European mobile phone users could make big savings under proposals from Brussels to scrap “roaming” costs incurred while travelling in another EU country.
In a move that could deal a strong blow to mobile operators, Viviane Reding, EU telecoms commissioner, will outline on Tuesday legal action that could force companies to abolish “unjustified” roaming fees – the add-on prices consumers pay to make or receive a call while abroad.
These rates vary but can account for up to 40 per cent of the cost Europeans pay to use their regular mobile phone elsewhere in the EU.
For Europe’s telecoms industry, which makes between 10 and 15 per cent of profits from these charges and is suffering from a slow-down in earnings growth, the move would be a significant setback.
Ms Reding’s announcement marks the culmination of a six-month wrangle with telecoms companies, which she believes levy unjustifiably high prices for international phone use.
She warned in September that she would legislate if roaming charges did not fall and will say on Tuesday that in some cases prices have risen.
As part of her plans, Ms Reding will say that companies could be forced to use a “home pricing” rule. This would make the prices consumers pay while using a phone abroad the same as those at home.
Ms Reding will argue that she has the power to legislate using European internal market rules. She will use as a precedent laws introduced in 2001 that cut the cost of cross-border bank transfers.
However her plans are far from a fait accompli. While there is little sympathy for companies because of the high charges they levy, critics could argue that the Brussels regulator’s action could damage the industry.
Even if Ms Reding’s plans go ahead, they could backfire if companies charge more for handsets or other services to recoup lost revenues – though the intense competition in the sector could prevent such steps.
Data to be released on Tuesday by the Commission will show that fees for cross-border phone use vary widely across the EU.
A Maltese in Latvia would pay €13.05 to make a four-minute call home using their regular phone. However a Finn calling home from Sweden could pay just €0.20 for a similar call. It is unclear how much roaming accounts for in these call costs.
Mobile phone companies claim fees are falling and argue competition alone should spur price cuts.
Ms Reding envisages launching formal legislative proposals in June. The European parliament and EU member states would have to approve the laws.