EU agrees to slash roaming charges, which could crimp operator revenues

European Union policy makers have agreed to overhaul mobile roaming fees, allowing consumers to pay less for calls, texts and mobile data services when travelling within Europe. This move, which will see a cap imposed on data services for the first time, will hit operator revenues as price cuts are imposed starting this summer and running through until 2014.

According to a Financial Times report, analysts estimate that European operators currently generate up to 5 per cent of their revenues from roaming charges, and these new cuts will force them to offer international services that could fall below the price at which they sell them to their domestic customers.

Of particular note, the agreement also aims to boost competition by allowing consumers to choose their mobile operator when they cross European borders, while retaining their existing number. This decision effectively creates a new market for roaming services instead of requiring subscribers to use their home-country operator, according to Reuters.

Commenting on the deal, Angelika Niebler told the Wall Street Journal that the planned price caps ensured an adequate margin between wholesale and retail prices to guarantee a level of competition that will enable new players to enter the market. "This agreement increases transparency and consumer protection to prevent bill shocks, so that EU consumers no longer need to worry about accidentally running up huge bills," Nieble saidr.

Under the agreement, for subscribers using their handset in another EU country, the cost of a one-minute call will not exceed €0.29 as of July 1, and €0.19 cents as of July 2014, down from €0.35 under the current rules. A text message will cost no more than €0.09 as of July 1 and €0.06 as of July 1, 2014, down from today's €0.11.

Data roaming will fall significantly and cost no more than €0.70 per MB as of 1 July, €0.45 in 2013; and €0.20 cents as of July 1, 2014. These new rates aim to bring roaming tariffs into line with domestic prices by 2015.

Reviewing the planned cuts, Paul Lambert, an analyst at Informa Telecoms & Media, said that politicians within the European Parliament and Council have largely been unimpressed by the approach and speed with which operators in the region have reduced roaming rates. "They perceive that European operators have done just enough to reduce rates in line with the different price ceilings that have been put in place since 2007 and that fundamental structural changes are needed to bring rates more in line with the rates consumers pay while at home," Lambert said in a statement.

For more:
- see this Financial Times article (reg. req.)
- see this Reuters article
- see this WSJ article (sub.req.)
- see this Informa Telecoms & Media release

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