European parliament backs roaming price cuts 13th April 2007 By Tom Jowitt The prospects of cheaper calls when using a mobile phone abroad in Europe are a step closer after the European parliament backed proposals to cut roaming charges.

Last July, Viviane Reding, the EU Commissioner for Information Society and Media, revealed plans to cap roaming charges by as much as 70%. The Commission proposed that the wholesale cost should be capped based on the cost of the termination rates for calls, which vary from country to country. Reding also wanted a cap on retail tariffs charged to EU customers to ensure lower wholesale prices filter directly through to consumers.

The move has been fiercely resisted by mobile operators, who have repeatedly warned that regulation could damage investment in the mobile sector. They argue that healthy competition is the best way of forcing mobile operators to cut prices, a view backed by the GSM Association, which said it believes the proposals are unnecessary because "competition is already delivering substantial reductions in the prices of roaming services."

Over the years, mobile operators have justified high roaming charges not only because of the complexity of routing a call over different networks, but also the complex billing process involved for making a call to a roaming mobile handset.

However, there is little doubt that roaming is a lucrative revenue stream. Industry estimates suggest that these services can account for up to 20% of operators' revenues. It is thought that about 147 million people in Europe use their mobile phones overseas, and the European Commission calculates that mobile operators are making profits from the practice of approximately 8.5bn euros ($11bn).

On Thursday a committee at the European parliament voted to support the proposals to cut roaming charges. A vote will now have to take place in the full EU parliament in the next few weeks, but the Commission is reportedly keen to have the cuts in place by the summer. The proposals also still need to be approved by individual EU nations.