EC tries to ring the changes: Tim Jackson reports from Brussels on resistance to plans to reduce prices and to improve the poor services offered by European telecom monopolies

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The Independent Online
THE UNFORTUNATE caller from Brussels who holds a 10- minute telephone conversation this evening with New York will have to pay pounds 12.36. The same call at the same time in the other direction would cost him only pounds 6.22.

Among the reasons for this enormous price differential for identical services is the fact that Europe's telephone services are still run mostly by large, inefficient public monopolies. High telephone prices and bad service are common across all of Europe.

Only two countries - Britain and Portugal - have allowed any significant degree of competition. But British consumers still get a raw deal, and phoning Granny in California for 20 minutes once a week will cost pounds 150 more each year than paying her to call back.

Sir Leon Brittan, who is in charge of competition policy at the European Commission, is due to make another attempt this morning to persuade his colleagues to push for a more open market in telephone services.

He has already circulated a study that shows convincingly just how bad the situation is. Even in Europe there are bizarre anomalies: calling from Spain to Luxembourg, for instance, costs twice as much as vice versa.

One innovative US company offers a service where a customer who wants to phone, say, from Greece to South Korea can dial a number in America, key in a code and hang up. The American firm then calls back automatically, allowing the customer to dial onwards to South Korea. So much cheaper are US phone prices that the indirect double call is cheaper than the direct single one.

Sir Leon's paper implies that two things are responsible for the high cost of international phone calls in Europe. One is that many European phone companies use fat profits from international calls, which are often made by businesses, to subsidise the cost of local calls and connection fees in remote areas. In the Netherlands, for instance, it costs more than seven times as much to make a 100-mile call across the border to Belgium than to a Dutch town 100 miles away.

The other is that, as monopolies, most European phone companies have no competitors forcing them to become more efficient. This lack of competition sits uneasily with the Community's plans to create a single market by the beginning of 1993.

The Commission has little chance of forcing governments to open their domestic telephone markets. What it can do, however, is to attack the club of phone companies that sets telephone prices. At present, the companies pay each other agreed rates for incoming calls, but charge their customers much more.

But sources in Brussels yesterday said that Sir Leon has been persuaded not to press the matter to a decision at today's meeting. A green paper, outlining how Europe's international phone calls might be deregulated, was opposed by six of the Commission's 17 members when it was presented a fortnight ago. It was due to be presented again today, but officials last night said the debate would now only be a general one.

Some of the commissioners object to the idea out of solidarity with their own national governments, many of which have cosy relations with the state-owned telephone company. France Telecom is said to have been lobbying particularly successfully: Commission sources say that President Francois Mitterrand himself called Jacques Delors, the Commission President, to express his Olympian disapproval of the green paper.

Others are concerned that cutting margins on international but not local calls will hit small countries' phone monopolies harder than others. According to confidential Commission figures, the national operator of Luxembourg depends for 26 per cent of its revenues on international calls, while BT's figure is only 3 per cent.

The irony, which will not be lost on Sir Leon, is that several countries in Eastern Europe are using competing private firms and cellular networks to upgrade their creaking telephone systems. EC citizens may soon be able to save money in their bills by driving east and making calls from there.