BRUSSELS - EUROPEAN businesses and households could save 2 billion euro (S$3.9 billion) over the next three years if cell phone operators cut wholesale charges under a new guideline price cap, European Union regulators claimed Thursday.
The European Commission wants telecoms operators to charge each other less for connecting cell phone calls between different networks, setting a recommended price target of between 1.5 euro cents and 3 euro cents per minute for wholesale tariffs by 2012. Current 'mobile termination rates' are an average of 8.5 euro cents per minute.
'This rip-off is not obvious to consumers,' EU Competition Commissioner Neelie Kroes told reporters, because they pay the charges as part of their total phone bill.
The connection charges for cell phone calls are ten times higher than fixed-line phone calls, the EU says. They vary widely across Europe, with Bulgaria charging 15 euro cents a minute and Cyprus just 2 euro cents.
The European Commission said the high fees were an 'indirect subsidy' for major telecoms operators - many former state monopolies - with wide network coverage that took profits and investment cash away from smaller players.
The EU telecoms industry denounced the proposed cut. The European Telecommunications Network Operators said 'in 2008, revenue and investment growth in the telecoms industry have continued to shrink and reached their lowest level since 2003.'
Lowering termination rates 'risks further hindering the telecoms industry's ability to invest and develop innovative packages for customers,' said Michael Bartholomew, ETNO's Director, in a statement.
The EU can only ask national regulators to enforce this guideline price by 2012 and said some countries could use different methods for a limited time as long as they forced prices down.
France, Italy and Romania have already promised to cut the charges. The EU has called on Bulgaria, Spain and Germany to do the same.
The EU's top telecoms official Viviane Reding said regulators had decided to intervene because these price differences could cause 'serious distortions of competition' between EU states and operators. -- AP
