O2 undercuts rivals on roaming fees

O2 has taken the lead in the race to make European roaming tariffs more affordable — and avoid sanctions from the EC

Mobile operator O2 has launched two roaming price plans, giving its UK customers cheaper overseas rates than any of its competitors and becoming the first network to allow frequent travellers to receive calls overseas for free.

O2 and its Spanish sister company Telefónica Móviles announced the "My Europe" tariffs on Friday. One, "high roamer", is a subscription service that offers frequent travellers free incoming calls, as well as domestic-level rates for outgoing calls. The service is due to roll out in late 2006.

The other is aimed at leisure travellers, giving them a flat rate of 35p per minute for receiving or making calls while roaming around Europe. Starting this summer, the free opt-in service represents the cheapest roaming rates yet seen in the current price war between UK operators.

Similar rate-slashing announcements have been made by T-Mobile, Vodafone and Orange in recent days. O2's Simon Gordon told ZDNet UK on Tuesday that the network was planning to change its roaming rates, but denied it had anything to do with the threat of regulation by the EU's Commissioner for Information Society and Media, Viviane Reding.

On Friday Gordon repeated his assertion that the plans were independently conceived by parent company Telefónica, which acquired O2 three months ago. He also said that being part of Telefónica had made the new tariffs possible.

"Obviously now we have better scale with Telefónica and it helps us negotiate a better wholesale rate," Gordon told ZDNet UK.

Explaining the decision to make O2's free roaming package an opt-in rather than automatic service, he said it would help O2 maintain better contact with its customers. "If you're communicating, you can see which customers roam more and can offer them particular deals," he said.

Gordon stressed that the operator would be sending a text to all its customers informing them of the offer. Contract customers who do not opt into the leisure tariff will still pay between 58p and 85p per minute when making or receiving calls abroad, and pre-pay customers will still pay between 69p and £1.49 per minute.

The "high roamer" package will see customers who travel frequently to EU countries paying a monthly fee of around £10 per country, which will allow them to receive calls for free and make calls at a rate of between 30-40 euro cents per minute.

Defending the policy of making customers pay per country, Gordon said: "Customers tend to visit one country and make and receive a lot of calls from one country."

It is still unclear whether the monthly charge will be have to be a permanent addition to a customer's regular bill, or whether it will be available on a short-term basis.