EU to consult on slashing mobile operator fee

BRUSSELS (Reuters) - Fees mobile phone operators charge for handling each others' calls will drop 70 percent under long-awaited draft guidelines for the industry to be published later on Thursday, a European Commission source said.

EU Telecoms Commissioner Viviane Reding wants to bring down so-called mobile termination fees charged by one operator for handling a call from another operator -- a common occurrence in a bloc of 27-countries and many phone companies.

The guidelines will contain no numerical cap for mobile termination rates and their equivalent for fixed line calls, but set out which charges can and cannot be included in the rates.

"The new methodology has to be phased in by 2011," the source said on condition of anonymity.

If the guidelines are applied properly, mobile and fixed line termination rates would converge to around 1.5 to 2.5 euro cents (1.2 to 1.9 pence) per minute, the source added.

Fixed line termination rates are currently around 0.5 euro cent per minute, with their mobile equivalent much higher at around 9 euro cents or more, depending on the EU state in question.

Financial analysts have said that big cuts in mobile termination rates would have a major impact on revenues for companies such as Vodafone Group.

Reding wants to end big differences in mobile termination rates between EU states and cross-subsidies between mobile and fixed termination rates at some operators.

Cutting mobile termination rates by 70 percent will also put downward pressure on tariffs for consumers, Reding has said.

The European Commission -- the EU's executive arm -- will formally adopt the guidelines in the autumn.

Known as a recommendation, telecoms regulators in EU states are obliged to apply them or explain whey they are not.

The guidelines are among several measures Reding is taking to boost competition and bring down tariffs for consumers.

She has already pushed through caps on the price of making a roamed mobile phone call while outside a home state in the 27-nation EU and is close to proposing a similar cap for roamed texts and surfing the Web using a mobile phone or laptop.

(Reporting by Huw Jones, Editing by Andre Grenon)