EU Telecom Mins OK Price Caps For EU Mobile Phone Calls

BRUSSELS -(Dow Jones)- The European Union Thursday cleared the final hurdle and set a ceiling on the price of cross-border mobile phone calls made within the 27-nation bloc.

At a meeting in Luxembourg, the EU's national telecom ministers unanimously approved a EUR0.49-per-minute fee limit for individuals making calls across national borders in the E.U., and a EUR0.24-per-minute fee limit for people receiving the so-called "roaming" calls.

The new rules also set limits on the wholesale prices for roaming calls that operators charge one another when using each other's networks, and they impose stringent transparency rules so that consumers will know exactly what they are being charged for when they see their mobile phone bills.

"It was necessary for us" to cap roaming fees "because the operators failed to solve this problem by themselves," E.U. Telecom Commissioner Viviane Reding said Thursday.

"Regrettably, the market was not capable of solving the problem by itself. The [European] Commission therefore had to act."

The new rules will come into force this month. In July the capped fee structure or "Eurotariff", as the commission calls it, must be offered to all E.U. mobile phone users, who will have the choice between the Eurotariff or staying with their old pricing plan.

Mobile phone users who do not make a decision will automatically be assigned the Eurotariff, which the commission claims will lower roaming bills throughout the E.U. by 70%.

By 2009, the price ceilings are set to drop further, to EUR0.43 for making calls abroad and EUR0.19 for receiving them.

The price ceilings are set to automatically lapse three years after coming into force, although Brussels could decide to prolong them if they fear that prices for roaming would merely shoot up again without E.U.-mandated fee limits.

Currently, a four-minute mobile phone call from France to Germany can cost up to EUR5.12, though a similar call made within France over a much larger distance could cost just a few cents, the commission says. The commission estimates that when a consumer pays an extra EUR0.58-per-minute for a roaming call, the operator only pays an extra EUR0.10 to EUR0.15-per- minute for the added cost of roaming.

The roaming rules, proposed by Reding one year ago, have spurred intense lobbying within the EU. An EU survey claims that 70% of European mobile phone users - and voters - support fixing a maximum price for roaming calls. The populist measure was pushed through the European Parliament and agreed to by national governments in just one year, a breakneck speed for European politics.

Yet mobile phone operators are furious with Reding. They claim that capping roaming fees is just a way for the EU to gain some much-needed public approval at the expense of the mobile phone operators, who draw between 10% and 18% of their revenues from international roaming charges, according to a 2006 study by research firm Evalueserve.

"These price caps leave very little room for competition, for innovation, they will harm this market," said David Pringle, spokesman for the GSM Association of Europe's mobile phone operators. "Also, it'll be difficult to implement the changes in the time frame they're envisioning."

The ceiling for roaming prices must be at least EUR0.65-per-minute for mobile phone operators to break even, the association claims. Many operators - those covering mountainous regions, for instance - won't be able to break even with the caps set by the E.U., the association says.

-By Anne Jolis Dow Jones Newswires; +32 2 741 1488; anne.jolis@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 7th June 2007