The European Commission is set to get tough with mobile operators over the cost of using mobile data services abroad. It has set an ultimatum forcing the operators to cut the cost of using these services by 1 July or face regulation.

Operators' representatives immediately rejected the idea of regulation as inappropriate for the data market, which is still developing.

"To avoid regulation, operators must show credible reductions in wholesale and retail roaming tariffs for mobile data," said European commissioner Viviane Reding at the Mobile World Congress in Barcelona.

Reding had spent the morning meeting with the CEOs and board members of network operators at a meeting organised by the GSM Association, a group representing operators. "I have been very clear to them," she said. "I want clear and measurable benchmarks that all GSMA members must reach before July."

But operators will resist regulation. "We don't believe retail price regulation is beneficial in this context at all. We would resist through reasoned argument and demonstration of the benefits of price competition any attempt to regulate retail prices," said Tom Phillips, the GSMA's chief government and regulatory affairs officer.

This is the Commission's second attack on the cost of international mobile phone charges. Last year, Reding pushed operators to cut the cost of making voice calls while roaming in other EU countries, imposing a maximum retail price of €0.49 per minute before tax for calls made while travelling around the EU.

Reding wants operators to cut charges for sending SMS text messages while travelling.

"It's a mature market," she said, warning that prices must come down to the home price level plus a small marginal cost for using the neighbour's network abroad.

"Above this level, there is a conflict with the single market that I am not prepared to tolerate," she said.

The market for data is much less mature, she acknowledged, with operators experimenting different ways of charging for traffic, including unlimited usage of certain services, or bundles of services.

"I believe this should not be regulated yet," she said - but added that she would introduce regulation if operators did not reduce prices themselves by July.

The GSMA warned that its experiments to find the right price for data services could be harmed by regulation. "When you set caps, innovation can be restricted," said Rob Conway, CEO of the GSMA.

Reding called for GSM operators to take three steps to cut data roaming charges before July, starting with adding transparency: "Consumers should be warned of roaming tariffs so that they don't receive shock bills of several thousand euros," she said.

Second, they should all introduce at least one package allowing consumers to download data for the same price they would pay at home, "subject only to a single competitive charge" for access to the service. Currently, consumers pay upwards of €10 (£7.50) per megabyte of traffic while roaming abroad, where similar traffic volumes would cost a tenth that, or be entirely covered by "unlimited" usage tariffs in their home country.

Thirdly, Reding wants action on wholesale data tariffs, which vary from €0.20 (15p) per megabyte to €7 (£5) per megabyte.

If operators don't respond by 1 July, "We will be ready at that moment with regulation," she said.

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