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Stop regulating prices or we'll stop investing, Vodafone chief tells EU: Cuts cost jobs, says Colao, ahead of new MEPs' vote Consumer groups warn of 'bill shock' after holidays(Guardian (UK) Via Acquire Media NewsEdge) The chief executive of Vodafone, Vittorio Colao, has called for a moratorium on regulation in the telecoms industry, warning that unless Europe stops imposing price cuts mobile companies will slash investment in networks. On the eve of a European vote to cut the cost of using a phone while travelling, Colao told reporters at the Mobile World Congress trade show in Barcelona that the move would cost jobs in the wider economy and that politicians faced a choice between a "heaven and hell scenario". "Does Europe need employment or rate cuts? We should stop having this continuous intervention on prices and let the industry reinvest the money," he said. In the last year operators across Europe have seen revenues fall in line with reductions on the wholesale price of calling a mobile from a landline, so-called mobile termination rates. They are about to pay billions for the spectrum needed to deliver superfast mobile broadband, with the UK's biggest ever auction of airspace expected to conclude early next year. The new 4G technology will require major investment in masts and fibre cables, but Vodafone believes it may not be able to sustain its pounds 6.2bn annual spend. "Regulators should stop cutting mobile termination rates, pushing down roaming prices, building funny auctions which are designed to extract more money from existing operators, and resisting industry consolidation," Colao said. "This is not a request for a moratorium on competition but a much stronger request for a moratorium on regulation." The UK, which will not introduce 4G nationally until the end of 2013, risks slipping further behind other nations in the race to roll out superfast broadband. The United States, Sweden, Germany and Singapore already have 4G networks. "The reality is, we have a heaven scenario or a hell scenario," said Colao. "The hell scenario is every year we lose hundreds of millions to mobile termination rates and reduce our investment. Investment means jobs not just in the telecoms sector, but in the media, entertainment and applications developer sectors." MEPs are expected to vote today on a series of price cuts that will fix the wholesale cost of using a mobile abroad while travelling in the European Union for the next decade. This will take the form of a staggered reduction in voice and internet call costs. Consumer group Which?, mobile operator Three and a number of small business trade groups have argued that the cuts do not go far enough, and will still leave customers facing "bill shock" when they return from holiday. Last week they wrote to the communications minister, Ed Vaizey, urging him to push for lower prices. Under the current proposals 1 gigabyte of data (enough to download 200 songs or watch two hours of video) would cost pounds 400 abroad, when it costs just pounds 10 at home in the UK today. But savings imposed by regulators are not being passed on to customers, said Colao, quoting European Commission research. For every euros 10 cut from the wholesale price of calling a mobile from a landline, euros 2 was passed on through lower retail prices. Vodafone argues most of the balance is pocketed by fixed-line operators such as BT Group or Virgin Mobile in the UK. "People think every time there is a reduction there is more money in the pockets of customers. This is not true." Vodafone believes regulation is out of date and needs revising. It would like to see the European Commission and national regulators back away from intrusive rule-making such as setting prices. The UK telecommunications watchdog Ofcom should still have a role in regulating fixed-line and fibre-optic broadband access, said Colao, but its remit should be limited to "competition regulation" where mobile operators are concerned. This would still give it a say on mergers and preventing cartels, for example. Captions: pounds 6.2bn Vodafone's annual investment in technology, which it says it may not be able to sustain if regulators force more price cuts Visitors arriving yesterday for the first day of the Mobile World Congress in Barcelona, which runs through the week Photograph: David Ramos/Getty Images (c) 2012 Guardian Newspapers Limited. |