A growing regulatory burden being applied by the European Union is putting telecoms operators under pressure which may hinder the development of services such as mobile TV according to the GSMA.

Speaking in response to the European Commission's public consultation on the voice roaming regulation, the global trade body for the mobile industry, warns that European mobile operators, on average, are only just covering their weighted cost of capital and some of them are making an economic loss.

To justify the imposition of retail price caps, the European Commission has claimed that mobile operators are making excessive profits, but the GSMA retorts that European mobile industry's return on capital employed (ROCE) was just 9% in 2006 compared with more than 20% in software, pharmaceuticals and several other sectors.

The EU's mobile industry has historically been one of the leading investors in Europe but the GSMA says that the industry's capital spending has slipped from 13% of revenue in 2005 to 12% in 2006 to 11% in 2007.

Moreover, it points out that heavy capital investment is needed to ensure the widespread availability of advanced 3G networks, which enable mobile users to access the Internet and other multimedia services, such as mobile TV and video, at broadband speeds.

While the mobile industry's technology roadmap envisages further dramatic improvements in network performance and capacity, the GSMA warns that the speed of deployment of new networks may be constrained by the mobile industry's relatively low level of profitability.

"Europe's mobile industry is in the midst of another major investment cycle to deploy new services, such as mobile broadband, video downloads, mobile television and mobile email, which enhance Europeans' daily lives and the economic competitiveness of the continent," said Tom Phillips, Chief Government & Regulatory Affairs Officer of the GSMA. "However, it is clear that the high level of investment required to provide these services across Europe won't happen if regulators continue to distort the market by setting prices."