UPDATE 2-EU plans 70 pct cut in mobile operator fees

(Adds T-Mobile, Ofcom, European Regulators Group)

By Huw Jones

BRUSSELS, June 26 (Reuters) - Fees mobile operators charge for handling each others' calls will drop by 70 percent under European Commission guidelines published on Thursday, but some operators warned owning a phone would become more expensive.

EU Telecoms Commissioner Viviane Reding wants to bring down so-called mobile termination fees charged by one operator for handling a call from another operator -- a common occurrence in a bloc of 27 countries and many phone companies.

Reding plans to end big differences in mobile termination rates between EU states and cross-subsidies between mobile and fixed-line termination rates at some operators.

Mobile termination fees make up about 20 percent of a mobile operator's revenues.

"The consumer pays the price for these gaps between national regulatory policies," Reding said in a statement.

EU Competition Commissioner Neelie Kroes said the measure would eliminate distortions in competition between fixed and mobile operators.

"Truly cost-oriented termination rates will increase competition to the benefit of consumers. Consumers should expect to pay lower retail prices as a result," Kroes said.

The guidelines contain no numerical cap for mobile termination rates (MTRs) and their equivalent for fixed-line calls but set out which charges can and cannot be included.

The new methodology will be phased in by 2011.

If the guidelines are applied properly, mobile and fixed-line termination rates will converge to around 1.5 to 2.5 euro cents (2.4 to 3.9 U.S. cents) per minute, the Commission said.

The European Regulators Group of national EU telecoms watchdogs said mobile rates had fallen by 40 percent in the past four years and sticking to current calculation systems was part of the solution to ensure legal certainty.

"Sudden changes in these principles may also present significant legal risks to those regulators currently involved in litigation on these matters," the ERG said in a letter to Reding and Kroes last month and obtained by Reuters.

British telecoms watchdog Ofcom said it was open to a debate on whether a better way existed on how to set MTRs after 2011 in the interests of consumers.

"Regulation should be evidence based and Ofcom will be looking with interest at the Commission's consultation," Ofcom said.