Mobile industry vows to fight EU roaming move

14 Jul 2006

The GSM Association, which represents more than 690 mobile operators worldwide, has branded the European Commission’s plans to lower roaming rates within the EU as unnecessary.

Moves by mobile operators to fight the directive could set the process back 18 months, the European Commission has acknowledged.

In a response to the European Commission’s roaming directive, which it claims could cut the cost of roaming within the EU by 70pc, the GSM Association said that the commission’s plans were unnecessary as competition is already delivering reductions in the prices of roaming services.

It said that price cuts being implemented by a group of leading European operators will lower tariffs and lead to a fall in roaming costs to the tune of 40pc.

The association warned that the commission’s plan to introduce a rigid cap on retail prices on each and every minute of a roaming call will stifle competition and prevent operators providing bundles of roaming minutes and other innovations.

“Although the European Commission has dropped its unworkable ‘home pricing principle’, its new proposals still amount to a straightjacket that will stifle innovation, dampen competition and ultimately harm consumers,” said Rob Conway, CEO of the GSM Association.

“The commission’s plans would represent a far-reaching and unprecedented intervention in a market which is clearly delivering for its customers.”

Conway said that the commission’s proposal to cap wholesale rates also has serious flaws. The level of the wholesale price cap envisaged by the commission will penalise mobile operators with relatively high costs and could lead to some operators making a loss on the provision of this service. Some mobile operators incur higher costs than others for a variety of reasons, for example, because they serve a sparsely populated or mountainous region, he said.

He pointed out that many European mobile operators have already made public commitments to lower wholesale rates. He added that given the competitive nature of the European mobile market, the GSM Association is confident that these wholesale cuts will flow through to significant retail price reductions for consumers.

“The industry is delivering cuts in roaming prices today, well before any regulatory intervention would come into force,” said Conway.

The association’s stance on the European Commission’s plans to reduce roaming costs was lambasted by Fine Gael spokesman on communications Bernard Durkan TD. He said the fact that the measures won’t take effect for 18 months was bad news for consumers.

“The matter is very simple. Roaming costs are about five times the costs incurred by the phone companies in connecting the call. There is simply no reason for these charges to exist, other than the fact the operators think they can get away with it.,” said Durkan.

“Equally contemptible, in my view, was the reaction of the GSM Association, which had the cheek to say that the limited action announced by the commission was unnecessary. I would be delighted to know on what grounds that absurd assertion is based.

“If they wanted the EU not to interfere in their price mechanisms they should treat their customers with a little more respect and end the practice of gouging them for cross-border calls.

“The Minister for Communications should now make it clear what he intends to do at EU level to end roaming charges and call-divert charges once and for all.

“As Ireland endures the highest call costs in Europe, it is only right that the Irish Government leads the charge for the abolition of these rip-off charges,” Durkan said.

By John Kennedy