updated 3/28/2006 8:44:47 AM ET 2006-03-28T13:44:47

The EU said Tuesday it will force mobile phone companies to scrap the "unjustified" high cost of using a mobile phone abroad after they failed to cut prices over the past six months.

The European Commission said it would draft a law that would next year eliminate charges for receiving a call abroad and see travelers charged the same price for making calls that they would face at home.

Europeans are punished with high phone bills simply for crossing a border inside the 25-nation EU, which hurts the growing numbers of people working and traveling outside their home country, said EU Information Society Commissioner Viviane Reding.

"Today it is only when using your mobile phone abroad you realize that there are still borders in Europe," she said.

Phone companies make some $12 billion a year from roaming charges in the EU, said Peter Rodford, who is in charge of the Commission's telecom regulation unit.

Reding said the companies generate "pure profit" by charging travelers for receiving a call when they are away.  A British customer in Slovenia will have to pay for a call to his message service even when the phone is switched off.

She wants travelers to pay the cost of a local call — at home rates — when they ring for a taxi on holiday in Madrid, and only face international charges to call home.

The Commission published new figures on a "name-and-shame" Web site showing that Finnish customers spend just 24 cents for a four-minute call home from Sweden while Maltese customers are slapped with a $15.69 fee to ring from Latvia.

Reding said the Web site showed no good news as companies made "no significant response" to warnings that they should cut cost.  "Most prices remain unchanged or have even gone up," she said.  "Mobile operators seem to have some difficulty understanding my message."

Some companies had increased prices since the Web site first went live last autumn.  British operator O2 PLC even upped the roaming charge from $4.15 to $5.92 for calls made in the EU.

Special packages
The Commission said many customers have not taken up special roaming packages offered by some companies because most are only available on an "opt-in" basis or for an extra fee.

EU leaders called for lower roaming charges last Friday.  Irish Prime Minister Bertie Ahern told reporters that other governments should follow his example and push companies to cut — or even drop — "excessively costly" charges.

The Commission's roaming Web site is supposed to help consumers find the best deal by showing them costs charged in September 2005 by their home phone company and the network of the country they are visiting.

EU antitrust regulators started investigating "excessive" roaming prices in 2000, leading to charges against German and British phone companies for abusing their monopoly power.  The cases are ongoing.

Stefano Nicoletti, senior analyst at British technology consultancy Ovum, said fixing retail costs was a very intrusive way of regulating a cash cow for mobile operators. "They should be used as a temporary measure and withdrawn once the market shows more competitive behaviour," he said.

Industry group the GSM Association insisted last week that a new law was not needed because prices were already falling, with retail roaming tariffs down 8 percent last year.

Vodafone PLC spokesman John Earl said the EU proposal to scrap the fee to receive a call did not recognize that firms must pay connection costs.

Some 6 million customers had already signed on for a fee-based plan to save between 30 and 45 percent on calls made abroad, he said.  Most use their phones to call home from abroad and pay a preferential rate that is lower than the international rate the EU is suggesting it charge.

Vodafone — which operates in several European countries — would not estimate how much it earns from international roaming.

T-Mobile, a subsidiary of Germany's Deutsche Telekom AG, says it favors lower charges but argues that market forces will prove more effective than regulation.

"We think sinking prices will eventually lead to higher use and that is certainly good for all," spokesman Christian Schwolow said.  "We are convinced that the competition itself is bringing the prices down."

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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