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EU defends roaming ‘climbdown’

http://www.eupolitix.com/EN/News/200607/6146eaea-e7d3-4240-afd8-190b72983fd7.htm

EU defends roaming ‘climbdown’

José Manuel Barroso has rebutted claims that new EU proposals on cutting mobile phone costs have been watered down under industry pressure.

The European commission president has repeatedly highlighted the EU’s determination to cut the “excessive” cost of international roaming as a prime example of a “Europe of results”.

But he was forced to defend this stance on Wednesday after the commission unveiled plans that appear to let mobile phone operators off the hook.

“What we said we would do, we are delivering, and I am proud of that,” he told journalists, claiming that more than 147 million EU citizens would benefit from roaming charges that would be up to 70 per cent lower than at present.

Barroso, along with EU media commissioner Viviane Reding, unveiled plans to cap the cost of wholesale roaming – the charges made between operators – at no more than 30 per cent above the basic cost.

But plans to impose a similar cap on retail prices – the price paid by consumers to operators for making calls – will only come into force six months later.

And a proposal to ban companies from charging customers to receive calls when abroad has been scrapped and replaced with a maximum charge.

Mobile operators will also be obliged to inform customers via SMS or a free call of the roaming tariffs in force in each particular country.

‘Compromise’

Barroso defended the revised proposals, which he qualified as a “compromise”, on the grounds that the EU has the duty to defend the interests of its businesses as well as its citizens.

“We are proud of the EU telecommunications sector, and rightly so, and we do not want to do anything that would harm its competitiveness. We listened to both industry and consumers, who urged us not to go too far, so we made our plans more balanced.”

“We have effectively created a European market for mobile telephony. Competition is working well in national markets, which are regulated by national regulators. But only the EU can regulate the cross-border market and make sure competition is working.”

The commission’s proposals would see the cost of calling home from abroad drop to no more than €0.49 a minute, compared to around €1.50 a minute at present.

Local calls – made within the same foreign country – would be capped at €0.33 minute, while the cost of receiving a call would be around €0.16 a minute.

Starting point

Reding explained that her initial proposal that all international mobile calls should cost no more than an equivalent national call had been little more than a starting point.

“I have been a politician long enough to know that you never put your final version on the table at the beginning.”

“You start with the biggest picture and then negotiate.”

But she stressed that her repeated calls for action from the mobile industry had been ignored for too long, and that she had been right to propose regulation.

“There was no clear link between the cost of roaming and the retail price. In some cases, it cost the consumer five times more than the operator. This was unacceptable.”

“But we do accept that there are some costs entailed in roaming, and this new proposal takes these into account.”

Commission rift?

Press reports suggested that a rift between Reding and several other commissioners, including enterprise chief Günter Verheugen and trade commissioner Peter Mandelson, had threatened to capsize the commission’s consumer-friendly proposal, forcing the change of tack.

Barroso confirmed that the debate in the college of 25 commissioners had been lively, with everyone having a say, and confirmed that all sides had had to compromise.

But he said the onus was now on the other institutions – the European parliament and the council of EU member states – to match the commission’s ambition.

“I expect strong support from parliament,” he said, but warned that some member states – especially those where major mobile phone companies were based – could resist the plans.

“Let’s see if all the governments share the same ambition as the commission. I’m afraid many of them won’t.”

Finland, home to Nokia, is the current EU president, but Barroso diplomatically said that the issue was “important to the Finns” and that he expected them to table the issue at council meeting as soon as possible.

Speedy resolution

The Portuguese commission president said that the speed with which the legislation could be approved by the other institutions was, in his opinion, a more important issue than whether the six-month period had let mobile operators off the hook.

“We are not postponing our plans, as I have seen suggested in some parts of the media. The cap on retail prices will be automatic and immediate after six months – any further delays will be in the co-decision process.”

“If companies act now to cut their costs, the legislation will not affect them, and I believe many will bring their prices down to well below the cap.”

“I can even envisage some companies offering roaming for free, as a means of beating the competition.”

Operators unhappy

But the reaction of mobile phone operators to the commission’s revised proposals would suggest that these halcyon days are still some way off.

“These new proposals would still do significant damage to the European roaming market and are not in the interests of consumers,” said the GSMA, which represents mobile phone operators.

“The commission’s plan to introduce a rigid cap on retail prices on each and every minute of a roaming call will stifle competition.”

“The price cap will prevent mobile operators from providing bundles of roaming minutes or other innovative tariff packages, which appeal to specific groups of customers and are an important feature of today's vibrant mobile marketplace.”

It also argued that the legislation was unnecessary. “The industry is delivering cuts in roaming prices today, well before any regulatory intervention would come into force.”

Consumers content

Consumer group BEUC was cautious in its praise for the commission’s decision. “Overall, the proposed regulation is a good first step in addressing consumer concerns in mobile communications markets,” said Jim Murray, BEUC director.

“But we will remain vigilant. We hope that operators will not try to find other markets where they can ‘prey’ on consumers. Constant monitoring of developments in other markets is therefore needed.”

Murray said that the threat of price caps after six months would push mobile operators to reduce their “extortionate roaming tariffs”.

“It would be naïve to hope that the same operators would suddenly be converted and voluntarily forego a part of their exorbitant roaming profits to the benefit of consumers,” without the price cap ‘stick’.

Parliament divided

Barroso confidence that the commission’s proposals would win the backing of parliament may be somewhat premature.

“The commission is thinking about this problem two-dimensionally. It should realise that if incumbent operators continue to charge high roaming costs, consumers will buy handsets with internet-calling technologies,” said centre-right MEP Syed Kamall MEP.

“The market is slowly sorting itself out and it should be left alone right now to find natural solutions to consumers’ concerns.”

“New technologies - such as Voice over IP (VoIP) - which are being built in to the next generation of mobile phones, will completely revolutionise international calling, and will act as the market solution to excessive roaming charges.”

But German centre-right deputy Angelika Niebler said the commission was “on the right track” by capping prices at a level that would allow companies to make a reasonable profit.