In Europe, a Move to Slash Phone Roaming Charges
For many tourists, it’s an experience they will long remember. After taking in the Eiffel Tower in Paris, the Coliseum in Rome or Buckingham Palace in London, they arrive home to something unexpected: a staggering cellphone roaming bill.
At least in much of Western Europe, the experience may become a bit less painful.
Over the next three years, the fees that consumers pay to browse the Internet with smartphones and tablets may be cut by as much as 78 percent, under a plan being proposed by the European Commission on Wednesday. That will be welcome news to travelers, many of whom don’t realize the high cost of roaming fees until they get bills totaling hundreds of dollars or more.
The commission will propose that mobile data roaming fees, which according to the commission average 2.23 euros, or $3.22, a megabyte in the 27-nation bloc, be capped at 90 euro cents starting July 1, 2012. The cap would fall to 70 euro cents a year later, and to 50 euro cents by July 1, 2014. A minute of music or about 80 Web page downloads contain about a megabyte of data.
According to an advance copy of the plan, the charges to make a voice call while traveling, at present 35 euro cents a minute, would fall to 24 euro cents by July 1, 2014. Roaming charges to receive a call, and to send a short text message, would fall to 10 cents from 11 cents by the same date.
The commission’s proposal, which was prepared by Neelie Kroes, the commissioner for telecommunications, will require approval by the European Parliament and the Council of Ministers in a process likely to conclude next spring.
Paul Rübig, a member of the European Parliament from Wels, Austria, said Mrs. Kroes’s plan would probably receive broad backing. “I think this proposal will receive massive support in both the European Parliament and in the Council of Ministers,” said Mr. Rübig, who was the legislative sponsor of the original roaming bill.
“The roaming regulations,” he added, “have become a symbol of how the European Union can function in the interests of its citizens.”
Operators, however, criticized the plan by Mrs. Kroes, a Dutch economist, saying that the reduced retail price caps on voice calling and new retail price controls on data would discourage investment in faster mobile networks.
“The retail data roaming market is growing quickly and prices are falling fast,” said the GSM Association, the group based in London that represents most of the world’s mobile operators. “We are convinced that competition can flourish in this market—if all regulators are prepared to favor it.”
Consumer advocates, for their part, were supportive but said that the caps were not set low enough to spur competition.
Nearly three-quarters of Europeans, according to a study by the European Consumers’ Organization in Brussels, limit their mobile phone calls while traveling within the European Union to avoid roaming charges. Voice roaming calls, said Monique Goyens, the director general of the Brussels-based group, typically cost three times what consumers pay domestically; data roaming charges can be up to 50 times what consumers pay in their home markets.
“The current cap of 90 cents per MB is a slow start,” Ms. Goyens said, referring to the proposed retail data roaming cap per megabyte. “Consumers should not be ripped off for surfing the net abroad. It’s blindingly obvious that fair pricing is only possible when the lack of competition is solved.”
Nick White, a spokesman in London for an association that represents corporate users of European telecommunications including MasterCard Europe , Philips, Pfizer , Toyota , Johnson & Johnson and BNP Paribas Fortis, said that Europe’s system of roaming charges should be abolished by 2015.
“The latest retail price cap proposals demonstrate acceptance by politicians and regulators that roaming charges are an unjustified imposition on consumers and a stealth tax on cross-border trade which relies increasingly on mobile data communications,” said Mr. White, the executive vice president of the International Telecommunications Users Group. “However, they still do not go far enough in eliminating this particular symptom of market failure.”
Mrs. Kroes’s proposal on roaming is a compromise reached after weeks of consultation with consumer and industry groups. In the weeks leading up to a planned announcement on Wednesday, Mrs. Kroes fought for the retail cap on data roaming, while giving operators an additional 2 cents per short message on text message roaming, which had originally been set to fall to 8 cents by mid-2014. SMS is still the largest single source of data revenue for most operators.
The first retail price controls on mobile roaming charges took effect on July 1, 2007, and were adopted by European lawmakers in the face of heavy industry opposition. Since then, retail caps on voice calls and short text messages have been lowered each year according to a schedule in the original legislation. The initial price controls regulated mobile data roaming fees only at the wholesale level, which limited the price that operators could charge each other to carry each other’s calls.
While operators have adhered to the wholesale price limit, which is currently 50 cents per megabyte, they continue to charge consumers a multiple of that rate at the retail level. The practice prompted European Union lawmakers last year to set a 50-euro limit on what operators could charge consumers for data roaming in a single month.
But because operators bill at such a high rate for data roaming—at about 15 cents per kilobyte of information in France, for example, which is roughly the amount of information in this paragraph—consumers typically reach that limit within a few hours of downloading standard e-mails. Once the limit is reached, many operators slow service for the rest of the month.
Besides lowering the retail caps and introducing new controls on mobile data, the commission is proposing that consumers be given the option of buying a roaming package separately from their regular mobile operator.
The proposal also will try to give mobile service resellers the right to lease bulk access to the networks of mobile operators at the same price that operators charge each other.
John Strand, a mobile industry analyst who specializes in such resellers, said the commission’s proposal, by setting uniform limits on data roaming across the European Union, may have the unintended effect of squeezing out small companies that have already started to sell roaming packages.
“While the data caps will limit what the big operators, such as France Télécom, Telefónica, Vodafone and T-Mobile, can charge, they will also limit what the smaller, niche players can make,” said Mr. Strand, who is based in Copenhagen.
But Bengt Beier, a student from Augsburg, Germany, who is studying political science at the University of Salzburg in Austria, said lower roaming charges were overdue.
A year ago, Mr. Beier and 1,300 other students across Europe formed a group called Europeans for Fair Roaming, which is advocating lower charges.
“I can tell you that it doesn’t go far enough,” Mr. Beier said. “I just received four e-mails with about 32 megabytes of combined photos. If I were to have downloaded those over my mobile operator, I would have paid about 30 euros. That’s crazy.”