Commission eyes big revenue cuts for mobile operators 

In a rare coordinated action, Information Society Commissioner Viviane Reding and Competition Commissioner Neelie Kroes will adopt a draft recommendation which will send a strong political message to national telecoms authorities across the EU.

Even if not legally binding, the document will outline a new system to calculate mobile termination rates which national regulators are expected to take into account. The text will suggest scrapping some costs which mobile operators currently add to the bill for terminations "even if there is no justification" for them, a Commission official explained to EurActiv.

In some countries, mobile companies include headquarters' bills in the expenses to be recuperated via termination rates. "This is one of the costs that the Commission will recommend be lifted from the calculation," added the official.

The Commission's proposals eventually aim to bring mobile termination rates down to a level similar to fixed termination rates. According to the EU executive's figures, current mobile termination rates are 18 times higher across the EU. Indeed, they cost an average of nine eurocents for mobile termination and 0.5 eurocents for fixed termination.

The wide variations in the price of making mobile rather than landline phone calls are a consequence of unbalanced termination rates. Mobile users cannot directly see these charges in their bills, but termination rates indirectly contribute to higher charges, runs the Commission's argument.

The revision and elimination of some of the costs that are included in mobile termination rates will make them drop by 70% over the next three years, according to the EU executive's plan, in order to reach an average rate of between one and 1.5 eurocents.

For operators acting almost exclusively in the mobile market, such as Vodafone, the blow will be significant if national regulators decide to apply the Commission's suggestions. Last September Arcep, the French telecoms authority, proposed to cut mobile termination rates to a level below one eurocent, a move immediately welcomed by the EU executive.

In a recent interview , Commissioner Reding did also not exclude the possibility that mobile operators could react by introducing US-style tariffs whereby customers are directly charged not only for making calls but also to receive them.

However, in its draft recommendation, the Commission will recognise that mobile rates will remain higher than fixed ones because of the extra costs experienced by mobile companies, like buying radio spectrum for example, which is particularly expensive in some EU countries.

The draft recommendation will be subject to public consultation until the end of August. The Commission said it will issue its final set of guidelines in the autumn.