EU probes high cost of making mobile calls abroad

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The European Commission has raided the offices of nine UK and German operators, investigating the high costs of making calls abroad.

International roaming calls - where a mobile phone is used outside the country in which it was bought - tend to cost a lot more than standard rates. Virgin Mobile - among those raided by the EU - admitted that roaming charges were often unclear, and said it had introduced a new set of tariffs at the end of June in order to simplify the cost structure.

EC competition officials suspect operators may have colluded in setting the prices charged. An EC competition spokesman said charges for so-called roaming calls, those involving the sharing of operators' networks, are not transparent and do not seem related to the costs. "We want to verify if the companies have colluded in illegal price fixing."

The raids follow a two-year exploratory inquiry, and a warning in April from EC competition commissioner Mario Monti that "competitive dynamics are not at work" in the market. The exploratory probe revealed pricing problems in 10 of 15 EU states, and prompted Monti to call on operators to implement "demonstrable benefits up front".

The significance of targeting UK and German firms is that they are really global companies, rather than just local operators. The international spread of firms such as Vodafone allows them to offer customers discounts for calls made on foreign visits.

Nonetheless, one expert has advised users going abroad to replace their mobile phone sim card, or control chip, with a local unit. In that way it is possible to cut the cost of calls by around 90 percent.

Declan Lonergan, European mobile director at research firm Yankee Group, pointed to the higher prices charged within Europe than in the US. "It is an area that was always ripe for some kind of an investigation if the operators were not seen to be making enough progress," he said. "It is the last bastion of high margin charges for some operators. They are a bit of a cash cow."

While US operators had used a roaming agreement similar to that used by European firms, its abolition some years ago had helped keep call prices low, analysts said.

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