EU acts to push down mobile roaming costs

It will become much cheaper to use voice, text and data-roaming services while travelling in Europe, if proposals published by the European Commission on Wednesday are passed
Written by David Meyer, Contributor on

The European Commission has unveiled its proposals for driving down the cost of mobile voice, text and data roaming for people travelling in Europe.

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The European Commission has unveiled its proposals for driving down the cost of mobile voice, text and data roaming for people travelling in Europe.

Published on Wednesday, the proposals would place a limit on retail prices for data roaming for the first time, while continuing to lower existing retail caps on voice and text messaging.

"This proposal tackles the root cause of the problem — the lack of competition on roaming markets — by giving customers more choice and by giving alternative operators easier access to the roaming market," digital agenda commissioner Neelie Kroes said in a statement. "It would also immediately bring down prices for data roaming, where operators currently enjoy outrageous profit margins."

To open up the market to other operators, the Commission wants to bring down the current caps on wholesale prices and, for the first time, give people the ability to sign up for a roaming contract that is separate from their contract for domestic mobile service.

The wholesale caps would also apply to mobile virtual network operators (MVNOs) such as Tesco Mobile for the first time, making it much easier for such relatively small players to develop aggressively priced roaming deals.

This proposal tackles the root cause of the problem — the lack of competition on roaming markets.
– Neelie Kroes

If approved by the European Parliament and Council of Ministers, the proposals will be implemented from 1 July, 2012. The Commission has previously said it wants the difference between domestic and roaming prices to approach zero by 2015.

ZDNet UK's research has shown that while data-roaming services only cost between 1-3p per megabyte to provide, per-megabyte prices for out-of-bundle data roaming within Europe range between £1 and £3. This is less than the £3-£10 people pay to use data while travelling outside of Europe, but still represents a massive mark-up. A survey carried out earlier this year showed 96 percent of ZDNet readers consider data-roaming prices excessive.

The European Commission already regulates the amount operators can charge other providers for providing data-roaming services to each other's customers. However, it has avoided retail caps until now.

New price caps

Under the proposals, a retail cap of 90c per megabyte would come into force in one year's time, dropping to 70c a year later and 50c on 1 July, 2014. Additionally, operators would be forced to charge their customers on a per-kilobyte basis, rather than per megabyte. This means people are less likely to pay for kilobytes of unused data.

EU roaming price caps table

The tables above show Europe's current and proposed retail and wholesale price caps for mobile roaming. Image credit: European Commission

The retail cap for making voice calls would drop from the current 35c per minute to 24c in three years' time, while the limit on receiving calls would fall from 11c to 10c. The text messaging maximum charge would also drop from 11c to 10c.

On the wholesale side, the price cap for data roaming would be lowered from 50c per megabyte to 10c within three years. The voice-roaming limit would fall from 18c per minute to 6c, and the wholesale SMS price cap would be halved from 4c to 2c.

The retail caps are intended as a temporary measure, helping to drive prices down while the deeper structural changes in the Commission's proposals take hold. Typically, people sign up with an operator because of its domestic tariffs, not its roaming tariffs. They then have no choice but to pay whatever the operator wants to charge them for roaming.

Structural changes

Current roaming caps have "temporarily reduced prices for roaming phone calls and text messages but [have] not remedied the lack of competition in the roaming market, with prices remaining stubbornly close to the retail caps", the Commission said.

The structural changes would make it simpler for consumers to roam and give them more choice, it added.

"Each time the customer crossed a border, they would automatically switch to their chosen roaming provider, without any further action on their part, while keeping the same number and subscriber identity module (SIM card)," the Commission said. "This would enhance transparency and allow customers to shop around for the best roaming offers and encourage operators to offer more competitive roaming deals."

The Commission added that it hoped this structural change would lead to "innovative pan-European offers and cheaper prices, significantly below the safeguard caps".

According to the proposals, the retail price caps for voice and text messaging would stay in place until mid-2016. Wholesale caps for all roaming services would persist until 2022, although they could be removed earlier "if market data indicated that competition had developed sufficiently", the Commission said.

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