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Last Updated: Thursday, 19 October 2006, 11:08 GMT 12:08 UK
O2 cuts European roaming charge
O2 store
O2 is upping the ante in the roaming price war
UK mobile phone operator O2 is to cut the charges its customers pay for incoming calls when they use their phones elsewhere in Europe.

For a 5 monthly fee, roaming customers will no longer pay for incoming calls.

O2's move will initially apply only in Spain, the home territory of its owner Telefonica, but will roll out across the rest of Europe next year.

The decision comes as the European Union continues to press mobile firms to cut roaming costs.

By starting to scrap the charge levied by all operators in the past for receiving calls when abroad, we hope to begin removing that barrier
Peter Erskine, O2 chairman and chief executive

O2 Spanish sister network Movistar will also bring in the free incoming calls option - although its Europe-wide service will start immediately.

In addition, O2 will launch a new "high roamer" service offering outgoing calls at 25p a minute - which the company said was a 70% discount on standard rates.

Peter Erskine, chairman and chief executive of O2, said the company was responding to customer concerns over charges while using their phones abroad.

Roaming tariffs vary according to which UK network and host network are used, as well as the packages offered to reduce rates. Sample tariffs for four-minute peak time call:

Calling the UK from Italy: 3.5-5.81 euros (2.42-4)
Receiving a call in Italy from the UK: 1.75-5.50 euros (1.21-3.80)

Calling the UK from Malta: 3.5-7.34 euros (2.42-5.06)
Receiving a call in Malta from the UK: 1.75-5.50 euros (1.21-3.80)

Calling France from Germany: 4 euros (2.76)
Receiving a call in Germany from France: 1.36-1.88 euros (94p-1.30)

Source: European Commission (March 2006)

"The high roamer proposition was rated as the most popular concept when tested on customers, with many indicating that they currently left their phones switched off when travelling in order to avoid the cost of receiving a call," Mr Erskine said.

"By starting to scrap the charge levied by all operators in the past for receiving calls when abroad, we hope to begin removing that barrier," he added.

'Fantasy costs'

The EU has been investigating whether fees charged when mobile phones are used abroad are too high, since December 2004.

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 began looking at the issue in September.

The details of the new cost cutting deal

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