* EU committed to ending roaming charges in June 2017
* Wholesale prices need to be brought down first
* New proposal would allow firms to charge other firms extra
* Designed to compensate for handling more tourist traffic (Adds proposed wholesale caps, recasts)
By Julia Fioretti
BRUSSELS, Oct 24 (Reuters) - Mobile telecoms operators across Europe could be allowed to charge each other higher fees for keeping customers connected when they travel abroad under a Spanish proposal to help firms recoup their costs when roaming charges are abolished.
The European Union has committed to letting its 500 million citizens use their phones while travelling abroad within Europe without incurring cross-border roaming charges from June 2017.
But the network operating companies will still face costs in the form of the wholesale charges they pay to foreign operators to let their customers use their networks.
European member states are split as to where the cap on wholesale roaming charges should be set to avoid operators raising their domestic prices to recover lost revenues.
On Wednesday, deputy EU ambassadors will attempt to break the stalemate and discuss a provision originally proposed by Spain that would allow operators hosting EU tourists on their networks to ask their regulators for permission to charge more than the wholesale cap in exceptional circumstances if they are unable to recover their costs.
Slovakia, which is chairing the discussions as holder of the rotating EU presidency, has proposed limiting the surcharge that can be levied so the final amount does not exceed 8.50 euros per gigabyte, according to a draft seen by Reuters.
Under the proposal, wholesale data caps would be progressively cut from 10.50 euros per gigabyte to 6.50 euros from June 2021, meaning that operators would only have an incentive to levy a surcharge from 2020 onwards, when the wholesale cap dips below 8.50 euros per gigabyte.
Still, the so-called sustainability mechanism faces opposition from states pushing for low wholesale caps to ensure their operators are not forced to hike retail prices or stop offering roaming altogether.
One diplomatic source said the sustainability proposal would not affect the end of retail roaming charges for consumers, which is set to come into force on June 15, as it dealt only with payments made between the operating companies.
The only way to accept the Spanish proposal would be to lower the wholesale caps significantly, another diplomat said.
A European Commission source said the wholesale data caps originally proposed by the EU executive meant there was “no need for a derogation at wholesale level as our proposal aims at fully covering the costs”.
The Commission had proposed a wholesale data cap of 0.85 euro cent per megabyte, or 8.50 euros per gigabyte.
EU-WIDE CAP ELUSIVE
Big differences in domestic prices make an EU-wide wholesale cap that suits all 28 member states elusive.
In the north and east of Europe, where domestic prices are low and packages relatively generous, operators fear that if wholesale prices are not brought down enough they will be forced to either raise prices at home or stop offering roaming.
But tourist destinations such as Spain, Greece and Portugal say the wholesale rates need to be high enough to allow their operators to recover the cost of hosting so many travellers on their networks, otherwise they too may need to raise prices.
Under the Spanish proposal, the national regulator would have to decide if the company is “cost efficient” before granting it permission to levy a surcharge on other operators. The extra charge could only be levied for up to one year and “only to the extent necessary to recover the costs”. (Editing by Greg Mahlich and Alexander Smith)