EU to Kill Off Cell-Phone Cross-Border Roaming Charges

BRUSSELS, Belgium – The EU said Tuesday it will force mobile-phone companies to scrap the "unjustified" high costs customers are charged for using mobile phones while traveling in Europe outside their home countries.

The European Commission said it would draft a law that could eliminate charges by next summer for receiving a call in another EU country, meaning travelers would be charged the same price they face at home. That could mean savings of 40 to 60 percent.

Europeans are punished with high phone bills simply for crossing a border inside the 25-nation EU, which hurts the growing numbers of people working and traveling outside their home country, said EU Information Society Commissioner Viviane Reding.

"Today, it is only when using your mobile phone abroad you realize that there are still borders in Europe," she said.

There are no plans to touch rates for calls made or received outside Europe.

Phone companies make some 10 billion euros ($12 billion) a year from roaming charges in the EU, said Peter Rodford, who is in charge of the commission's telecom regulation unit. He said they could expect to lose some of those "excessive" profits.

British cell-phone carrier Vodafone Group PLC (VOD) — which operates in several European countries — would not estimate how much it earns from international roaming.

Vodafone's U.S. shares fell 48 cents, or 2.2 percent, to $20.87, while France Telecom SA's (FTE) U.S. shares fell 16 cents to $22.60, both on the New York Stock Exchange.

Other carriers saw only slight drops in their stock prices, including Germany's Deutsche Telekom AG (DT) and Spain's Telefonica (TEF) and Telefonica Moviles (TEM).

Reding said the companies generate "pure profit" by charging travelers for receiving a call when they are away, even when the phone is switched off.

She wants travelers to pay the cost of a local call — at home rates — when they ring for a taxi on holiday in Madrid, and only face international charges to call home.

National telecom regulators said the problem lies with the wholesale prices operators charge to use each other's networks, recommending these should be cut from 70-80 euro cents a minute to 30 cents.

The commission set up a Web site last fall meant to help consumers find the best deal by showing them costs charged in September 2005 by their home phone company and the network of the country they are visiting.

Reding said the Web site showed companies made "no significant response" to warnings that they should cut the charges.

"Most prices remain unchanged or have even gone up," she said. "Mobile operators seem to have some difficulty understanding my message."

The commission published new figures on the "name-and-shame" Web site showing that Finnish customers spend just 20 euro cents (24 U.S. cents) for a four-minute call home from Sweden while Maltese customers are slapped with a 13.05 euros ($15.69) fee to call from Latvia.

Some companies had increased prices since the Web site first went up. British operator O2 PLC upped its roaming charge from 3.45 euros ($4.15) to 4.92 euros ($5.92) for calls made in the EU.

EU antitrust regulators started investigating roaming prices in 2000, leading to charges against German and British phone companies for abusing their monopoly power. The cases are ongoing.

Stefano Nicoletti, senior analyst at British technology consultancy Ovum, said fixing retail costs was a very intrusive way of regulating a cash cow for mobile operators.

"They should be used as a temporary measure and withdrawn once the market shows more competitive behavior," he said.

Industry group the GSM Association insisted last week that a new law was not needed because prices were already falling, with retail roaming tariffs down 8 percent last year.

Vodafone spokesman Jon Earl said the EU proposal did not recognize that firms must pay connection costs. Also, he said, some 6 million customers had already signed on for a fee-based plan to save between 30 percent and 45 percent on calls made abroad. Most use their phones to call home from abroad and pay a preferential rate that is lower than the international rate the EU is suggesting it charge.

TeliaSonera, the Nordic region's largest telecommunications operator, said roaming made up 10 percent of the company's sales volumes and any regulations would only affect overall sales by a couple of percentage points.

T-Mobile, a subsidiary of Germany's Deutsche Telekom, says it favors lower charges but argues that market forces will prove more effective than regulation.

"We are convinced that the competition itself is bringing the prices down," spokesman Christian Schwolow said.