* EU committed to ending roaming charges by June 2017
* Wholesale prices issue remains unresolved
* Problem exacerbated by market disparities
* Some operators could raise prices or pull roaming services
* GRAPHIC: Done roaming? http://tmsnrt.rs/2dpfKbS
By Julia Fioretti
BRUSSELS, Oct 13 (Reuters) - The European Union, governmentsand telecoms companies have only four months to resolve along-running impasse over the bloc's desire to end mobile phoneroaming charges or risk disruption to services when the newrules take effect next June.
Faced with a crisis of confidence after Britain's decisionto leave the EU, tweaks to the new rules ending roaming chargeswere presented last month as proof that Brussels can work forconsumers. However, continued failure to work out who will pickup the bill could yet throw a spanner in the works.
Politicians have long portrayed roaming fees as an insult tosingle-market ideals and a symbol of corporate greed. Theproblem, however, is that companies banned from charging extrafor calls or data while customers are abroad still facewholesale charges from the foreign networks that connect them.
"The wholesale pricing issue still hasn't been dealt with,"said one senior EU official familiar with a decade of roamingnegotiations.
"They've created a big expectation on roaming and they nowhave to solve a problem they've had for years."
And the clock is ticking. The ban on roaming charges willrequire lower caps on wholesale prices to avoid a knock-on jumpin domestic prices, which diplomats say need to be agreed byaround the end of February to become law before June.
Yet dreams of a United States-style continent-wide marketappear as elusive as ever, with the 28 EU states jealouslyguarding their lucrative control of national airwaves while widedisparities in living standards mean prices vary hugely.
The Irish, for example, spend nearly 10 times more on mobilephone bills than Latvians. In tourist-rich southern Europe,meanwhile, companies are fighting pressure to cut their rates.
DONE ROAMING?
Retail roaming fees account for about 5 percent of all EUretail mobile revenue and companies warn that if wholesalecharges do not fall they could recoup income by raising pricesin their home markets, effectively making poorer customerssubsidise frequent travellers.
There is also the possibility that some operators willsimply decide to stop offering roaming services entirely.
Finnish operator Elisa said in a writtensubmission to the European Commission that the risk of awaterbed effect on domestic prices was very high in markets likeFinland, where domestic prices are low and mobile servicebundles are very generous.
Yet passing on the cost to consumers has the potential todamage market share and could amount to commercial suicide,argues Innocenzo Genna of MVNO Europe, a mobile operators tradeassociation.
"Increasing prices in a competitive market is a deadlysolution," Genna said.
Deutsche Telekom's response to the Commission'sconsultation on the subject said that without limits on how muchcustomers can use their phones abroad, operators would be "putunder severe pressure" if they are unable or unwilling toincrease domestic prices.
Such pressure would be particularly keenly felt by operatorsthat offer cheap and generous domestic packages, such as thosein Scandinavia.
"Lower wholesale prices will definitely help those companiesto survive," Andrus Ansip, the European Commission vicepresident for digital affairs, told Reuters.
LOOPHOLE CONUNDRUM
Compounding the problems facing the EU is a loophole thatwould allow some operators -- if they can show a revenue hit ofat least 5 percent -- to apply to their national regulators tocontinue with roaming charges.
EU lawmaker Miapetra Kumpula-Natri believes the issue couldeven derail the proposed ban on roaming charges.
"It will not happen if ... operators have to cover a pricethat is excessive for them," said Kumpula-Natri, who is steeringproposed European legislation to cap wholesale roaming fees.
Big operators such as Deutsche Telekom, Vodafone,Telefonica and Orange have the market muscleto negotiate lower wholesale fees with foreign firms seekingreciprocal deals.
Less powerful players -- especially those who do not owntheir own networks, including the likes of Sky andFastweb -- can be required to pay up to the EUmaximum wholesale rate of 50 euros ($56) per gigabyte, enough tolisten to about 300 songs online.
The EU executive proposes setting the cap at 8.50 euros pergigabyte, while Brussels lawmaker Kumpula-Natri thinks it shouldbe 5 euros, dropping to 1 euro by 2021.
Member states remain deadlocked and there is little leewayto work the numbers to please everyone across different markets,as years of wrangling on retail caps have shown.
Vodafone, in its submission to the Commission'sconsultation, said it did not believe there is a "sweet spot"for wholesale caps that would allow everyone to offer freeroaming on all tariff plans.
Now the challenge is to cut a deal by February so thatcompanies do not find themselves taking drastic action toprevent losses.
"We've been kicking the wholesale can down the road," anexecutive working for one telecoms company said. "We're nottalking about making less money but potentially losing money."
(Additional reporting by Alastair Macdonald; Editing by DavidGoodman)
Vodafone (VOD)
