EC wants price caps to prevent mobile phone 'bill-shock'

Proposals would slash the cost of sending texts, downloading data and making calls overseas

The European commission yesterday opened a new front in its war with dominant mobile phone operators by proposing more price caps to slash the cost of sending texts, downloading data and making calls overseas.

Viviane Reding, EU telecoms commissioner, said: "We don't want to send operators out of business. Our price ceilings are very generous and no operator will be bankrupt because of these 'roaming' proposals."

She was responding to fresh complaints from the GSM Association, representing big players such as Orange and Vodafone, that the European commission plans are "politically motivated regulation" and "micro-management" and will drive down revenue and stifle investment and innovation.

Reding accused operators of failing to respond to her offer of a year's grace to cut text and data costs, and of continuing to levy excessive charges on consumers.

"We would have no need for micro-management at a political level if the industry had done its management at a commercial level," she replied, saying price caps on voice calls imposed since last year had been a zero-sum game - falling revenue among operators had been offset by increased traffic.

Last year EU citizens sent 2.5bn SMS texts worth €800m (£634m) at an average cost of €0.29 each when travelling within Europe. The EC now proposes a retail cap of €0.11, excluding VAT, from July 1, 2009, with the wholesale cap set at €0.04.

Amid reports that one consumer was charged €40,000 for downloading a TV show over a roaming line, the EC now proposes a €1 wholesale cap on data roaming compared with the current average of €5.40.

And, in an effort to prevent "bill-shock," it says consumers should be able, from July 1, 2010, to set their own bill limit in advance. The maximum price for making and receiving a call while travelling within the EU, cut to €0.46 and €0.22 respectively this summer, will drop to €0.34 and €0.10 by July 2012 under the EC's plans.

These extend price regulation for a further three years until 2013 but Reding offered an olive branch to the industry by saying a policy review in 2011 could end regulation - if the industry had made genuine strides to create a competitive single market across the European Union.

Meglena Kuneva, the EU consumer commissioner, said customers were being overcharged by 24% because operators bill per minute for overseas calls, but should bill per second after 30 seconds. "It's like taking the train from Brussels to Paris and being charged to go to Rome," she said of this practice.

Reding wants the legislation approved by next June but faces opposition among governments and MEPs, with the latter pressing for lower caps.

Christian Salbaing, European managing director of smaller mobile operator 3, also urged the EC to slash the wholesale data cap further, saying that consumers would still pay 100 times more when overseas than at home.


David Gow in Brussels

The GuardianTramp

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