Roaming cuts may lead to coverage black spots

GSM Association has warned that if impending legislation becomes law, lost revenue could mean operators shut down unprofitable base stations

The GSM Association, the trade body representing the mobile industry, believes impending cuts in roaming rates will see some customers plunged into coverage black spots.

According to the association, 25 percent of roaming traffic will become unprofitable if the legislation currently under review by the European parliament becomes law, as call rates will not cover the wholesale cost of providing the call.

The GSMA added it expects 20 percent of roaming and 40 percent of incoming calls to pre-paid phones will be provided at retail prices that don't cover third-party costs.

The lost revenue will mean a reduction in coverage — operators may simply shut down unprofitable base stations, including some in tourist areas such as ski resorts, said the industry group.

Rob Conway, chief executive of the GSMA, said in a statement: "After years of expanding mobile coverage, this regulation could lead to a contraction in coverage, running counter to the European Union's aim of ensuring all its citizens have ready access to communications."

Conway added he believes the current proposed caps will not cover call costs let alone all the operators' other concerns, including running retail outlets and call centres, buying licences and building networks.

However, some industry pundits believe cheaper roaming rates will mean operators simply pass on the charges to users in the form of more expensive calls at home.

The GSMA is not the only voice predicting consumers will be adversely affected. A recent report by researchers Informa Telecoms & Media said the proposed EU legislation will cause price hikes for those visiting Europe from outside the continent.

The European Commission, however, believes operators have been charging their customers "excessively high prices" to use roaming services. Research by the Commission found most holidaymakers travelling in Europe would rather switch off their mobiles than pay roaming rates.

Legislation that could see operators forced to take a hatchet to their roaming tariffs is currently making its way through the European parliament and has received broad approval from MEPs.

However, it is thought the German presidency of the European Union is set to propose less stringent caps on roaming this week and request an opt-in rather than opt-out system, whereby consumers will not automatically be put on the cheaper rates.

The European parliament's plenary vote on the roaming question — the next step needed to turned the proposed cuts into law — is expected next month.