Business

Mobile phone 'roaming' prices in EU face cuts

  • 6 July 2011
  • From the section Business
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Man with mobile phone
The EU wants increased competition to push down prices for consumers

New rules aimed at reducing the price gap between using a mobile phone at home and elsewhere in the EU have been proposed.

The European Commission wants to cut "roaming" costs - when calls are made or received, text messages sent or data downloaded when travelling in Europe.

New, lower price caps could come into force in stages to July 2014.

By then, mobile phone customers would also be able to separate their national and overseas contracts and shop around.

They would still be able to use their same phone number, but could switch to a separate operator when in another country for a cheaper deal for surfing the web or downloading music or photos.

At present, mobile users can buy a Sim card local to the country in which they are travelling, but this means they are on a different phone number to usual.

The Commission hopes that more "virtual" operators, which do not have their own networks, would enter the roaming market. The extra competition would then be expected to push down prices.

'Outrageous margins'

In the meantime, proposals have been published that would extend the level of price caps on calls and text messages for those travelling in Europe.

Current EU roaming price caps will expire at the end of June 2012. The authorities fear that without putting more plans in place, prices could pick up to pre-2007 levels.

For example, there is currently a cap of 35 euro cents (31p) a minute on calls made, excluding VAT. The proposals would see this falling steadily to 24 cents (22p), by July 2014.

There is currently no cap per megabyte on downloading data, but this would be limited to 50 cents (45p) per megabyte by July 2014, under the Commission's plans.

One megabyte is the equivalent of downloading 100 e-mails without attachments, less than an hour of internet browsing, one minute of downloading music or a few seconds of video downloading.

A more general cap is in place at present to avoid so-called bill shocks. Operators are compelled to place a 50 euro (£45) cap on users' data consumption in order to avoid unexpectedly high bills. Customers who wish to continue their data roaming can request to have the limit removed.

"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," said Neelie Kroes, European Commission Vice President for the Digital Agenda.

"It would also immediately bring down prices for data roaming, where operators currently enjoy outrageous profit margins."

Reaction

The Commission hopes the proposals will be given the go-ahead by the European Parliament and Council of Ministers by next year.

Ultimately, by 2015, the Commission would like to see prices for anyone making a call across the EU to be similar to making domestic calls.

But a body representing mobile operators has criticised the plans.

The GSM Association said it was "disappointed" that the Commission was considering price capping in addition to structural changes to the market.

"If any price caps are introduced, they should be set at true safeguard levels to avoid dampening innovation and competition in the market," a spokesman said.

"The retail data roaming market is growing quickly and prices are falling fast. We are convinced that competition can flourish in this market - if all regulators are prepared to favour it."

'High bills'

Price regulation was introduced in 2007 by the then commissioner for information, society and media, Viviane Reding.

Since then, the maximum call charge has been reduced by approximately 6% per year.

A group of UK mobile operators - O2, Vodafone, Orange and T-Mobile - attempted to challenge the Commission's price-cutting agenda, taking their case to the European Court of Justice.

However, their complaint was dismissed in June 2010.

The new price caps are planned to be in place until 30 June, 2016, when the Commission hopes that extra competition will make them redundant.

Monique Goyens, director general of the European Consumers' Organisation, said: "Roaming should not be a trap of travel in Europe. But too often it is, due to the potentially sky high costs and the dire lack of market choice.

"It is unjustifiable that data roaming can be 50 times more expensive than when at home."

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