In March, Reding proposed to bring down international roaming charges by addressing inter-operator tariffs (wholesale prices). The EU regulation would ensure that operators did not charge operators from other countries substantially more than the actual cost.
The new rule would also ensure that operator savings at the wholesale level are actually passed on to the consumer, and the Commission also said it saw a need for regulation at the retail level. Reding threatened new EU regulation that could introduce the home pricing principle. Mobile customers traveling abroad in the EU would always be charged only the prices that they are used to paying in their country of residence.
At the moment, when a customer makes a call on a mobile phone, he or she pays a start, transit, and end-fee. The fees for the start and end of a call cost approximately 0.12 euros ($0.15) across the EU. The cost for a call in transit is around 0.01 euros ($0.012) per minute, but this has dropped in recent years as technology has improved. The rub is that mobile customers using their phone abroad have not benefited from this drop in transit fees when they receive a call from home whilst in another EU country.
However, Reding’s proposals to clamp down on roaming charges are drawing heavy fire from two fellow commissioners, namely Trade Commissioner Peter Mandelson, and German Industry Commissioner Gunter Verheugen. They claim that excessive new regulations could damage the competitiveness of European mobile operators, according to the FT.
They look set to clash with Reding during the upcoming Commission meeting, as Reding is not backing down in her attempt to introduce new regulation for both wholesale and retail roaming charges. Mandelson and Verheugen are claiming they have the backing to rewrite the proposal.
Over the years, mobile operators have justified high roaming charges not only because of the complexity of routing a call over different networks, but also the complex billing process involved for making a call to a roaming mobile handset. Mobile operators are estimated to make around 10% to 15% of their profits from roaming charges.
It is high time that the EU’s internal market delivered substantially lower communication charges for consumers and business people traveling abroad, said Reding in March. I therefore propose that an EU regulation be used to eliminate all unjustified roaming charges. A mobile phone customer should not be charged a higher tariff just because he is traveling abroad.
However, besides her fellow Commissioners, Reding is also running into opposition from the industry itself, not surprisingly, as well as national watchdogs. The watchdogs only back her idea of regulating wholesale charges, as they believe measures to curb the retail level are unworkable.
Mobile operators will also watching closely to see if the proposals will include cuts to SMS (texting) and data transmission charges.
