Cap on Cell Phone Prices

Despite fierce lobbying from mobile phone operators, the parliament's industry committee massively supported plans to cap the price of calls made abroad in the EU at 40 cents per minute and 15 cents ($0.54 and $0.20) for calls received abroad.

The committee's backing sets the stage for a vote before the full parliament in a plenary session on May 10 in Brussels and a final decision by EU telecoms ministers on June 7 in Luxembourg.

"We are sending a very clear message to the consumers and telecom operators," said the bill's rapporteur, Austrian conservative Paul Ruedig. "It's a good basis for our deliberations."

The plans as adopted by the panel go even farther in the favor of consumers than original propositions from the European Commission, which had proposed a 44-cent ceiling on outgoing calls made abroad in the EU and a 15-cent cap on incoming calls.

Protecting consumers

The EU's executive arm hopes to see so-called roaming charges fall by as much as 70 percent, thanks to its plans to cap what operators charge customers at the retail level and what they charge each other at the wholesale level.

The Commission drew up the plans to regulate roaming rates last year after finding evidence of huge variations between operators' prices with roaming calls costing some times up to six times those of local mobile calls.

EU telecoms commissioner Viviane Reding, who has led the drive for regulation of roaming rates, hailed the committee's support for her plans as "very good news for Europe's consumers."

The BEUC European consumers association said that while the plans "go in the right direction," the price caps "are still too high and should be readjusted based on real costs."

Reding is aiming for the package to go into effect in summer so consumers can benefit from lower prices during the holidays abroad, although some EU lawmakers have said its application might not come until the autumn.

"In view of the emerging consensus on the new rules, an early entry into force of the EU roaming regulation is now a very realistic possibility," she added.

Industry up in arms

The package has the industry, which argues that fierce competition has already driven down prices, up in arms and it has been lobbying hard to get the plans watered down.

The GSMA trade association said that "retail price regulation is inappropriate and unprecedented on the basis of the principles of a market economy."

It charged that the plans "will force European mobile operators to offer roaming services at below cost and give them no scope to compete with each other on price and on new services."

The organization has been lobbying for a ceiling of at least 65 cents for outgoing calls abroad and 35 cents for incoming calls.

With roaming charges generating on average 10 percent of operators revenues, Reding acknowledged that the regulations would prove to be painful for operators and would probably provoke a "correction" in the share prices.