Are you sure?

EU executive seeks big price cuts in roaming calls

Sending a text message from the beach or surfing the Web by laptop in a bar will be nearly two-thirds cheaper for travelers from next summer under draft rules published by the European Commission on Tuesday.

Plans by EU Telecoms Commissioner Viviane Reding extend rules introduced in 2007 to cut the cost in the EU of roaming - making and receiving mobile phone calls abroad.

It marks the latest clash between Brussels and the telecoms industry, whose leaders like Vodafone say the EU rules could in the end make it more expensive to own a handset.

Operators say roaming tariffs are already falling and they need flexibility. The Commission says cheaper services will spur people to make more calls and use the Web more often, generating more income for telecoms companies over time.

“Using your mobile phone abroad in the EU should not cost unjustifiably more than at home, whether for making calls, sending texts or surfing the Web,” Reding told reporters.

The European Parliament and EU states have the final say and the rules are set to come into force on July 1 next year.

“Text messaging from a foreign country is still disproportionately expensive. We now need a political decision to set upper limits,” said Angelika Niebler, the centre-right chairman of parliament's industry committee.

“Consumers are being charged up to 10 times more than domestic rates for sending texts,” said Arlene McCarthy, the socialist chairwoman of parliament's internal market committee.

The GSM Association, which represents operators like Telefonica, Orange and Vodafone, said since the voice roaming caps were introduced in 2007, usage has risen by 11% and revenues have fallen by 26%.

“The overall concern of the industry is that it's a continuation of politically motivated regulation and it's micro regulation,” said Tom Phillips, the group's public policy chief.

Reding blamed the need for intervention on the industry's “bunker mentality.”

“Industry was given a year to bring prices down themselves. I am concerned this industry is not regulated enough. They overcharged consumers excessively,” Reding said.

The rules would be reviewed in 2011 to see if consumers were getting a better deal or a further extension was required.

The European Regulators' Group, made up of EU member state watchdogs, said it welcomed the proposals as the industry had failed to take satisfactory action to reduce excessive SMS prices.

The draft rules proposed include: - A retail price cap of 11 euro cents per roamed text message compared with an average price of about 29 euro cents at present. A wholesale price cap of 4 cents will also be introduced. Some 2.5 billion text messages were sent in 2007 worth €800 million.

- A wholesale price cap of 1 euro per megabyte for roamed data such as checking emails or downloading a song using a mobile phone or laptop. Downloading emails and other data abroad costs about €3 - €6 today.

From mid 2010, consumers can specify how high their data roaming bill can go before the service is cut off.

- Price caps on roamed voice calls, due to expire in 2010, will be extended. The cost of making a roamed call was capped at 43 euro cents a minute on August 30. The proposal foresees the cost of making a roamed call falling to 34 euro cents and to 10 euro cents for receiving a call by 1 July 2012.

- Mandatory billing on a per-second basis from the 31st second when making a roamed call and for the whole duration of a received call. Many operators bill on a per-minute basis.

The GSM Association said the data roaming market was too young to regulate and a cap could do more harm than good though newer entrants, which compete fiercely on price, said more should be done to reach the even lower tariffs they already charge.

“Today's proposals will see consumers continuing to pay over 100 times more for data abroad than at home,” said Christian Salbaing, managing director of 3 Group Europe.

The GSM lobby estimated that all forms of roaming make up 10% to 15% of a mobile operator's revenues. (Reuters)