EU tackles bill shock with data roaming caps

The European Parliament this week voted in favour of further caps on mobile roaming charges in a move that will be good for consumers' bills, including data, but will hit operators' revenues in the coming years.

The cap on roaming charges for the 27 member countries of the European Union will come into effect on July 1, 2012, subject to approval by EU leaders in June. The new deal addresses contentious data roaming rates for the first time, and may persuade users to stop turning off their data roaming capability when travelling.

"What is significant here is the first-ever cap on data roaming meaning it will now cost a maximum 70 euro cents per MB, falling to 20 cents in 2014," Monique Goyens, director general of the European Consumer Organization, said in a statement. "Given the proliferation of smartphones and more notably the actual cost of data provision for operators, this is still too high."

As well as helping users to reduce their roaming bills, the deal also seeks to open up the market to greater competition by allowing users more freedom on which operator they use for data services when travelling abroad. This is set to come into force in July 2014.

From the mobile operator perspective, the deal will mean an initial drop in revenue, although analysts suggest revenue will increase again once more users are convinced it is safe to use mobile data abroad. The caps would hit operators' revenues and the benefit from the increased mobile data usage would take time. 

"There is a real potential for data roaming usage, but clearly not within the next three to four years, in my opinion, when cuts occur," Stephane Beyazian, a telecoms analyst at Raymond James, told Reuters.

Reuters noted that some operators have already said they see opportunities with the plan to allow users to shop around for roaming plans. Vodafone and France Telecom have already said they plan such offers and see it as a new sales opportunity.

Meanwhile, Telefónicaresponded by launching its first standard pan-European data-roaming tariff that it says is "fraction of new [EU] price caps." The operator is launching a tariff that gives 25 MB usage anywhere across the 27 European Union member states for €2 a day.

For more:
- see this Reuters article
- see this Dow Jones Newswires article
- see this Mobile Europe article

Related articles:
EU agrees to slash roaming charges, which could crimp operator revenues
EU angry with Spanish regulator over delay to MTR cuts
European lobby group presses for deeper roaming price cuts 
Report: EU plans even steeper cuts to roaming charges
Spanish operators to suffer 75% cuts to termination rates
Ofcom hits UK operators with 80% mobile termination rate cut