Small operators urge EU not to dilute mobile plan

By Huw Jones

BRUSSELS (Reuters) - Smaller mobile companies urged the European Commission on Monday not to dilute or drag out moves to slash the fees operators charge each other.

European Union Telecoms Commissioner Viviane Reding is due to adopt guidelines to phase in by 2011 cuts of up to 70 percent in mobile call routing or termination fees.

Sector-wide, the fees represent 15 billion to 20 billion euros a year.

An operator pays the fee to another operator whose network it needs to complete a call. Reding believes the rates are excessive and cutting them would reduce customer bills.

This view was backed on Monday by a group of smaller operators such as Bouyges of France, Base in Belgium, Play in Poland and 3 in Britain.

They nip at the heels of big operators like Vodafone, Orange and T-Mobile.

These challengers have smaller networks and end up paying large amounts of termination fees that can account for up to a fifth of revenue for a big operator such as Vodafone.

Vodafone and others say slashing fees would make handsets costly for poorer customers and may result in people having to pay for receiving as well as making calls.

If Reding's guidelines are properly applied, termination rates would fall from above 6 euro cents per minute to 1.5-2.5 euro cents, the Commission has said.

"This will be good for the consumer and please do not worry that some customers won't be served," Base CEO Libor Voncina told Reuters.

Regulators are already putting downward pressure on rates. French telecoms regulator Arcep has proposed that operators cut termination fees to about 3-4 cents by end-2010.

The challengers group expects a final compromise on Reding's guidelines to result in rates of about 3 to 4 cents, still low enough to force business models to change and boost competition.

But they fear pressure on Reding to cut termination rates over a longer period than originally planned. "If you go down with a slow slope you will kill challengers on the way," Base's Regulatory Affairs Director Marc van Asbroek said.

The United States has no termination rates but uses "bill and keep" whereby operators don't charge for completing a call but customers may pay a tariff for receiving calls.

Termination rates were not being scrapped in the EU and a hybrid version of bill and keep would emerge. "I don't think consumers will be paying for receiving calls," Voncina said.