EU Debates Price Ceilings on International Data Roaming, Texting

The EC wants to extend the mobile voice roaming rate limits from 2010 to 2013, ending up with a maximum wholesale rate of 0.17 ($0.22) and a final retail “Eurotariff” of

0.34 per minute for calls made and 0.10 per minute for calls received. The EC also proposed requiring every home provider, starting next July, to charge roaming customers for calls to which the Eurotariff applies on a per-second rather than per-minute basis.

As of July, mobile operators will not be allowed to charge each other more than 0.04 per SMS message, the EC said. Retail roaming rates for a “Euro-SMS” message can’t exceed 0.11, and customers won’t be charged for receiving regulated roaming SMS texts, it said. Providers must give customers who cross national borders personalized pricing information on relevant roaming charges.

Inter-operator data roaming charges are limited to 1 per megabyte from next July, the EC said. Beginning in July 2010, it wants operators to provide a “cut-off limit” facility allowing customers to specify a maximum amount they're willing to spend for regulated data roaming services, it said. Last week, telecommunications ministers agreed generally to back EC plans (CD Dec 1 p8).

Excessive roaming charges have been a priority for regulators since 2005, European Regulators Group President Daniel Pataki said. The ERG supports a three-year extension of the voice roaming rate caps, he said, because although prices have dropped by about one-third since last year, they remain clustered just below the cap. Wholesale and retail SMS prices didn’t drop at all between 2007 and 2008, he said. Data roaming rates are coming down, but the ERG believes wholesale regulation is needed to even out price variations among operators, he said.

GSMA Europe Director Martin Whitehead challenged several “misconceptions.” The idea that “prices remain stubbornly high” is not true, since they've dropped faster in the mobile industry than in many others, he said. Nor does the industry enjoy “excessive profits,” he said: Average return on investment is 9 percent, far lower than in other sectors, and mobile services are popular and customer satisfaction levels high.

Industry shares EC concerns about customer bill shock from data roaming and its desire to make its charging schemes more open, Whitehead said. But it wants post-paid customers to be able to select individual data roaming limits so they can enjoy mobile broadband abroad without being subjected to automatic cut-off, he said. Market prices are dropping dramatically and the EC is right not to seek retail price caps, he said.

Customers expect to pay more for roaming, said Telefonica O2 Europe Vice President Steve Jordan. The EC’s proposed prices will distort competition because they're lower than current national levels for similar services, he said. There may be an argument for capping wholesale prices, but that shouldn’t dictate retail charges, he said. He questioned the feasibility of giving roamers real-time cost displays, saying providing them will be expensive and could disrupt services.

Customer rates are pricey because wholesale costs are excessive, said Hutchison Europe Managing Director Christian Salbaing. Operators with roaming services must make deals with foreign providers that directly affect consumer costs, he said. Often, the foreign operators belong to the same groups Hutchison competes with in its own country and which are unlikely to offer reasonable wholesale charges, he said.

Wholesale SMS and data caps are good for the consumer, he said. The EC proposal to limit wholesale data roaming charges to 1 per megabyte should be even lower, he said. There’s a huge potential demand for data services, and if wholesale prices go down, the retail market will likely flourish, he said. Salbaing joined other industry speakers in opposing the review of the current voice roaming regulation, saying the EC hasn’t justified why the review is needed now and why caps should be lowered.

Consumers wants lower voice retail ceilings and information on how much they spend on roaming services, not how many units they've used, said Levi Nietvelt, European Consumers’ Organization economic officer. Regulating until 2013 is the only way to ensure that costs abroad don’t exceed those at home, he said.

Some industry committee members criticized aspects of the EC plan. British MEP Syed Kamall (European People’s Party/European Democrats) complained of the “Soviet-style economics” of telling companies how much profit they can make. EU “better regulation” rules suggest that reviewing and extending the voice roaming regulation after less than one year doesn’t make sense, said Spanish MEP Pilar del Castillo (EPP/ED).

Parliament can further improve the legislation, said Romanian MEP Adina Ioanna Valean (Alliance of Liberals and Democrats for Europe). She said she supports wholesale regulation of SMS and data roaming rates, but not if it creates unfair advantages for some players. The EC cut-off scheme isn’t appropriate for consumers or operators, she added.

Lawmakers must ask, “what next?” said Kamall. Voice roaming calls are already regulated, SMS and data rules are coming -- but this shouldn’t set a precedent for other, unrelated markets, he said. The EU shouldn’t seek regulations that allow the richest consumers to pay less for services, he said.