Are you sure?

Germany offers compromise in EU mobile-phone fees row

Germany, the current holder of the European Union's six-month presidency, is offering a compromise in a dispute over price caps for international calls on mobile-phone operators such as Vodafone Group Plc.

Under the plan, which must be approved by European governments and the European Parliament, average roaming charges would be limited to 40 euro cents ($0.52) a minute, according to the proposal obtained by Bloomberg News. The maximum retail rate would be 70% above a weighted average of wholesale charges, up from a 30% cap proposed in July by Viviane Reding, the EU's telecommunications commissioner. Germany's plan aims to overcome concern raised by several EU governments, led by France and the UK, that Reding's draft rules won't let companies give special offers to frequent travelers. „The proposal is positive because it goes for broad averages and it doesn't talk about strict per-minute price caps,” said Tom Phillips, regulatory affairs officer for GSM Association, a lobby group for more than 700 mobile-phone operators. „The original proposal would reduce the ability to innovate and compete.”

Reding's original proposal called for two different wholesale price caps based on whether a traveler was making a call while inside a foreign network or calling back home. The plan would cut about €5 billion from EU wireless carriers' annual revenue of €8.5 billion from roaming charges, analyst Paul Reynolds of Charles River Associates estimated last year. During a telecommunication ministers' meeting in December, the UK and France called for a single price cap that would be based on the average wholesale tariff for receiving or making a call. The rate would be set by dividing operators' total revenue by total minutes used to come up with an average cost per minute. In the latest proposal, the wholesale price cap is calculated by multiplying the average termination rates by 2.6. Calls made have a weighting of two thirds, while calls received have a weighting of one third. „The weighting average of a traffic base will allow operators to optimize their prices,” Robert Grindle, an analyst at Dresdner Kleinwort Wasserstein in London, said in an interview. „Rather than have the EU tell them what to do, operators can make up their own minds.”

Reding said January 22 that she'll accept compromise proposals as long as they „simplify” the pricing plan and are „in the interest of all consumers.” „We welcome any call for customers getting a better deal when calling abroad,” said Edward Brewster, spokesman for Hutchison Whampoa Ltd.'s 3, a wireless provider in the UK. „We've argued for a reciprocal 25-cent a minute wholesale rate.” Jon Earl, a Vodafone spokesman, declined to comment. Reding has opposed the Franco-British average price plan. Setting a price ceiling based on an average would benefit frequent business travelers, who would see a reduction in their roaming bills, while tourists and students may see an increase, she said. To counter that problem, the German proposal also includes a voluntary „consumer protection tariff.” Operators would have to offer a plan where calls made in another EU nation won't exceed 50 euro cents a minute and calls received outside their home country can't cost more than 25 euro cents, according to the plan. (Bloomberg)