Fears of a roaming strait-jacket

The European Commission was accused of populism last year when it launched a bid to cut mobile phone roaming charges. But one year later it looks almost certain that travellers will be paying less to use their handsets abroad from this summer.

Telecoms ministers and mobile phone operators have accepted the approach proposed by Vivian Reding, the European information society commissioner, to set caps at wholesale and retail level on roaming charges despite opposition from the UK and France (and some of the commissioners themselves).

Roaming charges, the fees for using another company’s network to make or receive calls while abroad, have been a major cash cow for the mobile operators. Some consumers are being charged more than €1 a minute for roaming, five or six times the cost of making the call. The European Commission estimates that mobile operators earn about €10 billion a year from roaming fees.

EU telecoms ministers, meeting at the annual CeBIT technology fair in Hanover in March, endorsed Reding’s capping approach. But very important details still have to be resolved.

First there is the level of the retail price cap. Reding proposed €0.49 per minute for international calls on a foreign network, €0.33 for local calls on a foreign network and €0.165 for calls received abroad. The German presidency of the EU has suggested €0.50 a minute for international and ‘local calls’ (made to another destination within a visited country) and €0.25 for receiving calls abroad.

Speaking after the CeBIT meeting, Reding predicted that the ceiling would not be higher than €0.40 and expressed optimism that roaming charges could be cut by up to 70%.

David Pringle of mobile phone operators association GSM Europe says that the industry accepts that there will be regulation but it is keen to see that the price cap is not set too low. "If the cap is too low, if operators are only or barely covering their costs, you won’t see much competition on price or innovation", he says.

Apart from the level of the cap, the other key issue to be settled is how the new capped rate will work alongside special tariff deals offered by mobile operators. This is dubbed the ‘opt-in/opt-out’ question because opinion is divided over whether customers should automatically be offered the new lower tariffs or whether they should have to opt in to other packages.

Pringle says that the industry prefers an opt-in because many customers who are on existing favourable deals will have to come off them and opt back in again. He says that even when the customer protection tariff - as the price cap is called - is introduced, customers will prefer to keep their current contracts. "Customers may prefer to remain on these tariffs because, for the heavy users, prices are lower [than the customer protection tariff]", he says.

MEPs, after some initial concern that the Commission’s proposal would hit operators too hard, seem to be coming round to a consumer friendly version of the regulation. Members of the Parliament’s industry, research and energy committee (ITRE) voted last Thursday (12 April) for a so-called Euro-tariff set at €0.40 per minute. This would automatically be available to all subscribers new or old. ITRE committee members opposed elements of a draft report on the roaming regulation by Austrian centre-right MEP Paul Rübig who had called for a wholesale cap being based on the average prices across the EU27, a stock market for roaming time and an ‘opt in’ approach.

The final position of the ITRE committee MEPs was also more consumer friendly than that of MEPs on the internal market and consumer protection committee (IMCO) who voted on 22 March to offer cheaper tariffs only to new customers. Reding called the decision to offer lower rates only to new subscribers "regrettable", pointing out that with mobile phone usage at 103% in the EU there would be hardly any "new" customers to benefit from the effect of the cap.

Joseph Muscat, the Maltese Socialist MEP who drafted IMCO’s report on the roaming regulation, voted against his own report in protest at the changes made by other members of the committee.

The other tricky issue emerging is over the transparency of rates, with industry favouring a simple system where customers can request tariff information in a foreign country by SMS. Muscat wants customers to be able to get information by voice but GSM Europe’s Pringle warns anything which goes beyond the SMS-based approach would be "more cumbersome" for operators.

The Parliament is expected to vote on the two reports during the plenary session in May ahead of the final agreement by telecoms ministers, expected at the Council on 7 June. But there is widespread optimism that the remaining differences among member states and MEPs can be settled in time for an agreement in first reading. That would mean operators would have to start offering the new consumer protection tariff, which will probably be €0.40-50, by the summer.

In any event, industry has resigned itself to the fact that there will be legislation to lower roaming charges. "Regulation is coming. The industry position is to try and ensure as much flexibility as possible. It should not become a strait-jacket," says Pringle.

The European Commission was accused of populism last year when it launched a bid to cut mobile phone roaming charges. But one year later it looks almost certain that travellers will be paying less to use their handsets abroad from this summer.