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Mobile Phone Charges: EUC Report

rose to move, That this House takes note of the report of the European Union Committee on Mobile Phone Charges in the EU: Curbing the Excesses (17th report, HL Paper 79). The noble Lord said: My Lords, I speak as chairman of European Union Committee Sub-Committee B: Internal Market. I thank for their support—both speaking and moral—in this debate: the noble Lords, Lord Mitchell, Lord Dykes and Lord Lee of Trafford, and my noble friend Lady Eccles. The sub-committee reported through the Select Committee to the House of Lords on 23 April. I pay tribute to the retiring Clerk of the sub-committee, Duncan Sagar, who has distinguished himself in his service to Sub-Committee B. He is moving on to perhaps higher things in the Government Whips Office. He will doubtless be able to help facilitate debates on interesting reports coming from this committee in future. I also thank our special adviser, Chris Williams. Our report dealt with international mobile phone calls within the European Union. There has undoubtedly been market abuse over the past five years in terms of the level of charges made to consumers. It has been estimated, among others by Commissioner Reding, that the charges could have been up to four times the rate of domestic mobile phone charges. The industry has reacted to criticism over the years, but in the judgment of the committee it has not done enough. Charges have not come down fast enough. In the United Kingdom, and indeed in certain other nations, we regulate domestic charges, but until now there has been no method of controlling charges on an international level or within the European Union. I pay tribute to Ofcom, which is regarded within Europe as one of the better, if not the best, regulators in the telecommunications industry. However, its writ does not run to control the costs of charges coming from within the European Union back home to the United Kingdom. In our judgment, there is justification for the European Union authorities to act. The high level of charges is a barrier to developing effectively a single market. The charge levels affect businesses, particularly small and medium-sized enterprises. We believe that it is in the clear interests of European consumers for the European authorities to act. What did we propose? We proposed a wholesale cap on the rate of charges between network operators. For example, when a call emanating from Spain comes back to England, it goes through a network from Spain and perhaps through intermediate countries, back to a terminal in the United Kingdom. From thence it becomes a domestic call. The wholesale charges are presently completely without any kind of regulation. We recommended a cap of 30 eurocents per annum. That is the rate that network operators charge each other. I am glad to say that the European Parliament also came up with that figure. The presidency, under Germany for the past few months, has so far broadly supported that level of charge, and a consensus is building around it. We did not suggest specific retail caps; that is, a specific sum charged to both the sender and the receiver of an international mobile phone call. However, we were in favour of a safety-net tariff that limited the total cost to the consumer. We argued that there was no need for caps at the retail level because of our fear that innovation and competition would be endangered. We argued for an opt-in mechanism for existing customers of mobile phone operators being able to make specific decisions to opt-in to this safety-net tariff and for new customers automatically coming within the protection of a safety net but having the ability to opt-out. We also argued for sunset provisions for the regulations. I think that we were the only voice, certainly in this country and possibly in Europe, arguing for that. It is a matter for the European Parliament and the Council of Ministers under the co-decision principle, and for the Commission to implement. It is not for this Parliament to implement a regulation of international charges. I am glad to tell your Lordships that there has been significant progress in recent weeks. The European Parliament voted yesterday for action on this front, and I understand that the Council of Ministers has reached agreement with the European Parliament. It is due to consider the issue on 7 June. It will be the duty of Mrs Reding—a very impressive Commissioner whose views did not necessarily in their entirety commend themselves to your Lordships’ committee, but we were very impressed with her energy and enthusiasm—to implement any decision agreed between the Council and Parliament. What are the differences between the report of your Lordships’ Committee and the European consensus? We are agreed on the wholesale cap. It should be based on average charges throughout the year for different network operators, but we agree with the 30 eurocents per minute cap. Incidentally, the European Parliament has voted for a gradual decrease of that cap over three years. I welcome that, although it was not in our report. The European Parliament has voted to protect consumers with a maximum retail cap—obviously that includes the wholesale charges from the operators, but also the cost of delivering the call to the mobile phone or landline of the subscriber—of 49 eurocents per minute for an outgoing call and 29 eurocentsper minute for receiving a call. That is a total of73 eurocents. Those caps would also decrease over three years. Although we disagree with that approach, what we would end up with is certainly preferable to no action. Our concern with setting retail caps is that the industry might move immediately to charge the maximum, which would inhibit competition and innovation. I shall briefly touch on four points that may be helpful to future debate. It is a pleasure to see the noble Lord, Lord Truscott, in his place to answer the debate. He made a rapid transition from membership of European Union Sub-Committee C to ministerial duties and we thank him for taking time to come to answer this debate. My first point is that during the three-year uninterrupted life of the regime controlling mobile phone costs, I want the Commission to watch for the impact on competition and innovation in the industry. If we end up with everyone charging the same rate throughout Europe, that would be to the ultimate disadvantage of the consumer. Secondly, please let us not proceed on the assumption that there will inevitably be a renewal at the end of three years and an automatic extension. The proposed regulation passed by the Parliament suggests that the Commission and the Council look at the situation after 18 months and make a decision on whether further legislation is needed to extend the regime. I think and hope that the Commission will take a rational view of that, look at data on the costs of providing services and not automatically assume that the regulation should stay permanently. Thirdly—the noble Lord, Lord Mitchell, was one member of the committee who correctly referred to this—the proposal to which the Parliament has agreed and with which the Council seems to agree excludes any kind of regulation of data transmission. It covers simply voice transmission. Data transmission is becoming increasingly important, especially to businesses working in the European Union. We need to keep track of charges for data transmission to see whether similar action to the control over what I call the retail voice market is needed. Finally I make a plea for transparency. This is a plea to the industry. The tariffs which individual operators in this country make available to consumers are complicated. I am sure that quite a small percentage of your Lordships who use mobile phones are aware of the tariffs that you are offered by your UK mobile phone operator when you travel in Europe. We must have a mechanism to make sure that a wider audience is aware of what is offered. I hope that what is offered will be competitive. I conclude by making a brief comment on the timeliness of reports from the European Union Select Committee. The noble Lord, Lord Grenfell, who isin its place, is a distinguished chairman of the committee. I hope that he will not mind if I say that my personal view is that we must make greater efforts to ensure that our reports are concise, timely, listened to and can influence the outcome in Parliament, the European Parliament and the Council of Ministers. Here, the Department of Trade and Industry has performed extremely well with this report. We published emerging conclusions before our final report on 13 March. The Minister of State in the DTI, Mrs Margaret Hodge, replied very quickly.We produced our report on 23 April, and the Government responded very quickly. In the event, we found ourselves in almost complete agreement. Finally, the Lords parliamentary managers ensured that we had this debate today. Although Parliament took its decision yesterday, the Council’s decision is yet to come. I hope that we have been timely, and that the department and our colleagues in Europe have found our modest contributions helpful. The noble Lord, Lord Currie, the chairman of Ofcom, has written to me to say that he could not be present today, although he would have participated. I have already paid my tributes to Ofcom. In his letter, he says, ““we believe this agreement””—an agreement between the European Parliament and the Council to act, to which I have just referred— "““marks a momentous achievement and that the interests of British industry and British consumers have been safeguarded under these negotiations and in the Regulation itself””." We are nearing the summer holiday time. Millions of people in Europe will head for the beaches. I make a plea to the European Council of Ministers and the Commission to agree regulations to reduce international mobile phone charges, and to have them published by the end of June. That is not an impossible target. I also make a plea to the mobile phone operators not to wait for the statutory two months but to implement the recommendations enshrined in the regulations immediately. Let the young family on the beach in Torremolinos call mum and dad back home in Manchester, free from the worry over excessive costs. Let us please have action, if not this day, then this month. Moved, That this House takes note of the report of the European Union Committee on Mobile Phone Charges in the EU: Curbing the Excesses (17th report, HL Paper 79).—(Lord Freeman.)