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Last Updated: Tuesday, 11 July 2006, 21:09 GMT 22:09 UK
Europe to unveil mobile costs cap
By Theo Leggett
Europe business reporter, BBC News

Italy football coach Marcello Lippi on mobile after World Cup win
Mobile users often pay the price of making calls abroad
The European Commission is preparing to unveil controversial proposals to regulate the charges mobile phone users pay to make calls when they are abroad.

But even with a few hours to go before publication, key elements of the proposal remain under discussion.

The intention of the plans is to cut the cost of making mobile calls when abroad, known as roaming.

Telecoms operators frequently charge much more for roaming calls than they do for those made at home.

Although only a relatively small number of people use their mobiles abroad, it is still a very lucrative business - worth about $11bn (5.95bn; 8.6bn euros) - accounting for 10-15% of the industry's profits.

Consumers' organisations have long argued that roaming charges are too high, and that people who use their phones abroad are often shocked when they get their bills.

Charges targeted

European Union information society and media commissioner Viviane Reding agrees, and Wednesday's proposal is designed to bring those charges down.

The plan has three main components.

First of all, the Commission will place a cap on so-called wholesale charges - the fees which phone networks pay one another for processing roaming calls.

It's very dangerous to impose a uniform pricing structure
Tom Phillips, GSM Association

This will be linked to the average industry charge for handling an ordinary call within the EU, adjusted to take account of whether the call being made is local or long distance.

Secondly, the actual prices paid by consumers will be regulated as well. They will be limited to the wholesale charge, plus a profit margin of up to 30%.

Finally, the cost of receiving a call will be capped to reflect the average handling cost - also with a profit margin of up to 30% added.

In practice, it means that a user based in the UK who makes a local call in Spain could expect to pay 25 pence ($0.45) per minute. For an international call, the cost would be 36 pence ($0.66) per minute.

Most consumers currently pay many times that amount, although a number of large operators have recently reduced their charges.

Plans criticised

The industry, however, is heavily opposed to the plan.

"The EU market is varied and complicated," says Tom Phillips, chief regulatory affairs officer at the GSM Association.

"It's very dangerous to impose a uniform pricing structure on such a market. It could have a number of unintended consequences."

He says mobile firms may in future have to restrict users' access to roaming services, or increase charges for domestic calls, to make up the lost revenue.

It is a point of view which has some support within the commission. As a result, controls on the actual prices paid by consumers - as opposed to wholesale price caps - may be delayed for months or even years after the planned regulation comes into force.

Officials are still debating this point.

But for all the opposition, Ms Reding appears determined to ring the changes within the mobile phones industry.

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