Mobile firms lose first round in roaming battle

MOBILE phone companies lost the first round in their battle to get rid of the cap and raise prices on mobile phone roaming charges.

They have been forced to cut their charges by more than 60% in Ireland and other EU countries following action by the European Commission. Previously they were racking-up profits of as much as 400% on calls.

Four of Europe’s largest operators, Vodafone, Telefónica O2, Orange and T-Mobile, challenged the cap before the British courts, and they referred it to the European Court of Justice (ECJ).

The legal advice to the Court from Advocate General Polares Maduro said that the roaming regulation is valid and the Commission is entitled to impose limits on roaming call charges. The ECJ usually follows the advocate general’s advice.

The cap has been hugely successful and has since been extended to roaming texts.

The commission argues that people should pay the same price for making calls anywhere in the EU because of the internal market.

They agreed that a small charge could be added to cover the costs of service providers in the different member states.

But, they argued, huge charges such as €12 for Irish customers making calls to other EU countries that should cost about 49 cents, were exorbitant.

The Advocate General said the commission was right to take its action since the hugely profitable mobile phone companies had ignored all warnings.

He noted that the roaming charges varied wildly between countries and could not be explained by any of the underlining costs.

Companies were making profits of more than 200% on calls made while roaming and 300% to 400% for calls received, and normal competition had failed to push down rates.

It would have taken national regulators too long to introduce effective controls, the Advocate General argued. Finally the commission decided to act after carrying out an extensive investigation of Vodafone and T-Mobile’s policies.

Mr Maduro concluded that since the cap is for a limited period of three years and is being regularly reassessed, the commission’s action was correct.

The court itself will consider the case and give its judgment in a matter of months. In about 80% of instances it follows the advice of the Advocate General.