LUXEMBOURG – EU governments agreed to cut the cost of using mobile phones abroad Thursday, paving the way for a cap on roaming fees later this summer.
The price of a mobile phone call from abroad may drop by as much as 70 percent, according to the EU's executive Commission. Europeans will have better information on hidden charges they face when they make calls from a country other than their own within the 27-nation bloc after the law takes effect at the end of June.
Telecom companies will have one month after that to offer customers a new pricing structure with considerably cheaper roaming fees.
Mobile phone users will have another two months to choose whether they want to stick with their existing contracts.
After that, they will be put on the new contract automatically. The timetable should allow proactive customers to benefit from cheaper prices this summer, the Commission has said.
The exact timing depends on the law going into effect as scheduled on June 30.
EU Telecom Commissioner Viviane Reding called on EU governments to stick the deadline.
"Millions of citizens are waiting," she said. "Let's get the job done."
The telecom industry reacted with dismay, saying retail price regulation had no place in the free market.
"We're talking about a precedent. Regulating retail prices in this way is not what free market is about," said David Pringle, spokesman for the GSM Association of Europe's mobile phone operators.
"It created uncertainty for investors because they don't know where the Commission will strike next. This is going to have a big, long-term impact," he said.
The Commission and national regulators said would monitor the changes closely.
"I know that some in the industry have been saying that domestic prices may rise now to compensate operators. I find this very hard to believe because competition between mobile operators is fierce," Reding said. "Raising domestic prices means kicking yourself out of the market."
She also warned that the Commission would also keep an eye on roaming prices for data — such as text messages or Internet services like BlackBerries.
Before the reform, a four-minute call from France across the border to Germany would cost a traveler 4 euros ($5.38) even though a similar call made within France over a much larger distance could cost just a few cents. A Maltese calling home from Latvia can end up paying as much as 11.21 euros ($15.19) for a four-minute conversation.
Under the new rules, the retail roaming cap will be set at 0.49 euros ($0.66) per minute for making a call when abroad and 0.24 euros ($0.33) per minute for receiving one, plus value-added tax.
The ceilings would drop further, to 0.43 euros ($0.58) for making calls abroad and 0.19 euros ($0.26) for receiving them, by 2009.
Some 150 million mobile phone customers in the EU use roaming to make calls outside their home nation every year. Mobile operators draw between 10 percent and 18 percent of their revenues from international roaming charges, according to a 2006 study by research firm Evalueserve.
The European Commission has long argued that operators are reaping massive, unjustified profits from high roaming charges.