EU wants to cut cost of mobile calls

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The amount that telecoms operators charge for connecting each others' mobile phone calls is set to fall drastically thanks to guidelines just published by the European Commission.

EU Telecoms commissioner, Viviane Reding, has been threatening to do something about this for some time to iron out inconsistencies across the EU. It should cut the cost of calling other mobile phone networks. Hence it will make Reding popular with consumers once again.

The proposed reduction in MTRs (Mobile Termination Rates) has been calculated as a drop of about 70 per cent. It would bring the cost of connecting the call drown from €5.2 to 11.6 cents per minute to more like €1.5 to 2.5 cents.

The snag is that MTRs bring most operators about 20 per cent of their revenues. They argue that, while fixed-line operators get something like €0.5 cents per minute, the mobile networks are still recovering some of the billions they spent on 3G licences.

Ms Reding views the situation as a case of the fixed-line networks subsidising the mobile networks. Naturally the mobile operators would need to find some way of recovering this lost income.

Vodafone, for example, has said that one result would be higher costs for lower spenders such as those on pre-pay phones.

Not everybody in the cellular industry is against the change in MTRs. Especially Kevin Russell, CEO with 3 UK. He says, "Change is long overdue."

In fact, Russell believes that, "The rates have to come down further and faster to remove the distortions of competition they create." The EU's proposals would take until 2010 to come into force.

Indeed, 3 UK has taken its battle over current MTRs set in the UK by telecoms watchdog, Ofcom, to the Competition Commission which is expected to reach a conclusion in October [2008].

In theory, once the European Commission adopts the new guidelines – probably by Q3 2008 - EU states are obliged to enact them or explain their failure to do so.

Given the extraordinary high level of support Reding got for introducing the Eurotariff, resistance would seem to be futile. (c) 2010 Incisive Media

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