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The committee also benefited from the written evidence given by the Bureau Européen des Unions de Consommateurs, reminding us starkly that the Commission had started action way back in 2000, but that this had not stopped the rise in unfair roaming charges and that the national regulatory agencies—even the excellent Ofcom in Britain—could not solve these problems across national frontiers. Only the Commission, once again showing the validity of its work in the single market, had that intrinsic capacity. That will be shown in many other fields in future, as the public in different member states begin to accept this, even in Britain.

The British Minister in charge, Mrs Hodge, assured us that the UK Government were going all out to support the EU-wide solution because of self-evident market failure, as I said earlier. I therefore enthusiastically support the committee’s recommendations, and am glad to have been involved in an inquiry that will be of great help to mobile phone customers in years to come. However, to be fair to the companies, we also proposed a sunset clause, and some kind of review is necessary to see the changes in the marketplace over time.

I welcome our references to the crucial field of data roaming services—I imagine they will outstrip individual calls in due course, as my noble friend Lord Mitchell has suggested. Our conclusions also underscored the reality that high roaming prices were adversely affecting SME personnel trying to do legitimate business in what is supposed to be a single market.

If wholesale regulation is the right approach, however, the consumer protection tariff, or the EU tariff, is the way forward. We understand why the MEPs have reached that decision, which will be finalised on 7 June. We have thus almost reached, last week and this week, the end stage of a complicated scene, with the agreement between the member states and the EP to fix the maximums and the caps. I believe the Council telecom Ministers will now be fully engaged in discussing properly and accepting—not just rubber-stamping by the member states—the European Parliament debate suggestions.

This has been a very good example of strong work co-ordination between the national parliaments, national Governments, the European Parliament and the member states. Some people regard that as an international conspiracy. I think it is a very good thing.

5.52 pm

Lord Lee of Trafford: My Lords, as one who has supported the concept of closer European co-operation over 40 years, originally being a member of the Manchester Common Market Group and more recently being chairman of the Northwest in Europe campaign, I am delighted to participate in today’s debate.

The report discussed here today is on draft regulation, which is important because of what it represents. It is not just legislation that will help to reduce the excessive prices European consumers are charged when using their mobile phones abroad; it is a good example of how legislation on the EU level can actually make a difference to the everyday life of the citizens of EU member states. The cost of roaming could not be dealt with individually by member states. The cross-border nature of this service made it impossible for national regulators to act. Action on the EU level was required, and the Commission’s proposals, as amended by the European Parliament, the member states and the Council of Ministers, aim to do just that. They offer a solution at European level that will benefit every traveller who uses his or her mobile phone when abroad in another EU member state. All in all, it was a well received report that contributed to the debate and fed in important recommendations to the decision-making process in Brussels.

I join my colleagues from the committee, my noble friend Lord Dykes and the noble Lord, Lord Mitchell, in paying tribute to our chairman, the noble Lord, Lord Freeman, and to our colleagues. We had a very happy committee under the noble Lord’s chairmanship. I also pay tribute to our committee staff.

The agreement announced this week should reduce roaming charge bills by between 50 per cent and 70 per cent. In the Financial Times today, Nigel Farage, the leader of UKIP and a British MEP, is quoted as saying that in his view the law is a publicity stunt:

“Frankly, it smacks of communist central planning when bureaucrats and politicians think they know what the right market price is. They are always wrong”.

I am a little disappointed that the noble Lord, Lord Pearson of Rannoch, is not in his place. If he were, no doubt he would be attacking the agreement which so demonstrably benefits so many of us who travel overseas or go there on business.

There is a suggestion in the media and a number of other quarters that perhaps mobile phone companies will seek to replace lost revenue and profits by raising charges in their national markets. The national Governments in the EEC have various differing regulatory powers in individual member states and monitor in different ways. In the UK we have, thankfully, a free market. I hope that genuine competition will keep prices down and that consumers who are accustomed to a certain price level for mobile use will be on their guard against artificial price rises. The UK regulatory authority, Ofcom, will need to be extra vigilant in policing our market.

In conclusion, I commend our report and welcome the European agreement with the caveats so clearly set out by our chairman, the noble Lord, Lord Freeman.

5.56 pm

Baroness Wilcox: My Lords, I thank my noble friend Lord Freeman for giving us the opportunity to debate this European Union Committee report as well as the noble Lords, Lord Mitchell, Lord Dykes, and Lord Lee of Trafford, for their hard work on the sub-committee that prepared this report and for taking the time to speak to us today. I should have mentioned that my noble friend Lady Eccles of Moulton, who was also on the committee, is in her place. I congratulate the committee on the timeliness of its report; we heard yesterday that the European Parliament voted for action on this front, which must be very pleasing to hear.

The small number of speakers on this debate is certainly not a reflection of its importance. The interesting speeches we have heard have shown how much of an impact mobile phone charges can have not only on those who travel for pleasure but on businesses operating in countries across the European Union.

I should like to open my remarks by saying how glad I am that this report is being debated at all. Far too often, European Union regulation is imposed on this country without adequate scrutiny. This lack of due process leads inexorably to goldplating, misunderstandings and the sort of public backlash that is in no one’s interest, even when the regulations are to be welcomed, as they are in this case. We have seen too many examples in recent years where government legislation to introduce new European Union rules have shown them to be far in excess of what is required, and I hope that this will not be the case here.

We must instead move to a more consistent and rigorous process where legislation imposing EU regulations is subjected to regulatory impact assessments and other appropriate analysis, as national legislation is. We in this House and another place should be making informed decisions on the validity and extent of EU regulations, rather than having to choose between trusting blindly in the Government or resorting to knee-jerk opposition in the face of inaccurate media stories.

On these Benches we broadly welcome these regulations. Sub-Committee B of the European Union Committee, with its remit to focus on the internal market, has flagged up some important points. In general, we hope that placing a cap on mobile phone charges will significantly reduce the cost for small businesses and tourists who use a mobile phone in the European Union.

I am pleased by the provisions for further data collection. As the committee’s report pointed out, the decision to impose the regulations was based on rather inadequate data. It is crucial that this is addressed immediately. Without accurate EU-wide data on how the caps are affecting customers and providers, how can a decision be made on whether the regulations should be extended?

As it appears that one of the primary causes of the excessive prices was the confusion and obscurity that surrounds the pricing structures and comparative tariffs, better data must be collected and made widely available.

There cannot be effective competition in a market where not even the Government, let alone the consumer, can establish what the pricing levels are. For this reason, I welcome the obligation for providers to inform the customer what charges they will be liable to.

It appears from the report that a major failing has been the regulatory bodies in other European Union countries. My noble friend Lord Freeman and I congratulate Ofcom on showing its effectiveness and value by providing accurate and extensive data for the United Kingdom. I have heard nothing but praise for the constructive and informed role that it has played in the debate at national and European Union level. What steps is the Minister taking to encourage regulators in other European Union countries to learn from Ofcom?

As we have heard, improved monitoring should spur greater competition also in areas that the price caps do not affect; namely, texting and data roaming. The greater competition that we have recently seen among providers for voice roaming will, I hope, be replicated in these other services. It would be a great pity if it was found necessary to impose similar regulation on data roaming. I remain optimistic that now that consumers have been made more aware of the potential for improvement, they will demand a more competitive service from their provider.

Finally, how glad I am that the compromise agreement includes the sunset clause. Regulations such as these, while necessary in this instance, are a very blunt instrument. The rapid lowering of prices, even in anticipation of these regulations, gives cause for optimism that they will not need to be extended and that the greater transparency and awareness will keep the market working more effectively in the future.

Repealing unnecessary or outdated legislation is unfortunately given a rather low priority by many Parliaments. I am glad that, in future years, these regulations will not be added to the enormous pile of meaningless and petty restrictions that no longer have any practical use. These regulations will be a short, sharp shock to the industry, and I look forward to seeing the telecoms market return to a less restrictive level of regulation, but one where consumers are able to use these services at a reasonable price.

6.03 pm

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Truscott): My Lords, this has been a very useful, constructive and informative debate. If only the whole issue had been treated in this thoughtful way, we might well have ended up with better regulation earlier.

I thank the noble Lord, Lord Freeman, other members of the European Union Committee and the internal market sub-committee in particular for their work on this thorough and considered report before your Lordships' House. I am pleased to say that the Government agree with virtually all the report’s conclusions and that the committee’s views have provided a welcome and valuable insight into this topic, which has been the subject of protracted and complex negotiations during the past year. I thank the noble Lord, Lord Dykes, for his kind words on the work done by Her Majesty's Government in this area.

The noble Lord, Lord Dykes, mentioned concerns about transparency. I certainly agree that it is important that people know the costs of their calls when they travel and the regulation ensures that such prices are delivered by SMS as soon as a foreign country is entered.

A wide range of points and questions has been raised today, but before addressing them individually, it might be useful if I outlined where we now are in the process. As the noble Lord, Lord Freeman, said—I thank him for his elucidation of this matter, which I am sure has helped all noble Lords—the regulation is almost taking final shape.

As my noble friend Lord Mitchell and the noble Lord, Lord Freeman, mentioned, the European Parliament yesterday concluded its first reading of the relevant dossier. The text will be presented for endorsement by Ministers at the Telecoms Council on 7 June. Unless the council took a radically different approach from that previously taken during the discussions last week, the regulation will be agreed. Indeed, if there was not an agreement, the regulation would have to be sent back to the Parliament for a Second Reading, so we would not be seeing cheaper roaming calls until next Easter at the earliest. Obviously, we want to avoid that.

So-called first reading agreements are not that common and involve an enormous commitment between the institutions to find a compromise. This dossier was certainly no exception in that regard; and involved no fewer than four long and detailed negotiations between the council, represented by the presidency, the Commission and representatives of the European Parliament. The fact that an agreement was reached says a lot about the skills of the German presidency. I take this opportunity to thank ministerial colleagues in France, Italy and Spain who worked tirelessly with my right honourable friend Margaret Hodge to secure a solution that did not damage the competitiveness of this important sector for Europe.

The European Union has agreed at this stage that the Euro tariff will be the same as a safety net, as noble Lords themselves wanted in their report. That allows for innovation, as other tariffs can be offered. A variety of figures have been quoted in the press purporting to be the new mobile roaming prices. It may be worth restating them at this point. The Euro tariff will be available to all roaming customers. Under it, outbound calls made to other member states under the tariff will be charged at 49 eurocents—that is, 33.5p per minute. Calls received from other member states will be charged at 24 eurocents, or 16.5p per minute. Those rates will fall in the next two years of the regulations to 31.5 and 15p in year 2 and 29.5 and 13p in year 3.

All users will not automatically be transferred on to the Euro tariff. Those already on more favourable tariffs, perhaps by virtue of using bundle services, will be offered the Euro tariff but will not be obliged to take it and will not be put on it unless they ask. That is an important point of principle for the UK. The new roaming customer or one who moves to another network can be offered a variety of tariffs but will be put on the Euro tariff if a choice is not made. When moving from one network to another, users will be entitled to receive information about the new tariffs that they will be charged.

At the wholesale level, prices will be capped at 30 eurocents per minute, equating to 20.5p for the first year, which will drop to 19p in year 2 and 17.5p in year 3. These rates, which we believe are an adequate reflection of costs, should not, despite what one reads in the media, cause increased prices in the domestic market. On the other hand, the initial proposals made by the Commission would have had this effect.

As for the introduction of price caps, I am pleased to confirm that the wholesale cap will be introduced two months after the regulation is published, which will probably be in September, with the Euro tariff taking effect a month later. That will mean that by October all subscribers should have the choice of adopting the new tariff.

The regulation contains a sunset clause, as the noble Lord, Lord Dykes, said, which means that unless its continued existence proves necessary the regulation will cease to operate after three years. The noble Lord, Lord Freeman, also mentioned this. The need for an extension of the lifespan of the regulation will be determined by means of a review, which will be carried out after the regulation has been in force for 18 months. It is not automatic and any extension over the three years must be voted on again by the European Parliament and Council. I believe that that answers the noble Lord’s point on that matter.

The regulation has attracted a great deal of interest, for obvious reasons. Mobile phones have become an integral part of many people’s lives and working practices, as my noble friend Lord Mitchell graphically illustrated to your Lordships' House. Nobody enjoys paying high prices for something they have come to regard as a necessity. There was general agreement from the very start that the objectives of this regulation were good. As a well-known advertising slogan said, “It’s good to talk”—but not at £1, or more, per minute.

As noble Lords said, lower prices for international mobile phone calls make sense. Clear information about charges for roaming calls also makes sense. Lower wholesale prices between mobile operators are also to be welcomed. The main objective of this regulation is to encourage business people and leisure travellers to use their phones in the knowledge that they will not face a hefty phone bill later. It is also intended to encourage smaller mobile operators to enter the market. Competition drives innovation and gives rise to a better deal for the consumer.

The noble Lord, Lord Lee of Trafford, referred to charges being raised in national markets. We do not think that will happen. We agree that competition should prevent that happening. We have taken action to ensure that rates are not set below operators’ costs.

There have been many calls—if noble Lords will forgive the pun—on mobile operators to lower prices, especially from the European Commission, but up until now they have been to no avail. Furthermore, the national telecoms regulators across Europe stated through the European Regulators Group—the noble Lord, Lord Lee of Trafford, made this point—that they were unable to take effective action individually and had asked the European Commission to intervene. I agree with the noble Lord that the role of the regulators should be enhanced and that they should remain vigilant. I support his call for vigilance on the part of the regulators. Finally, in July last year, the Commission, with a fanfare, issued a draft regulation which aimed to address this problem. Like other noble Lords, I commend Commissioner Viviane Reding for her heroic efforts in this sphere.

We believe that we have now agreed a good and pragmatic solution which will deliver the desired results. Importantly, in relation to this debate, it is almost entirely consistent with the form of regulation called for by the committee. It balances the objectives of lower prices, innovation in the marketplace and sustained competition. It ensures that subscribers are not forced on to tariffs that might be less favourable to them and secures enhanced levels of transparency for all citizens using their phones abroad. It has a “sunset” clause limiting the life of the regulation to three years, unless it is decided that an extension is needed.

Importantly, the regulation—after some debate in the European Parliament—applies only to voice calls; the price of text messages and data downloads are not controlled. A number of noble Lords made that point, including the noble Lord, Lord Freeman, my noble friend Lord Mitchell and the noble Baroness, Lady Wilcox. However, it contains a provision that the price of such services should be made available to subscribers when they are roaming and that information about these should be collected by the national regulatory authorities. If these prices remain at an unacceptably high level, they may also be regulated in the future. Clearly, it would be preferable if this did not prove to be necessary, but the Commission has already said that it will monitor the situation, and Commissioner Viviane Reding has been reported as confirming that. The Commission will also review data and SMS costs in its report after 18 months.

As I have noted, the UK has worked closely with other member states to put forward constructive suggestions throughout these negotiations. The noble Baroness, Lady Wilcox, referred to sufficiency of data for formulating the regulation. The data used to derive the wholesale price cap levels were based primarily on detailed cost calculations and analysis undertaken by national regulatory authorities and were consulted on with mobile operators in order to set mobile termination rates. We believe that these are a reasonable proxy for the most costly parts of providing international roaming services. Further analysis and data will always improve the accuracy of any measure. However, the need for further detailed analysis should be weighed against any resulting benefit. At this stage we believe that the additional burden incurred by a delay in implementing the regulation would outweigh any benefit gained by a more accurate understanding of underlying costs.

As regards the cap on mobile phone charges, I should point out that the Euro tariff is not a cap but a tariff with regulated rates available to all. Our aim has always been to ensure that the proposed regulation would deliver a better deal for the consumer without unnecessary damage to the telecommunications industry. I suggest that, in the light of the regulation agreed by the European Parliament yesterday and our debate this afternoon, that has been achieved.

In conclusion, I thank all noble Lords who have taken part in the debate, and I commend the committee on its excellent work.

6.15 pm

Lord Freeman: My Lords, I thank the Minister for that very thorough answer, in his typical style of ensuring that all points are answered, and for dealing with the subject in such a sincere and intelligent fashion; the House appreciates it. I thank all noble Lords who have taken part.

We on this side of the House are always impressed by my noble friend Lady Wilcox’s quick grasp of the issue, which she demonstrates in her calm and charming fashion. She must give up her job on the Front Bench immediately and join us in Sub-Committee B; we need all the help we can get.

If Commissioner Viviane Reding reads Hansard tomorrow, perhaps she will through the airwaves or at least through the lines of Hansard recognise that, if she is still there in 18 months’ time and if I am still in post as chairman of the committee, I hope to go to Brussels along with my colleagues. We will look over her shoulder to make sure that there is a sensible review of whether these regulations are needed and that any changes needed in the interests of the consumer will be made.

On Question, Motion agreed to.

House adjourned at 6.16 pm.

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