EC formalizes objections to mobile roaming costs in U.K.

Two U.K. mobile operators have been charging too much when foreign visitors roam on their networks, the European Commission told them Monday.

The Commission sent statements to O2 (UK) Ltd. of Uxbridge, England, and Vodafone Ltd. in Newbury, England, objecting to the wholesale rates they charged foreign network operators for letting mobile phone subscribers from other countries use the U.K. networks, a practice known as roaming.

Typically, the mobile network that carries roaming calls charges the traveller’s home operator for the calls made and received at a wholesale rate known as the inter-operator tariff, or IOT, and the home operator then bills the traveller at a rate of its choosing.

In 1999, the Commission began an investigation into IOTs in Germany and the U.K. following a series of raids to gather information from the offices of operators there. In Monday’s statements of objection, it informed the operators of its preliminary findings.

Vodafone exploited its dominant position in the market for carrying roaming calls in the U.K. by setting an unfair and excessive IOT from 1997 until at least the end of September 2003, while O2 similarly exploited its position from 1998 until at least the end of September 2003, the Commission said in a news release Monday.

During those periods each U.K. mobile network constituted a separate market for roaming services that it dominated, the Commission said. The operators made profits on roaming calls several times higher than on comparable services, such as the resale of minutes of airtime to independent service providers, it said. Vodafone and O2 may now respond to the preliminary findings in writing and in an oral hearing, the Commission said.

Vodafone plans to take its time: “We have three months to look through it, and we are going to have a thorough review of the situation,” said Ben Padovan, deputy head of group media relations at Vodafone Group PLC the Newbury, England, parent company of Vodafone Ltd.

At O2, the mood is more combative.

“We are going to vigorously defend any allegation of uncompetitive behavior” in the U.K., said Simon Gordon, press relations manager for mmO2 PLC of Slough, England, the parent company of O2 (UK).

O2 owns one of the German companies under investigation, and the Commission’s investigation into German IOTs is still going on, Gordon said. The company is continuing to cooperate.

Retail rates for some international roaming routes have come down by up to 80 per cent since the investigation began, and IOTs have fallen as operators compete to attract more roaming traffic to their networks, Gordon said. “The world has moved on since the dawn raids in 1999.”

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