Europe's telecoms sector may argue that an EU plan to cut roaming fees, which people pay to make mobile phone calls when abroad, are unnecessary regulation, but popular support is almost certain to make this a fight the operators will lose.
The European Union is expected to steamroll past industry objections and adopt the proposals, spurring analysts to take a knife to their long-term earnings forecasts for Vodafone, Telefonica and other big European mobile phone firms.
Lehman Brothers has cut its average earnings forecasts for European operators by three per cent for 2007 and five per cent for 2008.
Many investors have already reacted with their wallets, sending telecoms companies' share prices lower, but some analysts say prices may not yet completely reflect the negative impact that the European Commission's proposals will have on revenues and profit.
The EU executive's move to adopt rules seeking to more than halve roaming charges is the latest bad news to hit the sector, already reeling amid investor concerns of slowing growth and peaking margins.
The EU executive says roaming charges for a four-minute call vary widely from €20 cents (14 pence) to €13 across the 25-nation European bloc, with profit margins for operators between 90 and 100 per cent. It argues that regulation can save the consumer between 40 and 60 per cent on mobile calls made abroad.
Unsurprisingly, the industry is crying foul. Operators say that roaming rates were in any case falling and that moves to regulate prices, besides being wrong in principle, could upset a complex mesh of factors that go into setting tariffs.
"I don't think there's a need for regulation ... The concept is wrong," Rene Obermann, chief executive of Deutsche Telekom unit T-Mobile, one of Europe's biggest mobile operators, told a wireless industry conference in London this week. But his and other industry protests have few sympathisers.
"Political support makes major roaming cuts seem inevitable," Credit Suisse said in a research note last week. "It is such a popular issue that it seems likely that a majority of governments across Europe will want to support it, because it is good for so many people and bad for so few," said another analyst, asking not to be named.
"I don't think there has ever been this much support in all of the EU for a set of proposals, and that says a lot," he added.
The new regulation could be in place as early as next year and the EU's plans fully implemented by 2008.
The Commission's plans have widespread support among politicians across Europe. Indeed, some have complained that the executive's proposals don't go far enough.
At a summit of European leaders last month, Ireland's Prime Minister Bertie Ahern called for roaming charges to be scrapped, calling them an "unnecessary evil".
Support for the EU's stance from an unlikely quarter - the tabloid media, where Brussels-bashing is a popular sport - could help to make it politically difficult for governments and lawmakers to dilute the Commission's plans.
The result: an across-the-board cut in earnings forecasts.
"The direct impact of the EU proposal is to lower average mobile growth by one percentage point per annum and EBITDA (earnings before interest, tax, depreciation and amortisation) growth by two percentage points, taking six per cent off industry EBITDA by 2008," Credit Suisse said.
Lehman Brothers said Telefonica and Vodafone were most exposed to the roaming cuts.
Telefonica and other southern European operators benefit from roaming fees as their countries are popular holiday destinations for many tourists.
Vodafone, whose shares dropped four per cent when the EC announced its plans last week, is Europe's largest mobile operator.
The cuts to forecasts will put further pressure on a sector that is already struggling to find favour among investors worried about the impact of falling prices, rising competition, changing technologies and aggressive regulators.