Text warning to mobile phone companies

Europe’s top telecoms official has warned mobile telephone companies she is ready to cut prices customers pay to send text messages while abroad, unless the industry lowers fees swiftly.

Viviane Reding, who last year forced operators to slash “roaming” call charges, said: “I have full confidence that the industry this time will manage to solve the problem. In the meantime, I’m preparing a regulation, so if the industry will not be ready, I will be ready ... to bring down prices.”

Her warning is the latest salvo in her battle to cut the cost of cross-border mobile phone use in the European Union.

The EU telecoms commissioner last month enraged many operators by calling for the industry to cut charges for sending text messages and accessing the internet while in another European country.

The industry claims regulation, especially of retail prices, is inappropriate for a competitive, fast-evolving market. Operators including Vodafone, Telefonica, KPN and 3, however, have cut prices.

Mrs Reding told the FT on Tuesday her deadline for industry action was July 1. “Some [operators] are moving in the right direction. Others make announcements and promises. Some have done very concrete things. I will see how the industry goes, not only in promises, but in facts.”

The pro-consumer commissioner says that the prices should not be substantially more expensive than domestic charges, arguing that “this is the logic of the borderless, single market”.

She seeks a retail limit of of €0.12 (9p, $0.18) on cross-border text messages, against an average price of €0.29 now, and wants wholesale charges for data downloading to fall to €0.35 per megabyte.

Mrs Reding, who releases an annual health report on the EU’s €300bn-a-year electronic communications market on Wednesday, is on a collision course with the industry over lucrative connection charges.

She plans legislative action to lower “mobile termination rates” – wholesale fees that companies can charge other operators for connecting calls to their networks. In the UK, the fees represent 15 per cent of mobile operators’ revenues

Wednesday’s report will show MTRs fell last year but vary widely across the EU. The lowest charge was €0.019 a minute, in Cyprus, while the highest was €0.224 a minute in Estonia. Mrs Reding argues that the charges can act as industry subsidies and wants prices to fall to between €0.01 and €0.015 a minute in the long term.

She says the true cost of the service is €0.01. “We need a level playing field. Big differences lead to market distortions.”

source : http://www.ft.com/