Mobile operators on offensive over roaming costs

Mobile phone operators were last night on collision course with the European Commission as they attacked watered-down plans to rein in roaming fees charged by the networks.

The initiative will be launched today by the European Commission, which wants to cap charges made for making and receiving calls in another European country. Originally the Commission had planned to scrap fees for receiving calls in Europe altogether.

Despite the concessions, which were made after a fierce internal battle in the European Commission, the operators were on the offensive yesterday.

David Pringle, of the GSM Association, which represents 680 mobile operators worldwide, said: "Even if some of the more unworkable elements of the scheme have been dropped we still see this as a straitjacket for the industry. We are still very concerned because this is intervention in the market which will limit the ability of operators to develop packages for particular groups."

Friedrich Joussen, chief executive of Vodafone's German unit, conceded that "roaming prices are too high" but argued that "all experience shows that end-customer price regulation is something which is dangerous, because it excludes competition. It is close to socialism. You try to plan exactly what you think the market should be doing."

Proposals to cap the charges will be outlined today by Viviane Reding, European commissioner for media and information. On current rates the wholesale costs for making a call would be 26 euro cents (18p) and 39 euro cents per minute for national and international roaming, respectively. In addition there would be a maximum retail premium of 30 per cent, ending up with total costs of 34 euro cents and 53 cents per minute, respectively.

Operators will be allowed to charge customers to receive calls abroad, though this will be capped to 130 per cent of the so-called European termination rate - the actual cost. The plan will not cover SMS messages.

What remains unclear is whether the Commission will agree to give the industry a period of grace to get roaming fees down before it starts to legislate. That would mean that any new lawmight not bite until the summer of 2008.

Today's initiative is part of a broader strategy from the European Commission to prove that it is delivering concrete benefits to ordinary consumers.

Ms Reding published a survey which argued that roaming charges have "generally remained at the same high level" across Europe over the past six months and in some cases have increased. The Commission document showed O2 customers from the UK being charged €5.50 (£3.80) for a four-minute call in France or Italy, while T-Mobile users paid €7.63 in Slovenia. Some consumers in other countries pay up to €13.05.

European operators are thought to earn €8.5bn a year from roaming, 5.7 per cent of the industry's revenues and 15 per cent of its profits. However some operators have already begun to bring their roaming charges down under the threat of legislation.