EU Deliberates Capping Roaming Charges

The EU's commissioner in charge of communication, Viviane Reding, unveiled an outline for cutting the cost of using mobile phones abroad on Tuesday.

Reding said the new EU regulation would "ensure that operators do not charge operators from other countries substantially more than the actual cost."

Mobile operators worried

But mobile phone operators say the EU regulation outline does not take into account market variations across Europe. Philipp Schindera, a spokesperson for T-Mobile international, criticized the lack of detail in the EU proposal.

"It doesn't take into account that you have an unbalanced situation in Europe," Schindera said. "There are many more people who travel from northern to southern Europe than the other way around, and this means for example, that T-Mobile pays more to operators in the south than it gets back from them, because generally people in the south don't go north for their vacations."

The proposal includes suggestions that could see calls made from a mobile abroad being charged at the same rates as if they were made at home. So, for example, a German who travels to Britain with his mobile phone will pay the same to call people within Britain as he would if he were using his mobile in Germany, calling people within the German states.

Telecom groups, however, say existing competition and regulatory tools are adequate.

"We think we have strong competition among all mobile operators, so we don't see a need for regulation from the EU," Schindera said. "We have said in the past that the market can handle the issue itself, and you can see that the rates have already come down."

Mobile phone operators have argued that cutting roaming costs would severely impact their profits. Currently, operators rely on roaming charges for between 8 and 15 percent of their revenue.

They argue that the normal reason for regulating a market is if it is failing in some way, which is not the case here.

Not reflecting competition

The EU says mobile operators have had long enough to reduce costs, and have done disappointingly little so far. At an EU summit on Friday, EU leaders agreed that cuts in roaming charges would boost competitiveness in the industry.

In 2004, Brussels began launching probes into roaming charges. Shortly afterwards, it formally charged T-Mobile and Vodafone for overcharging customers in Germany.

In October 2005, Reding launched an EU website, drawing consumers' attention to charges travellers can expect to incur when they use mobiles abroad. However, despite operator claims that prices have gone down since 2005, the European Commission is still not satisfied that prices reflect competition in the mobile market.

The European member states and Parliament will have to give approval before any new regulations are put into place. Reding hopes the European Commission will adopt the proposal in June, following further consultation.