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Last Updated: Wednesday, 5 July 2006, 14:33 GMT 15:33 UK
EU plans crackdown on mobile fees
By Theo Leggett
Europe business reporter, BBC News

Mobile phone
Making calls abroad can be costly
A plan to regulate mobile phone charges for calls made abroad will shortly be published by the European Commission, despite intense opposition.

The industry is concerned that the proposals go too far, and even within the commission itself there are doubts.

At present, most users pay far more to make mobile calls when they are abroad than they do in their home country.

This is because service providers have to pay large fees for access to one another's networks.

These costs are generally passed on to consumers.

Telecoms companies say the money they make from such charges is used to subsidise other services - for example, to keep national calling costs down or to give customers free phones.

But critics say the profits they make are too high.

Charge cap

The Commissioner for Information Society and Media, Viviane Reding, has made it clear she agrees.

She is proposing to introduce a cap on the charges phone companies pay for access to one another's networks - known as wholesale costs.

Meanwhile, the price charged to consumers would be pegged to the wholesale cost, plus a maximum profit margin, likely to be up to 30%.

European Commissioner for Information Society and Media Viviane Reding
Viviane Reding is determined to push ahead with the plans

But while officials in Brussels are adamant that roaming charges are too high, there are concerns over Ms Reding's approach.

Colleagues of Industry Commissioner Gunter Verheugen say he is concerned about the possible impact of the regulation on the telecoms industry.

There are fears that if the plan leads to lower revenues for EU telecoms companies, they could become less competitive on the global stage.

Trade officials also have reservations, because it is not yet clear how contracts between EU companies and businesses based outside the region would be affected.

Wider scope

A key question is whether or not to regulate the charges paid by consumers themselves.

Some officials think it would be better to limit wholesale costs, while leaving phone companies free to set prices for consumers as they see fit.

But others believe that without further regulation, telecoms companies would have little incentive to keep prices down.

Despite these concerns, Ms Reding appears determined to push ahead.

The scope of the plan may even be extended to cover charges for data calls made by handheld computers, for example, as well as voice calls.

It is a prospect which the industry is unlikely to welcome - and whatever form Ms Reding's proposal actually takes, one thing is clear.

The debate is only just beginning.

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