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Monday, May 07, 2007

Roaming Charges Alert 2!: EP has to delay vote...

The Financial Times continues the saga of the last-ditch effort of big Telecom companies, who found support among some big European countries (i.e.: their governments).
The Eurpean Parliament, who approved the Commission proposal for a cap on roaming tariffs, has had to delay its vote, as negotiations with the EU governments are trailing.
Satisfaction with investors and speculants in telecoms (FT, 3 May:)

Nick Delfas, a telecoms analyst at Morgan Stanley, said: “Things appear to be moving back towards the operators’ interests in some important respects as the roaming regulation grinds through the institutional process.”

This could assist “good near-term performance” by the telecoms sector, as he predicted companies would report revenue and profit in line with expectations.

And here are somle quotes from the Financial Times article:

Cheap mobile phone calls unlikely

By Sarah Laitner in Brussels and Andrew Parker in London

Published: May 3 2007 20:21 | Last updated: May 3 2007 20:21

European plans to force cheaper holiday mobile phone calls this summer were thrown into doubt on Thursday after talks to finalise the legislation broke down.

The failure to agree on how far to slash customers’ “roaming charges” threatens to delay promised price cuts of up to 70 per cent beyond the original July deadline.

The collapse of negotiations could offer a short-term reprieve over the lucrative July to September period for mobile operators such as Vodafone and Orange, whose revenues would be hit by the tariff caps.

Maximum charges to receive a call while abroad should fall to €0.45 a minute, while an incoming call should cost no more than €0.20 a minute, the European parliament insisted on Thursday.

These sharp price cuts have put the assembly on a collision course with some heavyweight European Union countries, with whom it must agree for the plans to come into force.

As we argued long ago, the roaming charges are a problem for the citizens of smaller countries in the first place. That is why large countries feel free to bow to the pressure of their large Telecoms companies:

The UK, France and Spain have in the past favoured higher maximum tariffs than the parliament, while member states such as the Netherlands and Denmark want the lowest possible fees. Their citizens might typically travel to these popular tourist destination countries for foreign holidays.

For the moment, the EP stands strong on its position:

Paul Ruebig, the Austrian MEP steering the controversial legislation through parliament, warned EU countries after Thursday’s talks in Brussels: “This position [on prices] is take it or leave it.”

After the failure of negotiations with member states, the parliament on Thursday postponed a crunch vote on the legislation that had been pencilled in for next week.

Another trick of the telecoms companies, has been a proposal to have customers obliged to ask for the new tariffs, ostensibly hoping that they would forget to do so, before leaving for their (holiday) destinations. >Or, worse still, only going to allow the roaming tariffs, if they agree to pay higher tariffs at home.

MEPs and member states are also at loggerheads over whether the lower rates should apply automatically to all customers, or only to those who request it.

Why is the European roaming charges capping debate so important?

We pointed out, beginning last year, that this drive by the Commission (and its Commissioner Viviane Reding in the first place) is not only of great interest in itself, but also for the future of the European Union as a whole. The mobile phone companies profit, like the banks tried to do after 2001, from the disunity of the Common Market. For it is only because of the allotting of telecom-concesions by the national states, that (technically) artificial borders are put up within this market. It is the task of the EC (and of the governments who created it) to eliminate such barriers, in this case in the interest of the overcharged consumers.

The Companies are fighting a rearguard-combat. If they would manage to keep the compartmentalisation of the market in place, they will soon loose all of most of the roaming market to internet-based providers like Skype. A process that is already going on. All money they are putting in lobbying is utter ly wasted money, for their shareholders as well as their customers.

This struggle has therefore a high symbolic value. The FT agrees:

It is an unusual example of an EU law that has won widespread consumer backing. However, EU mobile phone operators have lobbied hard over the plans to slash roaming fees, which are worth a total of €8.5bn ($11.5bn, £5.8bn) a year to their industry. They fear that the caps will force them to operate below cost and question Brussels’ role in regulating prices.

Copyright The Financial Times Limited 2007
And we repeat: Intervene with your government and make them change their position, in line with what an overwhelming majority of citizens want!

Update 6.5.07, 21:52:
Sarah Laitner continues EuroCommission-bashing in her blogpost "Has the European Commission Misdialled?" in the Blog, criticizing the "precocious" announcement of the roaming charges capping by July this year.

It really is not the Commission or Viviane Reding, who is to blame here.

The Hannover meeting (March) of the competent telecoms ministers of the member states had accepted the Commission proposals. The Commission announced then confidently the capping Directive for July this year.

It was only a month afterwards, that, suddenly, the presiding German Telecoms Minister announced that he intends to follow the Companies' proposals.

On top of this undemocratic move (undemocratic, for the Governments know very well, that a large majority of their citizens are in favour of capping the roaming charges), this issue is also being turned into another eurosceptic cabal.

No objection at all against the FT's position as business paper. But if it would make an effort to serve business interests well, it would have to point out, that the Companies are fighting a lost battle, a battle against a free market, clinging to historical market compartmentalisations that have no technical reason any more.

If the Companies would "win" this round by means of their expensive lobbying, they will soon loose the whole market segment of international roaming to internet-based calling. That will do them much more harm than the Commission caps will do.

A sound and independent judgment in that sense should have come from the FT experts.

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