Mobile Phone Operators Warn of Rate Hike

By PAUL AMES, Associated Press Writer

Mobile phone users in Europe could face higher domestic charges if the European Union forces telecom companies to limit the costs of international calls, the industry warned Monday.

"It could be foreseen that the rate of the decrease of the domestic tariffs will stall, or stop altogether," said Aoife Sexton, acting head of regulatory affairs of the GSM Association, which represents more than 700 cell phone operators around the world.

"Operators would have to sit back and take a good hard look at holistically how they might recoup their charges, and the knock-on effect could be potentially in the domestic market," she told reporters.

The industry is opposing a bill before the European Parliament that would cap roaming charges for mobile phone calls made abroad within the EU, by imposing a ceiling at 40 euro cents (54 U.S. cents) per minute for an outgoing call and 15 euro cents (20 U.S. cents) per minute for an incoming call.

Sexton cited a study conducted for the industry which said the proposed EU legislation would cut operators' annual retail revenues from roaming by more than half, from 5 billion euros to 2.4 billion euros ($6.8 billion to $3.3 billion).

The European Commission introduced the bill to curb roaming charges, claiming network providers are reaping massive profits from inflated prices for calls from one EU nation to another. The EU's executive body aimed to slash roaming fees by as much as 70 percent.

Last week, the European Parliament's industry committee went further, suggesting still lower caps in the cost of cross-border calls.

If those suggestions are passed by the full parliament next month and approved by governments of the 27 EU nations in June, Sexton warned phone companies could be forced to operate roaming networks at a loss, harming investment and competition.

She said the industry opposes all regulation -- likening the limits to Communist-style economic planning. However she said since price caps appear inevitable they should be set higher -- at 65 euro cents (88 U.S. cents) per minute for outgoing calls and 35 euro cents (48 U.S. cents) for incoming.

The Parliament's industry committee voted for an immediate application of the retail price ceiling after the regulation is approved for all customers, unless they opt for a package with higher roaming fees that would be, for instance, compensated for by a lower tariff on domestic calls.

Sexton says the industry needs more time to adjust to the law changes and called for a delay of up to a year. The trade body is also seeking changes that would mean customers could keep existing pricing packages unless they opt into the new mandatory charges.

The industry argues that a flat rate across Europe would particularly hurt operators providing cell phone service in difficult environments such as Austrian mountain resorts or the Greek islands.

However, the European Commission says operators make billions of euros on charges that are unjustifiably higher than fees charged within a user's home country. When the operational cost to back a roaming call is less than 20 euro cents (27 U.S. cents), the EU head office says operators charge consumers about 1.15 euros ($1.54).

Copyright 2007 The Associated Press.

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Paul Ames, Associated Press
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