Mobile firms vow to fight 'heavy-handed' charges crackdown

Europe's phone companies pledged yesterday to fight plans by Brussels to abolish mobile roaming charges which generate £6.9bn a year.

A plan by the European commission to remove the "excessive charges" by summer 2007 prompted accusations of heavy-handedness from the industry. "Such a heavy intervention, at both wholesale and retail levels, would be unprecedented in the mobile market and appears disproportionate," warned Michael Bartholomew, director of the European Telecommunications Network Operators lobby group.

His remarks came after Viviane Reding, Europe's information society and media commissioner, announced plans to abolish roaming charges, imposed on mobile phone users who travel abroad. The charges are levied in two ways: users face an extra cost when they receive a call overseas and they are charged at a higher rate to make calls from overseas.

Ms Reding aims to remove these charges, which account for 15% of the income of mobile operators, by imposing the "home pricing principle". This would mean that a British tourist travelling to Madrid, for instance, would be charged on the same tariff as at home; a local call in Spain would be charged like a British domestic call, while a call back to Britain would be charged at the British international rate.

"It is high time that the EU's internal market delivered substantially lower communication charges for consumers and business people travelling abroad," Mrs Reding said yesterday.

Ms Reding decided to act because mobile phone companies incur little or no extra cost in routing calls across the EU. Despite this, they levy high roaming charges.

Vodafone, which has the most to lose from reduced roaming rates, suffered the biggest decline in the FTSE 100 yesterday, its shares dropping 4%.

Richard Feasey, director of public policy at Vodafone, said the growth of pan-European companies like itself, Telefonica and TMobile was already bringing prices down. It claimed to have cut prices by 30% last year when it launched Passport, a set 75p connection fee plus usual local tariffs. "The regulator's proposals seem a little bit like they are looking at where the market was a couple of years ago," he said.

Kip Meek, chief policy partner at the UK telecoms regulator Ofcom and president of the European Regulators Group, welcomed the initiative but declined to support the specific proposals. "The ERG is very committed to working with [Ms Reding] to come up with a practical, proportionate and speedy mechanism for getting retail roaming prices down."

But mobile phone operators pledged to fight Ms Reding's proposals in their consultation period from April 3 to 28. Ms Reding plans to publish legislation in June and introduce regulation by summer 2007.

The GSM Association, the mobile industry trade group, described the proposals as "unprecedented, unnecessary and heavy-handed". It challenged the commission's data and said prices from key operators had fallen 8% last year.

Its chief executive, Rob Conway, said: "Regulating retail prices is a drastic step that distorts competition and interferes with companies' ability to develop their own business models and differentiate themselves from the competition."

The Ireland question

The rural borders between Northern Ireland and the Republic provided the inspiration for the crackdown on roaming charges after Bertie Ahern, the Irish prime minster, persuaded fellow EU leaders last week to copy the Irish model.

The border zigzags from Carlingford Lough in the east to Lough Foyle in the north-west, often doubling back on itself, so that masts in the Republic regularly pick up signals from Northern Ireland and vice versa.

Dermot Ahern, the Irish foreign minister who lives five miles south of the border at Blackrock, Co Louth, said: "When I was in my sitting room my phone would pick up my normal Vodafone Ireland service. But when I moved into my kitchen I would receive a text welcoming me to the UK."

Mr Ahern no longer experiences a problem after the charges were abolished and Vodafone Ireland boosted its reception in Co Louth. Republicans in Co Louth, many of whom fled the troubles in Northern Ireland, did not take kindly to being welcomed to the United Kingdom.

Mr Ahern, whose daughter is hit by roaming charges on a pre-paid service, said: "We need to look at ways of communicating Europe to the general public. What better way to do that than ending young people being fleeced by roaming charges?"