The European Commission has produced new rules for the mobile phone industry that should slash the cost of using phones abroad.
Mobile phone companues, particularly ones based in the popular tourist destinations, have enjoyed profit margins of up to 300 percent on so-called roaming calls. The law to be proposed Wednesday will reduce this to 30 percent - similar to the margins they enjoy on calls made from phones in the subscribers’ own countries.
The Commission is considering delaying the new law, however, to give phone companies one more lucrative summer holiday season next year. However, the commissioner in charge of the proposal, Viviane Reding, is opposed to any further delays. "One summer season amounts to millions of euros in profit. The question for commissioners on Wednesday is ‘Is it legitimate to give operators one more summer?’" said Martin Selmayr, Reding's spokesman.
Wednesday's proposed law will set a formula for wholesale roaming charges based on the average cost of terminating a phone call made abroad. Termination costs are one of three costs incurred when a phone is used outside the country it is registered in. The other two are the originating cost and the sending cost.
Instead of getting each national telecommunications regulator to calculate the average total roaming costs for each operator in its country, as the Commission originally proposed, the new law would impose a maximum wholesale roaming charge set at twice the average termination cost across the EU for local calls made abroad, said Selmayr.
If you use your mobile phone to make an international call while you are abroad the maximum wholesale price would be three times the average European termination cost, he said.
Average termination costs will be recalculated every 18 months by the 25 national regulators. The Commission will then publish the EU average, which will be used as a base for all roaming charge calculations.
The formula allows companies to cover the costs they incur when a phone is used abroad, said Selmayr. The Commission believes that two or three times the termination cost gives a rough estimate of the total roaming cost incurred during a local or international call.
The draft regulation will then allow operators to charge their customers another 30 percent - roughly the profit margin enjoyed by operators on domestic calls at present.
Once the proposal for a regulation is adopted it must be debated by national governments and the European Parliament. Unlike European directives, which must be passed into national statute books, a regulation becomes law as soon as it is agreed on by the European lawmaking institutions.