EU Wireless Carriers Threaten to Raise Domestic Fees

The ongoing disagreement between the European Union and the mobile phone industry continues to heat up over a proposal to cap the cost of roaming fees. The GSM Association says carriers may be forced to raise domestic fees in order to balance the loss of roaming revenue.

Last July, the European Commission said it wanted to cut roaming fees by up to 70 percent, claiming that consumers were being taken advantage of while wireless carriers reaped huge profits. However, it said legislation would be a last resort, and it hoped the networks work make the changes on their own.

But the GSM Association, which represents about 700 cellular carriers around the world, says the recommended pricing was far too low. In turn, the bill was introduced to the EU Parliament. The Commission proposed roaming fees should be capped at 40 cents for an outgoing call and 15 cents for an incoming call.

In addition, the EU Parliament's industry committee voted for further cuts to long distance calls made to other EU countries. Those recommendations will be voted on next month, and if approved, taken to the 27 EU member nations for a final vote. The Commission wants price caps in place by summer, but such swift action is unlikely.

The GSM Association cited a study that says industry revenues from roaming will drop from around 5 billion euros to 2.4 billion euros, forcing companies to look elsewhere to make up the amount - namely by raising costs in their home region.

"Operators would have to sit back and take a good hard look at holistically how they might recoup their charges, and the knock-on effect could be potentially in the domestic market," GSM Association's acting head of regulatory affairs, Aoife Sexton, was quoted by AP telling reporters.

Sexton says the industry would oppose all regulation, but was willing to compromise with price caps set at 65 cents for outgoing calls and 30 cents for incoming calls. In addition, the GSM Association wants the price cap to be opt-in, which means consumers would be forced to specifically request the cost savings.

While the EU Parliament has pushed back against such industry demands in the past, the GSM Association may have found an ally in Germany - the country currently holding the EU Presidency. Germany on Monday said it would propose roaming fee caps of 60 cents outgoing and 30 cents incoming.

Germany also backed the opt-in proposal, which consumer advocates say would make the effort far less effective, as many customers would not know of the option. On Tuesday, the country will meet with both the EU Commission and Parliament in an attempt to reach a compromise on the plan.

Either way, consumers are likely to save money from any legislation that meets the approval of all EU members. Current roaming fees are around 1.15 euros, which amounts to a 500 percent profit margin, according to the EU Commission.

However, the discount to traveling mobile phone users may not come right away: the wireless industry wants a delay of one year in implementing any such price caps.