TELECOM Digest OnLine - Sorted: Mobile Phone Operators Warn of Rate Hike

Mobile Phone Operators Warn of Rate Hike

Paul Ames, Associated Press (
Mon, 23 Apr 2007 14:07:02 -0500

By PAUL AMES, Associated Press Writer

Mobile phone users in Europe could face higher domestic charges if the
European Union forces telecom companies to limit the costs of
international calls, the industry warned Monday.

"It could be foreseen that the rate of the decrease of the domestic
tariffs will stall, or stop altogether," said Aoife Sexton, acting
head of regulatory affairs of the GSM Association, which represents
more than 700 cell phone operators around the world.

"Operators would have to sit back and take a good hard look at
holistically how they might recoup their charges, and the knock-on
effect could be potentially in the domestic market," she told

The industry is opposing a bill before the European Parliament that
would cap roaming charges for mobile phone calls made abroad within
the EU, by imposing a ceiling at 40 euro cents (54 U.S. cents) per
minute for an outgoing call and 15 euro cents (20 U.S. cents) per
minute for an incoming call.

Sexton cited a study conducted for the industry which said the
proposed EU legislation would cut operators' annual retail revenues
from roaming by more than half, from 5 billion euros to 2.4 billion
euros ($6.8 billion to $3.3 billion).

The European Commission introduced the bill to curb roaming charges,
claiming network providers are reaping massive profits from inflated
prices for calls from one EU nation to another. The EU's executive
body aimed to slash roaming fees by as much as 70 percent.

Last week, the European Parliament's industry committee went further,
suggesting still lower caps in the cost of cross-border calls.

If those suggestions are passed by the full parliament next month and
approved by governments of the 27 EU nations in June, Sexton warned
phone companies could be forced to operate roaming networks at a loss,
harming investment and competition.

She said the industry opposes all regulation -- likening the limits to
Communist-style economic planning. However she said since price caps
appear inevitable they should be set higher -- at 65 euro cents (88 U.S.
cents) per minute for outgoing calls and 35 euro cents (48 U.S. cents)
for incoming.

The Parliament's industry committee voted for an immediate application
of the retail price ceiling after the regulation is approved for all
customers, unless they opt for a package with higher roaming fees that
would be, for instance, compensated for by a lower tariff on domestic

Sexton says the industry needs more time to adjust to the law changes
and called for a delay of up to a year. The trade body is also seeking
changes that would mean customers could keep existing pricing packages
unless they opt into the new mandatory charges.

The industry argues that a flat rate across Europe would particularly
hurt operators providing cell phone service in difficult environments
such as Austrian mountain resorts or the Greek islands.

However, the European Commission says operators make billions of euros
on charges that are unjustifiably higher than fees charged within a
user's home country. When the operational cost to back a roaming call
is less than 20 euro cents (27 U.S. cents), the EU head office says
operators charge consumers about 1.15 euros ($1.54).

Copyright 2007 The Associated Press.

NOTE: For more telecom/internet/networking/computer news from the
daily media, check out our feature 'Telecom Digest Extra' each day at . Hundreds of new
articles daily. And, discuss this and other topics in our forum at (or)

For more news and headlines, please go to:

Post Followup Article Use your browser's quoting feature to quote article into reply
Go to Next message: communicationsdirect: "CommunicationsDirect News Daily Update"
Go to Previous message: Raf Casert, Associated Press: "Microsoft Responds to Latest EU Charges"
TELECOM Digest: Home Page