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Europe’s telecoms industry on Wednesday failed to derail a law that would slash the cost of international mobile phone use, as regulators vowed to cut by up to 70 per cent the charges that Europeans pay.
In one of its most controversial moves in years, the European Commission proposed maximum rates that operators could levy on Europeans to make and receive calls while travelling in the EU.
Despite a partial retreat on her original plans, Viviane Reding, the EU telecoms commissioner behind the move, won a ferocious battle to cap both wholesale and retail fees charged by companies such as Vodafone and T-Mobile.
She claimed victory for 147m Europeans whom she said paid “roaming” charges that averaged €1.15 ($1.38) a minute – in some cases five times the cost of providing the service and four times more than a national call. Roaming is worth €8.5bn in revenues each year to the European industry.
A defiant Ms Reding said: “The market had its chance. It did not deliver and we believe that European citizens should no longer put up with these unjustifiably high prices in an internal market.”
However, it is far from certain that her proposed law will be in place by this time next year, as she wishes.
The European parliament and the union’s 25 countries must approve the legislation, and big member states such as the UK and France have reservations.
A French diplomat said: “We think there should be regulation, but at the level of wholesale rates rather than telling them [operators] what to charge customers. If we regulate wholesale prices that will allow for the market forces to act.”
Ms Reding succumbed to pressure from operators and fellow commissioners and gave a six-month delay to caps on retail charges – the fees companies levy on customers.
In another tactical retreat she allowed operators to continue to charge consumers for calls received while abroad.
Under the plans the Commission will cap wholesale fees, the charges phone companies pay each other to use their networks. Consumer prices will be regulated, with companies able to charge customers up to 30 per cent over the wholesale cost when they make calls in other EU countries.
Ms Reding argues that, if the law were in place today, calling home from abroad would cost customers up to €0.49 a minute. The fee to receive a call while in another EU member state would be about €0.17 a minute.
The industry campaigned against the draft law and its lobbying is likely to continue. Vodafone said that competition between operators, rather than regulation, offered the best value for customers. T-Mobile, Deutsche Telekom’s mobile business that has operations in seven EU countries, said it would be lobbying EU governments and the European parliament.