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EU Regulators Propose Forced Reduction in Wireless Roaming Costs

1:45 am on March 29, 2006 | Category: Business, Regulation, Telecom Services, Wireless

The European Unionâ€™s Information Society and Media Commissioner, Viviane Reding, proposed a new regulation yesterday that would severely cut the international roaming costs charged by wireless carriers.

â€œIt’s unacceptable that consumers are punished on their telephone bill simply for crossing a border,â€ Reding said to reporters in Brussels. â€œThis regulation I intend to propose will end international roaming charges as we know them today.â€

The new regulation would make calls when traveling abroad, which have been known to cost as much as 13 Euros for a four minute call, will cost more or less the same as if they were made back home.

Reding hopes that the European Commsion will formally adopt the new plan in June, allowing it to come into effect by the summer of 2007. Before it becomes law, however, the proposal will need to be approved by member states and the European parliament. It is difficult to say for sure whether it will pass, but many lawmakers have already expressed support for it.

â€œThe ludicrous cost of receiving calls or calling from a mobile phone abroad has been burning a hole in consumers’ pockets for far too long,â€ Liberal Democrat MEP, Sharon Bowles was quoted as saying. â€œThis regulation will ensure that operators cannot charge and international roaming charge that is higher than that imposed nationally.â€

Many wireless carriers, however, including Vodafone, have come out against the proposal, claiming that they already offer fair roaming charges, and that competition is gradually reducing these costs naturally. The company says that rates for its Passport roaming program fell 30% last year due to natural competition.

“The normal reason why you regulate is that markets are failing in some way,” said Vodafoneâ€™s public policy director, Richard Feasey, in an interview with Reuters. “They will need to explain, given that national regulators have looked at this market and not found any market failure, why the Commission comes to a different view.”

Analysts, meanwhile, caution that eliminating roaming charges altogether could seriously cut in to the revenues of carriers, potentially forcing them to charge more money for basic cell phone use.

â€œAn outright scrapping of international roaming surcharges for intra-EU roaming would cause a loss of up to 7-9 percent of European mobile operator revenues, and about 15 percent of earnings overnight, well beyond the downside currently already factored in,â€ according to an analyst Swiss bank Credit Suisse.

Ultimately, it appears that regulators need to take into account the real cost of roaming, and be realistic in their demands of carriers. It is not fair for providers to charge exorbitant sums for roaming, but neither is it fair for travelling customers to expect access to complex and expensive raoming services without paying their way.

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