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EU measure could spell end of call routing fees
April 15, 2008 / 3:51 PM / 9 years ago

EU measure could spell end of call routing fees

BRUSSELS, April 15 (Reuters) - Fees that telecoms operators charge each other for routing calls may disappear under guidelines the European Commission is set to adopt in September, a senior official from the EU executive said on Tuesday.

European Union Telecoms Commissioner Viviane Reding is set to open public consultation in June on cutting “termination rates” levied by operators when a call has to be passed from one company’s network to another to complete a call inside the 27-nation EU.

The rates among mobile operators are much higher than for fixed-line calls, and the EU executive wants to end what it sees as cross-subsidy between the two.

Fixed mobile termination rates are around 0.6 euro cent per minute, with mobile termination rates anything from 2 to about 20 cents per minute. Reding wants mobile termination rates brought down to 1 to 2 cents per minute.

Shares in operators like Vodafone (VOD.L) have come under pressure as analysts said operators’ revenues would be hit.

The official said that after public consultation the Commission is expected to adopt a recommendation or guidelines in September that would become effective immediately.

It would put downward pressure on termination rates for mobile calls to bring them roughly in line with fixed-line calls by around 2012.

“The logic of the recommendation would be that by 2012 the incentive for keeping fixed termination rates and mobile termination rates would go,” the Commission official said.

The Commission expects some operators to give up charging termination rates and switch to the U.S. system known as “bill and keep” for mobile calls.

Under this system each mobile operator keeps all the money it has billed its customers, a step the the Commission official said would free operators and national regulators from the bureaucracy needed to administer termination rates.

U.S. regulators have favoured low or zero termination rates, saying it encourages low consumer prices by encouraging more innovative pricing, the official added.

The EU recommendation will guide the industry on which costs can be included in termination rates. Although legally non-binding, EU states would have to explain why they were not enforcing it.

Reding has also given the mobile industry until July 1 make it cheaper for people to sent text messages or surf the Web on a laptop when they travel outside their home state in the EU, or else she will propose legislation to cap charges. (Reporting by Huw Jones, editing by Will Waterman)

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