Mon, Jul 10, 2006 page10

• EU forces cuts to `roaming' rates

  SLASHING RATES The European Commission is set to demand that telecom firms cut their rates on calls made while abroad, after many companies ignored appeals

  • AFP
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  Despite a fierce lobbying campaign by the telecoms industry, the European Commission is poised to force operators to slash the cost of mobile phone calls while abroad, officials say.

  Upset that operators have ignored warnings to cut so-called "roaming" rates, the EU's executive arm is to carry out its threat to introduce measures aimed at cutting prices in half.

  Information Society and Media Commissioner Viviane Reding is to unveil on Wednesday controversial new regulations to push prices lower, which the industry has fought tooth-and-nail to avoid.

  "The cross-border nature of international roaming services ... partially explains the difficulties for the national regulators to address the high prices for international roaming," she said in a recent speech.

  "In addition, given the cross border nature of the problems, any type of legislative intervention by member states would be ineffective and would risk giving rise to divergent results," she added.

  With 147 million Europeans using roaming services, the market is estimated to be worth about 8.5 billion euros (US$10.9 billion) a year.

  But although Reding has decided to go ahead with the measures in the teeth of resistance from operators and even some national measures, she has watered down the new regulations.

  In particular, she has dropped plans for a so-called country-of-origin principle under which a Frenchman, for example, on a trip in Berlin would pay a local rate if he called a taxi with his mobile phone.

  Critics warned that the rule could have encouraged consumers to import SIM cards -- which, inserted into a mobile phone, manage which networks the caller can use and at what price -- from countries with the lowest rates.

  But under the plans she is to present on Wednesday, Reding will fix the wholesale rate that an operator charges a foreign rival who uses its network on the behalf of a customer travelling abroad.

  However, what really makes operators shiver with dread are plans for a cap on retail rates they can impose.

  Consumer associations and the European Commission consider that the measure is necessary so that the benefits of lower wholesale rates are passed on to consumers.

  Even more controversially, the commission does not allow customers to be charged when they receive a call while abroad.

  The GSM Association, an industry lobby, warns that the reform will only result in operators raising their domestic prices so that they can make up for the lower roaming profits.

  However, an EU official said: "Clearly they will lose some of their huge profits, but the blackmail about higher domestic prices is more political maneuvering than anything."

  "If one of them does it they will lose market share and if they all do it they will have problems with competition authorities," the official said.

  However, operators still have some time to adjust because the plans still require approval by the European Parliament and EU governments to go into effect.

  Reding wants the new regulations to be in place next year although some other commissioners say that they should be phased in over several years.

  The commissioner is having a broader look at the telecoms industry and has proposed drafting new rules to boost competition.

  Meanwhile, EU Competition Commissioner Neelie Kroes is planning to launch a sector-wide inquiry next year.
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