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EU Commission unveils plan to cap cost of phone calls

By Foo Yun Chee and Claire Davenport

BRUSSELS (Reuters) - The European Commission on Wednesday proposed a price cap on cross-border phone calls in Europe and asked for veto power over sales of mobile spectrum, as part of a fresh attempt to overhaul the bloc's telecommunications sector.

Other elements of the proposals include cutting red tape for operators with cross-border businesses, allowing providers to charge more for carrying data-heavy services at high speeds and harmonizing the sales of lucrative mobile spectrum by EU countries.

The proposals are intended to encourage telecom companies to invest more in broadband network infrastructure to ensure that European citizens can download data from the Internet as quickly as their counterparts in Asia and North America.

The Commission said it also hopes that limiting costs in the bloc, where international mobile calls vary from 35 cents to 1.19 euros per minute, will benefit businesses. It said a projected 0.5 percent fall in operators' revenues would be offset by more usage.

"The European Commission says no to roaming premiums, yes to net neutrality, yes to investment, yes to new jobs," EU telecoms chief Neelie Kroes said in a statement.

Kroes' plan would cap the cost of cross-border phone calls in Europe at the price of a long-distance domestic call and also limit, to 19 cents a minute, the price for users making calls on a mobile phone while travelling in Europe. Charges for receiving calls would be scrapped.

For her entire plan to become law, Kroes will have to win the blessing of all 28 EU governments and the European Parliament.

While they would likely back lower call prices, the EU governments and Parliament could oppose an EU veto on spectrum sales, which are an important source of revenue for the governments.

Having veto power would allow the Commission to slap down EU governments seeking to sell mobile spectrum at inflated prices or set unreasonable conditions, something that operators have complained about. There are currently no harmonized EU-wide rules for spectrum auctions.

Europe's telecoms operators, which will face a 0.5 percent to 2 percent annual drop in revenues by the end of 2020, according to a report by Boston Consulting Group, criticized Kroes' plan.

Telecoms lobby group ETNO said the proposals would not create the momentum required to achieve the EU's targets.

ETNO's members include Deutsche Telekom, Telecom Italia, Orange, Telefonica, KPN and Telenor.

Hutchison Whampoa subsidiary Three attacked the Commission for its plan to allow operators that phase out roaming to join alliances with other firms.

"The Commission should not seek to manipulate the structure of the EU mobile market by incentivizing incumbent groups or alliances to the detriment of other operators," said Christian Salbaing, Hutchison Whampoa Europe's deputy chairman and Three's managing director.

The Commission also said it would seek feedback on the possibility of creating a single EU regulator for the industry, a sensitive issue for countries wary of losing power to the European Union's executive.

(Additional reporting by Leila Abboud in Paris; editing by John O'Donnell, Elaine Hardcastle and Steve Orlofsky)

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