EU plans new push to cut mobile charges
BERLIN: The European Commission, having capped roaming fees on international mobile phone calls, plans a new move to lower cellphone charges that could result in even greater savings for European consumers.
Viviane Reding, the telecommunications commissioner, and Neelie Kroes, the competition commissioner, are expected to announce Thursday that they will use new administrative powers to push national regulators to lower the fees that mobile operators can charge each other to connect calls between their networks. These charges vary widely among the 27 European Union countries.
The recommendation, if adopted locally, would reduce the charges by an average of 70 percent within three years, the commission estimates. Industry analysts say much of the savings would be passed on to consumers in lower per-minute calling charges or larger bundled packages of free minutes.
The commission's proposal, obtained by the International Herald Tribune, does not estimate the amount of potential savings for consumers, but analysts say it could be greater than those generated by Reding's move to reduce roaming charges. The commission has said those caps could cost operators €2 billion, or $3.1 billion, out of the €5.8 billion they collect annually in roaming fees.
"The stakes are much higher," said Nick Delfas, an analyst at Morgan Stanley in London. The so-called termination rates generate up to 20 percent of mobile operators' revenue, analysts say, compared with about 5 percent for roaming charges on voice calls.
As the European wireless industry developed in the late 1980s, it was permitted to grow without the same degree of price regulation as traditional land-line phone operators, which were initially government monopolies. But the patchwork approach by national regulators has led to widely varying prices for service across the supposedly common EU market. Last year, European lawmakers imposed the first EU-wide price controls, setting caps on voice roaming fees.
Reding in July also plans to seek legislative approval to cap the roaming fees imposed on short text messages and mobile data. Mobile termination rates range from 2 cents in Cyprus to 18.2 cents in Bulgaria, the commission says.
Unlike last year, the commission wants to reduce mobile termination rates using an administrative power granted in a 2002 overhaul of European telecommunications law, avoiding the need for approval from the European Parliament or the Council of Ministers.
After a two-month public comment period, the recommendation on termination rates would take effect in October. It remains unclear, however, whether all EU countries will fall into line.
The commission's recommendation to national regulators is considered semibinding, but because it involves a complex methodology for calculating legitimate business costs, there may still be room for interpretation, some industry experts said. It is also not uncommon for some EU countries to differ with Brussels - as Germany is doing by opposing an EU demand for Deutsche Telekom to open its high-speed broadband network to competitors - and to opt for a protracted legal fight.
In a statement this month, the European Regulators Group, the panel of 27 national regulators, endorsed efforts to harmonize EU telecommunication law but did not support the commission's call for a uniform method of calculating the termination rates. Instead, regulators noted that their individual approaches had lowered termination rates by 40 percent over four years.
Tom Phillips, director of public policy at London-based GSM Association, which represents network operators, predicted that many national regulators would balk at the new rules. Regulators will recognize that it costs operators more to connect calls in some places than in others, he said, so termination fees should be allowed to vary.
"It is rubbish to say that these costs are the same in each EU country," Phillips said. "It is patently obvious that operating and capital costs are not the same by any degree across the EU because of topography, demographics, employment costs, license fees, real estate costs and infrastructure."
But Monique Goyens, director general of the European Consumers' Organization, a Brussels group representing consumer advocates, said she supported the latest attempt to bring down mobile calling charges. Mobile termination rates are "too generous for operators and lead to high prices for making calls," Goyens wrote in a letter to Reding on June 24.
Consumer groups argue that high mobile termination rates, which are paid to the operator whose network is called, rather than to the one where the call is initiated, implicitly favor larger operators with larger customer bases.
The European Competitive Telecommunications Association, a Brussels group representing smaller operators, called mobile termination fees inflated and said they generated €10 billion each year in unnecessary charges for consumers.
source
Viviane Reding, the telecommunications commissioner, and Neelie Kroes, the competition commissioner, are expected to announce Thursday that they will use new administrative powers to push national regulators to lower the fees that mobile operators can charge each other to connect calls between their networks. These charges vary widely among the 27 European Union countries.
The recommendation, if adopted locally, would reduce the charges by an average of 70 percent within three years, the commission estimates. Industry analysts say much of the savings would be passed on to consumers in lower per-minute calling charges or larger bundled packages of free minutes.
The commission's proposal, obtained by the International Herald Tribune, does not estimate the amount of potential savings for consumers, but analysts say it could be greater than those generated by Reding's move to reduce roaming charges. The commission has said those caps could cost operators €2 billion, or $3.1 billion, out of the €5.8 billion they collect annually in roaming fees.
"The stakes are much higher," said Nick Delfas, an analyst at Morgan Stanley in London. The so-called termination rates generate up to 20 percent of mobile operators' revenue, analysts say, compared with about 5 percent for roaming charges on voice calls.
As the European wireless industry developed in the late 1980s, it was permitted to grow without the same degree of price regulation as traditional land-line phone operators, which were initially government monopolies. But the patchwork approach by national regulators has led to widely varying prices for service across the supposedly common EU market. Last year, European lawmakers imposed the first EU-wide price controls, setting caps on voice roaming fees.
Reding in July also plans to seek legislative approval to cap the roaming fees imposed on short text messages and mobile data. Mobile termination rates range from 2 cents in Cyprus to 18.2 cents in Bulgaria, the commission says.
Unlike last year, the commission wants to reduce mobile termination rates using an administrative power granted in a 2002 overhaul of European telecommunications law, avoiding the need for approval from the European Parliament or the Council of Ministers.
After a two-month public comment period, the recommendation on termination rates would take effect in October. It remains unclear, however, whether all EU countries will fall into line.
The commission's recommendation to national regulators is considered semibinding, but because it involves a complex methodology for calculating legitimate business costs, there may still be room for interpretation, some industry experts said. It is also not uncommon for some EU countries to differ with Brussels - as Germany is doing by opposing an EU demand for Deutsche Telekom to open its high-speed broadband network to competitors - and to opt for a protracted legal fight.
In a statement this month, the European Regulators Group, the panel of 27 national regulators, endorsed efforts to harmonize EU telecommunication law but did not support the commission's call for a uniform method of calculating the termination rates. Instead, regulators noted that their individual approaches had lowered termination rates by 40 percent over four years.
Tom Phillips, director of public policy at London-based GSM Association, which represents network operators, predicted that many national regulators would balk at the new rules. Regulators will recognize that it costs operators more to connect calls in some places than in others, he said, so termination fees should be allowed to vary.
"It is rubbish to say that these costs are the same in each EU country," Phillips said. "It is patently obvious that operating and capital costs are not the same by any degree across the EU because of topography, demographics, employment costs, license fees, real estate costs and infrastructure."
But Monique Goyens, director general of the European Consumers' Organization, a Brussels group representing consumer advocates, said she supported the latest attempt to bring down mobile calling charges. Mobile termination rates are "too generous for operators and lead to high prices for making calls," Goyens wrote in a letter to Reding on June 24.
Consumer groups argue that high mobile termination rates, which are paid to the operator whose network is called, rather than to the one where the call is initiated, implicitly favor larger operators with larger customer bases.
The European Competitive Telecommunications Association, a Brussels group representing smaller operators, called mobile termination fees inflated and said they generated €10 billion each year in unnecessary charges for consumers.
source
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