Europe Plans New Push to Cut Mobile Charges
BERLIN — The European Commission, having capped roaming fees on international mobile phone calls, plans a new move to lower cellphone charges that could result in even greater savings for European consumers.
The telecommunications commissioner, Viviane Reding, and the competition commissioner, Neelie Kroes, are expected to announce on Thursday that they will push national regulators to lower the fees that mobile operators can charge each other to connect calls between their networks. The charges vary widely among the 27 European Union countries.
The recommendation, if adopted locally, would reduce the charges by an average of 70 percent within three years, the commission estimates. Industry analysts say much of the savings would be passed on to consumers in lower per-minute calling charges or larger bundled packages of free minutes.
The commission’s proposal, obtained by The International Herald Tribune, does not estimate the potential savings for consumers, but analysts say it could be greater than those generated by Ms. Reding’s move to reduce roaming charges. The commission has said those caps could cost operators 2 billion euros ($3.1 billion) out of the 5.8 billion euros that they collect a year in roaming fees.
“The stakes are much higher,” an analyst at Morgan Stanley in London, Nick Delfas, said. The so-called termination rates generate up to 20 percent of mobile operators’ revenue, analysts say, compared with about 5 percent for roaming charges on voice calls.
The initiative from Brussels is expected to encounter opposition from mobile operators. It represents a significant attempt to impose price restrictions on a leading European industry, which has produced the GSM technology standard and global leaders like Nokia and Vodafone.
As the European wireless industry developed in the late 1980s, it was permitted to grow without the same degree of price regulation as traditional landline phone operators, which were initially government monopolies. But the patchwork approach by national regulators has led to widely varying prices for service. Last year, European lawmakers imposed the first European-wide price controls, setting caps on voice roaming fees.
Ms. Reding also plans to seek legislative approval in July to cap the roaming fees imposed on short text messages and mobile data. Mobile termination rates range from 2 cents in Cyprus to 18.2 cents in Bulgaria, the commission says. By comparison, the average termination rate for connecting a call between landline networks is less than 1 cent across Europe.
The commission wants to reduce mobile termination rates using an administrative power granted in a 2002 overhaul of European telecommunications law, avoiding the need for approval from the European Parliament or the Council of Ministers.
Tom Phillips, director of public policy at the London-based GSM Association, which represents network operators, predicted that many national regulators would balk at the new rules. Regulators will recognize that it costs operators more to connect calls in some places than in others, he said, so termination fees should be allowed to vary.
“It is rubbish to say that these costs are the same in each E.U. country,” Mr. Phillips said.
But Monique Goyens, director general of the European Consumers’ Organization, a Brussels group representing consumer advocates, said she supported the latest attempt to bring down mobile calling charges.
Mobile termination rates are “too generous for operators and lead to high prices for making calls,” Ms. Goyens wrote in a letter to Ms. Reding on Tuesday. “As a consequence, the part of the consumer budget devoted to mobile telephone calls is far too important.”
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