Jeremy Warner's Outlook: The right to roam has to be determined by market forces, not European regulators

Time for action on animal rights activists; Miners bank on a super-cycle

Is this the market working as intended or, but for the threat of regulatory action, might the cost of "roaming" on European mobile networks have been left at the current, exorbitant rates? Whatever the mobile phone companies say, Viviane Reding, the European Commissioner for information society and media, can presumably claim some sort of role in the decision by Vodafone, T-Mobile, Orange and O2 to start slashing the cost of using a mobile abroad.

In March, she threatened legislation that would force mobile operators to harmonise their roaming prices with domestic call rates. Two months later the main British operators are promising to slash these tariffs by up to 50 per cent. For Vodafone, the market leader, that means reducing the average cost per minute for international roaming within Europe from €0.90 last summer to €0.55 by April next year. That's a big cut, though charges will still be relatively high by domestic call rate standards.

It is also not enough for Ms Reding to call off the dogs. A spokesman for the commission insists that she is still set on legislating. That will presumably remain the case until other European mobile operators come to heel too. Or perhaps she's intent on legislating in any event. If so, it's not going to be easy.

Already, she's finding the task an exceptionally complicated one. The superficially simplistic approach of forcing mobile companies to charge no more than domestic rates for roaming takes no account of the significant extra costs of providing the facility and in any case risks creating a whole new set of distortions.

For instance, a UK subscriber calling from Milan to London could expect to pay aninternational rate, but if the same call were made to him from London, he would pay nothing at all under the commissioner's proposals. That would plainly be absurd. Traffic would very rapidly migrate from making calls to receiving incoming ones. I won't call you, the mobile phone subscriber will say when travelling abroad, but you call me as often as you like.

What's more, other charges will only rise to compensate if mobile companies are forced to provide a roaming service at an uneconomic rate.

Like most forms of regulation, the law of unintended consequences quite quickly kicks in. Indeed, the absence of a market based solution to roaming charges is very likely the fault of EU regulation in the first place.

When Vodafone took over Mannesmann, the EU prevented Vodafone from rolling out more acceptable charges to its own subscribers across Europe by insisting that it make the same prices available to all rival network subscribers. It was only after these rules were eased that Vodafone felt confident enough to introduce its "Passport" tariff, which has already succeeded in sharply reducing the cost of roaming to Vodafone's own subscribers.

The EU's draftsmen are tying themselves up in knots trying to produce something that doesn't do more damage than good. Both domestically and internationally, mobile call charges are already falling. In these circumstances, is it really necessary to regulate them further?

All that said, you have to wonder why it has taken the mobile phone operators so long to act. By their own admission, roaming is a relatively insignificant source of revenue for most mobile companies. Why is this? It is because with the exception of non-price sensitive corporate users, mobile subscribers tend to leave their phones at home or switched off when travelling abroad for fear of getting stung.

With the other half of their brains now apparently functioning again, mobile operators are finally beginning to realise they might drive more revenue by reducing their prices, as well as see off the possibility of heavy handed regulation. Eureka! Better late than never, I suppose.

Time for action on animal rights activists

Animal rights activists have taken their campaign to a new and more sinister level by writing threatening letters to private shareholders in GlaxoSmithKline alongside big institutional investors. Employees and others connected to the activities of big pharmaceutical companies have grown accustomed to intimidation. But for the activists to target retail investors too is something new.

The letter - professing to come from an organisation called the Campaign against Huntingdon Life Sciences - is very probably illegal under new laws to deal with economic harassment in the Serious Organised Crime and Police Act. Yet this doesn't immediately much help the hapless GSK shareholder, who's name the activists threaten to post on a website, with presumably adverse consequences, if he doesn't immediately sell his shares.

GSK received more than 100 calls yesterday from worried investors. One way of protecting anonymity might be to transfer any shareholding into a custodial account, though it may already be too late for that. It is, in any case, outrageous that shareholders should be forced to take such evasive action. There could hardly be a more noble purpose in business than that pursued by GSK, which is to develop medications that save and prolong life. Investment in such a company should not be something to be hidden, like some sort of guilty secret.

As for the activists' claim that by targeting GSK investors they will eventually cause the shares to plummet, this is just bombastic nonsense. True enough, they did have that effect on Huntingdon Life Sciences, which struggled to survive as one financier after another decided it wasn't worth the candle and pulled out. GSK is a much larger organisation, with a shareholder base of such international diversity that it renders such tactics largely irrelevant. There may be some effect at the margins of the share price, but given the otherwise excellent prospects of this company, it is unlikely to be noticeable.

The authorities must act swiftly against the perpetrators of this letter. Those who consider animal life just as important as that of humans deserve the highest possible respect. Yet they won't win the argument by discouraging investment in GSK and others that must test their products on animals for efficacy and safety. Britain is in many respects a world leader in pharmaceuticals. That lead will soon pass to areas of the world much less sensitive about animal rights than Britain, and much harder on activists of this sort too, if such nonsense is allowed to proliferate.

Miners bank on a super-cycle

Sky-high prices for base metals and the companies that mine them don't seem to have acted as any kind of deterrent to takeover activity in the sector. The world's No 1 in zinc, Teck Cominco, yesterday made a $16bn (£9bn) bid for the world's No 2 in nickel, Inco. If this had been an all-shares transaction, it possibly wouldn't have been particularly noteworthy. Shareholders would merely be swapping one form of paper inflated by the present hype around commodity prices for another.

Yet more than one-third of the consideration is in cash. The Teck Cominco chief executive, Donald Lindsay, is betting that the price of base metals is going to remain high for quite a bit longer yet. He wouldn't be borrowing hard cash if he thought it about to collapse. Is his confidence well placed?

Most mining chiefs have come to believe that we are in the midst of a so-called "super-cycle" where, supported by a sustained expansion in demand, the upward trajectory in prices continues for much longer than happens in a normal economic cycle. Industrialisation in Asia gives every reason to suppose they are right. There will be setbacks along the way, but demand for these metals is still strongly upwards. The very long-term trend for base metal prices is less supportive. On a 200-year view, prices have declined steeply in real terms as new sources of supply are opened up and the costs of extraction decline.

Yet this trend too may have to take a back seat, such is the growth in demand. Substantial new sources of supply are becoming thinner on the ground, and as miners are forced into ever more inhospitable and environmentally sensitive areas of the world, the costs of extraction are rising. There's a lot of froth in commodity markets at the moment, but it might be unwise to think it only that.

j.warner@independent.co.uk