A report commissioned by Vodafone claims that some 40 million Europeans would ditch their mobile phone if US-style billing comes to the EU where a mobile phone user has to pay to receive phone calls. The submission to the European Commission, seen by the Financial Times is in response to proposals from the European Commissioner for Telecoms, Viviane Reding.
Ms Reding has lead a long standing campaign against roaming charges imposed by the operators when customers travel around Europe.
The Commission warned in June that price regulation of termination markets across Europe lacks consistency. It said that gaps between fixed and mobile termination rates and between mobile termination rates imposed by national regulators cannot be altogether justified by differences in the underlying costs, networks or national characteristics.
Her current proposal is to slash the termination rates charged by the mobile operators - which it has been feared could lead to the operators having to charge recipients for incoming phone calls.
The move could position Europe closer to the model followed in the USA - which while it has some of the lowest calling rates around, but also has a much lower population penetration level. Mexico introduced Caller Party Pays (as the current European model is called) in 1998 and saw a ten percent jump in mobile usage within the first month. Technically, CPP is available within the USA, although practically no one offers the service.
The Vodafone commissioned research questioned some 9,000 mobile users and reportedly that found significant resistance to the US-style charges and could lead to some 10% of the European customer base ditching their mobile phone.
In a submission to Ms Reding's consultation on her plan, and seen by the Financial Times, Vodafone says: "Our research leads us to conclude that around 40m European mobile users would be forced to cancel their mobile service if Europe moved to a US wholesale model, even if EU mobile operators took every possible step to minimise the loss of users and even if the users themselves sought to minimise the impact."
Ms Reding's spokesman described Vodafone's claims as "unfounded".
At the moment the decisions of the national telecoms regulators result in very divergent rates across the EU. Mobile termination rates range from €0.02/min (in Cyprus) to over €0.18/min (in Bulgaria) and are 9 times higher than fixed line termination rates (on average €0.0057/min for local call termination).
The Commission has argued that at present, fixed operators and their customers are indirectly subsidising mobile operators by paying higher termination rates for calls made from fixed lines to mobiles. This cross-subsidisation is estimated at €10 billion in Germany for 1998-2006 (WIK Consult) and €19 billion in the UK, Germany and France for 1998-2002 (CERNA-Warwick-WIK).
The public consultation on their proposal closes on Wednesday.
On the web: Financial Times
Posted to the site on 1st September 2008
Posted to: www.cellular-news.com/story/33363.php