Tuesday's decision by the European Union to bring out legislation forcing mobile companies to slash roaming charges has drawn fire from the industry, which is vowing to fight the proposals tooth and nail.
Through the European Regulators Group, the EU proposed that a single Europe-wide cap on wholesale roaming charges be applied and suggested that this would "lead to reductions in average wholesale roaming charges of around 60 percent."
The proposals will go into a short consultation period (April 3-28) before the legislation is published this summer with the aim of introducing the final regulations in summer 2007. Mobile companies in Europe are taking issue with the commissioner responsible for the move, Viviane Reding, on the size of the cuts, the scope of the legislation and the process of introducing the legislation, which, they claim, is flawed.
As the largest mobile phone company in Europe, Vodafone has the most to lose from the EU's move. Phil Kirby, the director of regulatory affairs at Vodafone, accused Reding and her department of being "less well informed than we think they should be."
The EU's Web site for monitoring the cost of roaming in European countries quoted the wrong prices for Vodafone and others, the company said. "It takes no account of the Vodafone Passport scheme (introduced in July 2006), which is entirely free to use and is available for all our customers. That cuts the price by 30 percent for account customers and 45 percent for those on prepay," Kirby said.
Kirby further criticized the EU's methodology. "They don't have enough facts to draw the conclusions they are drawing," he said. "They had some consultation last Tuesday. We know the input they have had from most of the organizations who contributed, and nobody who commented actually proposed what the commissioner has now proposed."
Kirby said he believes the consultation period is a sham and that the commissioner had already decided on the outcome before the event.
The notion that the commission already is determined to cut the costs for roaming abroad, before it has even started its consultation period, is a view shared by analyst group Ovum.
"We expect the industry to react strongly and challenge this decision, which could take away pretty much all their roaming revenues," said senior analyst, Stefano Nicoletti, "but it now seems that everything has been decided--it might be too late."
Other mobile companies share Vodafone's worries about the prospect of legislation being enacted next year. O2 was singled out by Reding after she claimed the U.K. company had increased its prices by about US$1.20 (1 euro) per call since the last time the EU published a list.
"The prices on the EU Web site don't take account of our International Traveller Service," an O2 representative said. "This O2 savings scheme is now used by most people, and it cuts roaming charges by between 30 and 70 percent. Around 70 percent of our roaming calls are made by customers using International Traveller Service."
Other operators were less eager to comment on the findings. In a statement, mobile operator Orange said it "remains focused on providing our customers with transparent pricing, convenience and quality whether they are at home or abroad." The company added that it is "currently studying the EC's proposal for further regulation of the telecoms industry and will provide a detailed response in the coming days."