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Last Updated: Monday, 18 September 2006, 13:52 GMT 14:52 UK
EU under fire over mobile fee cap
By Theo Leggett
Europe business reporter, BBC News

Mobile phone
The industry says the Commission has relied on "misleading analysis"
Plans to limit the cost of mobile phone calls for consumers who travel abroad within Europe have been attacked by the mobile phone industry.

The measures were put forward by the European Commission in June this year.

But the GSM Association, which speaks on behalf of mobile phone firms, has accused the Commission of making "basic mistakes" in its economic research.

The Commission said it was "surprised" by the criticism, adding it had used data supplied by the mobile industry.

Charging limits

Users often pay much more for so-called "roamed" calls than for an equivalent call made in their home country.

In June, the European Telecoms commissioner, Viviane Reding, put forward proposals intended to bring down what she called the "fantasy costs" being charged by some networks.

The plan would limit the fees companies impose on one another for providing roaming services, as well as restricting the profit margins they can charge to consumers.

Experts from the 25 member states have already begun discussions on the proposal, and the European Parliament will begin looking at it in the coming weeks.

Wrong assessment?

But while consumer groups have welcomed the proposal, phone companies are up in arms.

They say if roaming prices come down, consumers will have to pay more for other services.

A lot of people contributed to our economic impact assessment, including the GSM Association. These are not our figures; they are figures from the industry
Fabio Colasanti, European Commission

Now the industry has accused the Commission of making fundamental errors in its assessment of the telecoms market, on which the proposal is based.

A study produced by consultants AT Kearney and CRA International, on behalf of the GSM Association, says the Commission has relied on a "partial and misleading analysis".

It adds that this "creates the risk of regulation being imposed on a basis not supported by established economic theory or market evidence".

Among its key allegations are that the commission has grossly overestimated the size of the roaming market and the potential savings to consumers if the proposal is adopted.

It also says the Commission's research does not properly reflect the impact which the new rules will have on the industry.

According to Tom Phillips, the chief regulatory officer of the GSM Association, the roaming proposal was pushed through too quickly.

"This whole process was driven by a very tight timetable. People were under pressure to produce the right answers.

"It's inconceivable that officials would intentionally overestimate the size of the market, for example; but it is a very basic mistake to make."

Prices 'unjustifiable'

The Commission, however, remains unrepentant.

Fabio Colasanti, the director general of the commission unit which produced the proposal, said he was "surprised" by the GSM Association's criticisms.

"A lot of people contributed to our economic impact assessment, including the GSM Association. These are not our figures; they are figures from the industry," he said.

"We are surprised that there could be a misunderstanding over those figures.

"But even if their interpretation is correct, this simply means that the measure will not be as disruptive as we thought.

"If the market isn't as big as we believed, then OK, the benefits for consumers may be a little bit less - but that means the costs and disruption to the industry will be less as well.

"The fact remains that we prepared a proposal to address the unjustifiably high prices being charged to consumers and to intervene in a market where competition had failed to bring about the results we had hoped for.

"In that respect, nothing has changed."

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12 Jul 06 |  Business
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14 Jun 06 |  Business
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01 Jun 06 |  Business
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28 Mar 06 |  Business
Mobile roaming charges to be cut
09 Feb 06 |  Business

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