updated 5/23/2007 8:16:00 AM ET 2007-05-23T12:16:00

Mobile phone users in the European Union could enjoy cheaper rates for calls made and received abroad as early as August, after EU lawmakers endorsed a deal Wednesday to cap mobile phone roaming fees in the 27-nation bloc.

The European Commission, the bloc’s executive arm, has long argued operators are reaping massive, unjustified profits from high roaming charges. The caps will force them to slash the prices they charge consumers for making and receiving calls outside their home markets by up to 70 percent.

The landmark measure, which is all but certain to be backed by EU telecommunications ministers next month, should become binding on June 29, said German Economy Minister Joachim Wuermeling, whose country holds the rotating EU presidency.

Service providers will then have one month to offer customers a new pricing structure with considerably cheaper roaming rates — the extra charges added to the cost of a mobile phone call made or received abroad. Mobile phone users will have another two months to choose whether they want to go with the cheaper roaming or stick with their existing service contracts.

That means customers would be able to benefit from the capped rates in August, said EU Telecommunications Commissioner Viviane Redding.

“This is putting an end to the saga of excessive roaming charges. The regulation will protect the vast majority of ordinary customers who up to now have been heavily overcharged when traveling abroad,” she said before the vote in the European Parliament.

Two-tiered reduction
Currently, a Maltese calling home from Latvia can end up paying as much as 11.21 euros ($15.19) for a four-minute conversation. Under the new rules, the retail roaming cap will be set at 0.49 euros (66 cents) per minute for making a call when abroad and 0.24 euros (33 cents) per minute for receiving one, plus VAT.

The price ceilings would drop further, to 0.43 euros (58 cents) for making calls abroad and 0.19 euros (26 cents) for receiving them, by 2009. The regulation will then lapse automatically, unless the EU decides to extend it.

“I hope very much this won’t be necessary,” Redding said.

The wholesale charge that a “visited” operator can levy on the “home” operator for providing roaming will be capped at 0.30 euros (40 cents) a minute.

“Crossing the borders was used as leverage to generate higher prices, which was unacceptable,” Wuermeling said. “All of us agree the market requires rules and competition must be fair, and that wasn’t the case of roaming, because the consumer had no choice.”

Mobile operators draw between 10 percent and 18 percent of their revenues from international roaming charges, according to a 2006 study by research firm Evalueserve.

The telecom industry has likened it to a communist-style planned economy regulation and has said it may increase the cost of local calls to make up for the losses of revenue from roaming.

“These price caps leave very little room for competition, for innovation, they will harm this market,” said David Pringle, spokesman for the GSM Association of Europe’s mobile phone operators. “Also, it’ll be difficult to implement the changes in the time frame they’re envisioning.”

Some 150 million mobile phone customers in the EU use roaming to make calls outside their home nation every year.

The roaming caps represent one of the most significant pieces of EU regulation in recent years. The legislative procedure in the European Parliament has taken just several months, much less than usual. Some EU laws are debated for years.

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