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Price rise warning over European Parliament’s ban on roaming charges

European Parliament set to pass law to stop mobile operators imposing fees on EU travellers, but companies say it may force up domestic bills

PUBLISHED : Monday, 17 March, 2014, 9:34pm
UPDATED : Tuesday, 18 March, 2014, 4:50am
 

Mobile network operators in EU countries will be banned from imposing roaming charges on customers who travel elsewhere in Europe from December next year in proposals expected to be voted through the European Parliament today.

But operators have warned that bills could rise domestically to pay for the change.

Posting holiday snaps to Instagram or keeping up with e-mails while abroad should no longer result in unexpectedly high bills under legislation to be approved by members of the European Parliament's industry committee today, which is due to be rubber stamped by the full parliament on April 3.

Operators will no longer be able to charge travellers to the European Union's 28 member states extra for calls, texts and internet use, a practice that telecoms commissioner Neelie Kroes has described as a "cash cow" for the industry.

These charges are already set to fall from €450 (HK$4,796) per gigabit to roam on the internet to €200 in July as a result of recent European legislation.

But abolishing roaming charges completely will make a big difference for consumers, meaning they will pay the same rate as at home, currently around £10 (HK$129) per gigabit in Britain. One gigabit is just enough to download a single standard definition feature film from iTunes.

But a coalition of networks representing 45 million consumers says the legislation is so badly designed that the cost of domestic calls could rise to pay for it.

"There is a risk that domestic tariffs for European consumers will increase," according to the roaming coalition.

"Roaming might not be subject to surcharges anymore, but the overall level of tariffs would increase, and non-roaming customers might effectively foot the bill for roaming customers." The coalition, which represents 15 operators and virtual networks including Three, Virgin Media, France's Free and Italy's FastWeb and Coop Italia, says to avoid a hike in domestic call costs, the wholesale prices that operators charge rivals for customers to roam on their networks need to be reduced.

Smaller operators fear they could be charged more than their customers are paying, while Europe's largest networks could do deals to limit their costs.

From July, the wholesale cost of roaming will be capped at €0.05 per megabit of data or per voice call made, and at €0.02 per text. British customers currently pay less.

Data costs around £10 per gigabit for consumers, while the European wholesale cap is not set to fall below €50 per gigabit.

"Effective wholesale regulation is key," said Three Group's regulatory affairs director John Blakemore. "Without it, if customers from northern Europe go to southern Europe and use their smartphones, they are going to incur very large wholesale charges, but the amount operators can recoup is going to be cut.

"That is unsustainable and could have an impact on the domestic prices operators have to charge their customers."

Britons and other northern Europeans are likely to be hit hardest, because they travel more and usually holiday in southern member states.

An alliance of the largest operators warned last year that abolishing roaming could cost the industry €7 billion in cash flow before 2020.

The European Telecommunications Network Operators' Association has claimed that removing one of the most profitable sources of revenues could force networks to slash their investment, hampering the roll out of 4G services.

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