Roaming bills to be slashed by 70 per cent

Mobile operators are to have their roaming prices capped by the European Commission - a move that could see roaming prices slashed by up to 70 per cent.

The EC has announced new proposals that will first limit the wholesale prices operators can charge for roaming services, with a similar price cap to be placed on retail prices six months after. Operators will now only be allowed to charge up to 30 per cent more than cost price to consumers.

This, according to the Commission, will save business users a fortune when using a mobile abroad as they make up the majority of roaming users. Across the continent 147 million Europeans are thought to use roaming, 110 million of whom are business users.

Viviane Reding, the EU commissioner for information society and media, is hoping the proposals will become law by summer 2007, although they will need to win the support of local regulators first.

Several mobile operators tried to pre-empt the planned changes to roaming by cutting their tariffs earlier this year and mobile industry body the GSM Association predicts the average cost of a roaming phone call within the EU has fallen by 40 per cent as a result.

The GSMA believes the plans are flawed and won't help out travelling consumers. GSMA CEO Rob Conway said in a statement: "[The EC's] new proposals still amount to a straitjacket that will stifle innovation, dampen competition and ultimately harm consumers."

While consumers will doubtless be pleased to see bills drop, the mobile industry has unsurprisingly come out against the proposals. A spokesman for O2 said the legislation will stymie innovation and harm the industry.

He told silicon.com: "You could see smaller operators suffer as they'll rein back investment to compensate for their losses and all the support suppliers that rely on operators will see some of their revenue dry up."

A T-Mobile spokesman added: "We consider any regulation of the market in any form to be unnecessary and counterproductive as it only serves to undermine competition."

Despite the industry's displeasure, the new proposals represent a climbdown for Reding, who had previously hinted she may bring in legislation that would mean roaming users could not be charged more than the country's home users.