EU parliament imposes roaming price cuts
Rating: stop moaning, start innovating
Well, the European parliament did it and in record time. They’ve agreed to restrictions on mobile roaming charges in Europe. The majority agreed with doughty Vivian Redding, EU Telecommunications Commissioner, that mobile operators are making unnecessarily high profits from roaming that bear little relation to the cost of delivering the service. Roaming charges are to be cut by up to 70%.
Now it needs to be agreed by the European Union’s telecoms ministers next month for it to come into force on 29th June, but mobile phone users will have another two months to choose whether they want to go with the cheaper roaming or stick with their existing service contracts. That means customers won’t be able to benefit from the roaming restrictions until August.
Under the new rules, the retail roaming cap will be set at 0.49 euros per minute for making a call when abroad and 0.24 euros per minute for receiving one, plus VAT. Furthermore, the price ceilings would drop further, to 0.43 euros for making calls abroad and 0.19 euros for receiving them, by 2009.
The regulation will then lapse automatically, unless the EU decides to extend it, which Commissioner Redding said she hoped would not be necessary.
Mobile operators generate up to 18% of their income from roaming charges, according to a recent study by Evalueserve. About 150m European consumers make roaming calls outside in the EU every year.
Needless to say, the operators¹ club, the GSM Association, wasn’t too happy.
A spokesperson said, “These price caps leave very little room for competition, for innovation, they will harm this market. Also, it’ll be difficult to implement the changes in the time frame they’re envisioning.”
The GSMA insisted that the regulation would hurt consumers in the long term and that it was superfluous as operators were reducing prices at a sustainable rate anyway. It argued that the average cost of making and receiving calls while travelling in Europe is now 29% lower than during 2005, according to the European mobile phone industry’s roaming Retail Price Index. Across the EU, the average cost of a roaming call has fallen from EUR 0.83 per minute, excluding VAT, in 2005 to EUR 0.59 per minute in the first quarter of 2007.
We can only say that no-one screams self-righteous indignation than those who have enjoyed privileges and see them being eroded. Complaining that this is against the free market economy is risible, after all, fixed carriers are regulated and so are gas, electricity and other service providers. The mobile operators have had a good run for their money they shouldn’t complain now, rather they should concentrate on offering affordable data plans and see their data traffic and the services it would enable rocket off the scale.
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