26 Novembre 2003

Euro Crackdown On SMS Pricing May Cost Carriers Billions

Euro Crackdown On SMS Pricing May Cost Carriers Billions

Paris (Dow Jones)–European telecom cell carriers are set to loose billions of euros of profits if regulators decide to enforce lower prices on their most profitable business, Small Message Services -or SMS, a representative of a French consumer group told Dow Jones Newswires Wednesday.

“French consumers are overpaying EUR400 million to mobile operators every year on SMS, which means billions of euros are overcharged on an European basis“, said Julien Dourgnon, a researcher at UFC-Que Choisir.

UFC-Que Choisir is the most influential consumer organization in the country with a magazine boasting three million readers a month.

Dourgnon said UFC-Que Choisir, together with its counterparts Altro Consumo of Italy and Organizacion de Consumidores y Usuarios of Spain is
planning to lodge a complaint with the European Union`s Commission in the
next few months.

The group states that SMSes are charged at unfairly high prices in France and in many European countries.
Tuesday, UFC-Que Choisir submitted a case to French competition authorities alleging that the three mobile operators -who all charge
non-bundled messages at EUR0.15 each- engage in price fixing.

The carriers are Bouygues Telecom, part of Bouygues SA (12050.FR), Orange SA (7919.FR), part of France Telecom SA (FTE) and SFR, controlled by Vivendi Universal SA (V) and minority-owned by Vodafone Group PLC (VOD).

The group wants the margin of SMS to fall from 82% today -according to its own estimates- to 47%.

Such a cut would have represented a EUR400 million cut in France out of more than an estimated EUR1 billion in 2003.

Two analysts -who declined to be named- said the percentage looks realistic and similar profitability levels are found in most of Western Europe.

According to consulting firm Idate, person-to-person SMS generated EUR11.7 billion in Europe in 2002.
The French group`s complaint is part of a groundswell against SMS pricing that has reached many West European countries over the past few weeks.
Mid-November, Italian consumer group Codacons said it asked the Italian Antitrust Authority to investigate whether carriers Vodafone`s Omnitel, Telecom Italian Mobile SPA (TIM.MI), Wind Infostrada SPA (WIF.YY) have formed a cartel on SMS.

As in France and Spain, Italian operators charge an identical EUR0.15 for each unbundled SMS.

The same concerns about high pricing on SMS are also expressed in the U.K.
Last week, British lawmaker John Barrett called on regulator Office for Telecommunications to look into SMS pricing, which he said is 10 pence (EUR0.14) on average.

Ewan Sutherland, executive director of lobby group International Telecommunications User Group in Brussels said “I`ve never understood how (operators) got away with these prices. In a competitive market, prices should come down to marginal costs.“

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