Issue: 34/08

Roam Fair - INTUG Update on European Developments

September 02, 2008

Roaming Rates to Become Cheaper in EU

BRUSSELS, 29 August 2008 – From 30 August, Europeans traveling within all of the 27 EU member states will pay a little less for making or receiving calls on their cell phones. But text messaging and data usage will remain unjustifiably high, says the European Commission (EC).

The price ceiling for roaming calls (the “Eurotariff”) introduced by the EU in 2007 will go down from EUR0.49 to 0.46 per minute (excluding VAT) for making a call and from EUR0.24 to 0.22 per minute (excluding VAT) for receiving a call while in another EU member state.

These price reductions are the result of the EU Roaming Regulation, proposed by the EC two years ago to curb the excessive roaming charges for consumers (on average EUR1.15 per minute at the time).

The EU Roaming Regulation, which expires in 2010, is currently under review. The EC now has to decide whether it will extend the regulation in time and in scope. Under the present regulation, prices for roaming calls will go down a last time on 30 August 2009 to EUR0.43 per minute for making calls and to EUR0.19 per minute for receiving calls while in another EU country. Besides, figures recently published by national telecoms regulators have shown that prices for roaming text messages and data services remain unjustifiably high, the Commission states.

On the basis of an independent cost analysis and taking into account falling termination rates, national regulators have also estimated that the price caps agreed by the European Parliament (EP) and the Council in the present regulation are around EUR0.08 per minute too high, at both wholesale and retail levels.

Figures also show that consumers are currently paying 24 per cent more than the minutes they actually use to make calls, and 19 per cent more for calls they receive. National regulators also recommend including wholesale and retail regulation on text messaging abroad in a revised roaming regulation, leading to a maximum consumer price of between EUR0.11 and EUR0.15 per text message abroad (excluding VAT).

A recent report from the European Regulators Group (ERG) shows that the cost of data roaming is still very high for many consumers. In the first quarter of 2008, a customer using data services paid on average EUR2.05 per megabyte while roaming with companies from their operator’s group and EUR5.40 per megabyte for roaming with non-group companies. Italian and Slovak consumers who roam with a non-group company can even pay over EUR12 per megabyte.

Read more on roaming in the EU on the EC’s roaming website – in the words of the Commission, “Texting without borders: ending roaming rip-offs for text messages abroad”.

EU, mobile operators clash over call billing - European Union Telecoms Commissioner Viviane Reding is concerned that some mobile operators are charging by the minute rather than second for calls made while traveling between EU states, her spokesman said. "In some cases operators are charging you for a call of one minute two seconds what they can charge you for two minutes. This leads to overcharging on average of 24 percent for calls made and 19 percent for calls received," the spokesman told a news briefing.

Analysis of Prices and Costs for Mobile Data - Services Abroad, a report published by the Danish National IT and Telecom Agency. Overall, the analysis shows that the prices for sending an SMS, an MMS, or using other data services when located in another EU country are very high, both in relation to national prices and the real costs of providing the services. Both at the wholesale level and at the retail level, the prices charged are far in excess of costs.

SMS The analysis shows that if the Danish company only added DKK 0.20 (AUD 4.59 cents) on top of the price, then it would cover the real costs of the company and ensure a reasonable profit at the same time. So in an effective market with more reasonable profits, a product that costs DKK 2.50 (AUD 57.43 cents) today, including VAT, would not need to cost more than DKK 0.31 (AUD 7.12 cents) including VAT. MMS So in an effective market with more natural profit margins both at the retail and wholesale levels, it should not cost more than DKK 2.06 (AUD 47.33 cents) including VAT to send an MMS from another EU country. The analysis shows that in an effective market with more natural profit margins both at the retail and wholesale levels, it should cost no more than about DKK 0.90 ( AUD 20.68 cents) including VAT to receive an MMS of an average size when located in another EU country. Other Data Services On average, the Danish company adds DKK 16.79 (AUD $3.855) on top of the price per MB data downloaded or sent from the customer's mobile telephone in another EU country. Also in this case the profit margin is very high. By adding just DKK 3.62 (AUD 83 cents) to the price, the Danish company would be able to cover its costs and ensure a reasonable profit. So in an effective market with more natural profit margins, a product that costs about DKK 48 (AUD $11.02) today, including VAT, should cost no more than about DKK 8.80(AUD $2.02) including VAT.

INTUG is currently working on its submission to the Public Consultation by the European Commission on Fixed and Mobile Termination Rates in the European EU

Trade relies heavily on cross-border communications over fixed and mobile networks. Within and beyond the European Union (“EU”), trade flows are being hampered as a result of excessive costs for termination on fixed and mobile networks, and inconsistent application of EU rules by Member States and their regulators both within and between Member States. The net effect of these problems is that significant damage is being done to the EU’s economy as, despite the passage of a considerable period of time, there has been no concerted attempt to grapple with the issues effectively. The current situation is a “tax on trade,” which does not benefit business users or consumers….

Similarly, ATUG has made a submission to the Australian House of Representatives Inquiry into International Mobile Roaming on behalf of end users:

Current prices for these services do not reflect costs, are not competitive and deter the use of services that businesses need for competitiveness, growth and innovation. End users have no power to negotiate prices with suppliers. A global economy needs global communications services at reasonable prices. Many of these issues are equally relevant for residential end users traveling overseas. Industry suggested “work arounds” are seen as very second rate strategies by end users who have already invested in equipment, services and plans with their chosen domestic provider and want full value and true mobile convenience when traveling.

To have your say about International roaming go the ATUG’s Blog