By Chris Jones - 20th September 2006
Mobile telephone operators have asked the EU ombudsman to investigate the legality of the European commission’s plans to slash international roaming charges.
Telecoms commissioner Viviane Reding plans to slash the cost of international calls by capping prices at both the wholesale – between operators – and retail – between operator and customer – levels.
The commission, which has broad support from MEPs, is keen to push through its new legislation as quickly as possible – possibly in time for next year’s summer holidays – as evidence of Brussels commitment to improving the life of European consumers.
But the GSMA, the global trade association for mobile operators, believes that Reding’s apparent obsession with grabbing headlines has led to the commission running roughshod over its own procedures.
The association has asked the EU ombudsman Nikiforos Diamandouros – who deals with complaints against the institutions - to investigate three aspects of the commission’s proposal.
Firstly, the operators believe that the Brussels executive has failed to carry out a proper consultation of its plans in the rush to get the new legislation as quickly as possible.
“While the commission conducted two public consultations on regulation of the international roaming market, they both failed to follow the commission’s own procedures for providing clear content and adequate time for responses,” the GSMA said in a statement.
“Moreover, following these ‘public consultations’, the commission drastically changed its proposal for regulation without submitting the new proposal to additional public consultation.”
In a similar vein, the GSMA believes that the commission failed to carry out a correct impact assessment of the proposals and questions the headline-grabbing figure of €3.78bn in savings put forward by the commission.
The trade association, which represents more than 690 operators worldwide, claims that its own assessment of the savings likely to be made by consumers following the commission’s proposal would be “marginal at best, and could even be negative”.
The third complaint centres on what the GSMA claims is discrimination against the mobile industry.
“The adoption of arbitrary regulation without proper review and consultation will undermine investors’ confidence in the EU,” claimed Tom Phillips, chief government and regulatory affairs officer at the GSMA.
“It is beholden on the European commission to present a clear and compelling case for the proposed roaming regulation before intervening in the competitive and innovative mobile market.”
There is widespread agreement that roaming charges are too high, and that operators have been making excessive profits on international calls for too long.
And while the national telecoms regulators support the commission’s aim to bring down prices, they believe that the cap on wholesale prices should be enough to bring down consumer prices without the need for direct intervention.
Reding’s proposal would mean that wholesale prices would be capped immediately, with a retail cap coming in six months later.
The Luxembourg commissioner believes that this will force operators to cut prices to the capped level immediately, but opponents dispute this suggestion.
The regulators believe that there will be no incentive for operators to cut prices – and reduce their profits - during the six-month period if they know they will have to cut them in the end.
Under pressure from her industry and trade colleagues, Reding had initially agreed to a so-called sunrise clause, which would have triggered the retail price regulations within six months if prices had not come down.
But she persuaded commission chief José Manuel Barroso to support her plans for obligatory retail price controls.
The regulators would prefer to see a name-and-shame system for operators that keep their consumer prices high once the wholesale cap is in place.
They believe that competitive pressure should be enough to bring down prices automatically.
Mobile operators fear that the one-size-fits-all approach from the commission would remove their flexibility on prices.
They want to be free to reward heavy roaming users with lower prices, offsetting the cost by charging infrequent users at a higher price.
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