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Last Updated: Wednesday, 14 June 2006, 14:54 GMT 15:54 UK
Anger at EU cap on mobile charges
By Theo Leggett
Europe business reporter, BBC News

Mobile phone user
Brussels says there is too big a discrepancy in call charges
Mobile phone firms have reacted angrily to new ideas put forward by the European Commission to cut costs for consumers making calls on trips abroad.

They are concerned that plans to put a cap on foreign call charges will distort competition within the market, and stifle innovation.

Brussels has consciously provoked a heated public debate on the issue of roaming charges.

People currently pay much higher charges abroad than for domestic calls.

'Keeping costs down'

Telecoms companies say they need the extra revenues to subsidise other services - for example to keep national calling costs down - or to give customers free phones.

Critics accuse them of profiteering.

Earlier this year, the information society and media commissioner Viviane Reding said travellers were being penalised by the "fantasy costs" being charged for roaming services.

The Commission is trying to force uniform prices across Europe and dictate what are acceptable returns to business through regulation
Rob Conway, GSM Association

She said the Commission would propose new rules to bring charges down, by ensuring that calls made abroad cost no more than the equivalent call made in the user's home country.

After extensive consultations, and protests from the industry, that idea has now been dropped.

The Commission is now proposing a cap on so-called wholesale roaming charges - the fees phone companies impose on each other for providing access to their networks.

Consumers, meanwhile, would be expected to pay the wholesale charge, plus a profit margin of no more than 30%.

'Deeply flawed'

But people within the industry are unimpressed.

The GSM Association, which represents mobile operators around the world, says the latest proposal is "deeply flawed".

"The Commission is trying to force uniform prices across Europe and dictate what are acceptable returns to business through regulation", says its chief executive, Rob Conway.

He believes that price caps will distort competition between operators, and stifle competition within the industry.

The trade body wants the Commission to reconsider before it comes forward with formal proposals - expected in the next few weeks.

But while operators are incensed by what they see as the Commission's high-handed approach, the EU's tactics seem are working.

A number of Europe's biggest mobile phone companies have already announced big cuts in their roaming charges.

But that, it appears, still doesn't go far enough.

Mobile phone roaming fees slashed
01 Jun 06 |  Business
EU cracks down on mobile charges
28 Mar 06 |  Business
EU targets mobile roaming costs
08 Feb 06 |  Business
EU probes mobile phone call costs
10 Dec 04 |  Business

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