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EC ready to impose price cuts on cross-border texting

This article is more than 16 years old
· July 1 deadline imposed to drop charges
· Companies' reductions unlikely to be big enough

The cost of sending a text message and using the mobile internet abroad is likely to fall after the European telecoms commissioner, Viviane Reding, said yesterday she will impose price cuts if Europe's mobile phone companies do not drop their charges significantly by the summer.

Speaking at the Mobile World Congress in Barcelona, Reding said that sending a text home from another country within the EU should be only marginally more expensive than sending one in a consumer's home market.

"I want to see the end of these artificial borders between networks and nations which are both preventing private consumers and business customers from benefiting fully from the single borderless market we have created between 27 EU countries so far."

She said she has no desire to impose regulation but "if I see no such single market offers for data roaming evolve by July 1 of this year, I will have no choice than to propose regulatory intervention again".

Last year Reding pushed through cuts in the cost of making phone calls from overseas - bringing down the price of so-called voice roaming by about 70% - and is now turning to the cost of data services.

The mobile phone industry has suspected for some time that data roaming charges would be the next target of regulation. Ofcom boss Ed Richards recently noted that text roaming prices looked too high while the cost of using the mobile internet overseas was hampering usage by business customers.

To try to see off the threat of price caps, the mobile phone operators have been pushing through price reductions. O2 and Vodafone have reduced the cost of using the mobile internet within the EU, while O2 has cut the price of texts. T-Mobile is expected to announce its price cuts today in Barcelona. These moves are unlikely to be enough for Reding.

The average price of consuming one megabit of mobile data - roughly enough to view up to 200 mobile web pages - is about £1.50 in Britain. But the average price charged by UK operators for using data roaming services within Europe last summer was £4.11 per megabit, higher than the European average of €5.24 (£3.90). The average cost of sending a text message within Britain, meanwhile, is 5.6p but the average cost to a UK customer of sending one back home when abroad is 21p.

"Sending text messages or downloading data via a mobile phone while in another EU country should not be substantially more expensive for a consumer than sending text messages or downloading data at home," Reding said yesterday.

She said she was pleased with moves to reduce the "wholesale" prices that some mobile operators charge each other for roaming services.

"It is these wholesale tariffs where the real problem lies for data roaming," she said, with some operators charging rival firms as much as €7 per megabit.

Last week, for instance, 3 linked with other networks including E-Plus in Germany and Base in Belgium, and agreed a flat rate of €0.25 per megabit of data. It remains to be seen, however, whether a reduction in the wholesale rate the operators charge each other is translated into a reduction in the retail price that the operators charge their customers.

Reding said the 3 deal "certainly indicates that there is a lot of commercial scope for substantial reductions over the average rates that are quite common today". Kevin Russell, chief executive of 3 UK, welcomed Reding's move, adding "we believe wholesale rates for text messaging should come down by more than 70%".

Reding said the commission is required to make proposals by the end of 2008 at the latest if data roaming prices should continue to "depart substantially and without justification from domestic tariffs".

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