The mobile industry has hit back at the European Commission's move to slash roaming charges, as the details of the finalised proposals start to sink in.
After Information Society and Media Commissioner Viviane Reding and EC President José Manuel Barroso announced their intention on Wednesday to push through roaming charge cuts of up to 70 percent, operators claimed the move was unnecessary. A major industry body has already vowed to lobby the European Parliament into a change of heart.
"We'll be seeking to talk to parliamentarians about this and explain our views to them," David Pringle of the GSM Association told ZDNet UK on Wednesday. "We recognise that the Commission has dropped some of the more unworkable elements of the first proposal, but we still see this as a straitjacket for the industry… we're not happy with the retail price cap at all."
Pringle added that there was "potentially work" the GSMA could do in terms of "influencing" opinion within the Council of Ministers — the third and final stage (after the European Parliament) before the proposals become law.
Those comments led Stefano Nicoletti, an analyst with Ovum, to warn that intense lobbying could make the European Parliament's decision "very much political rather than purely technical".
A representative of operator O2, which is owned by Spain's Telefonica, said the cuts could lead to "less investment in future technologies", and would be "hard on smaller operators" and their suppliers.
"There's no other industry in the single market that is regulated to such an extent," the O2 spokesperson complained, adding: "It needs to be recognised that there shouldn't be a one-size-fits-all approach as people have different travelling patterns. If you have a single approach then one of those camps will not benefit".
Under the proposals, a capped wholesale rate for roaming connections will be levied across the EU. A retail cap will follow automatically in six months, theoretically giving operators the time to restructure their prices accordingly.
"We'll see what happens in six months," said O2's spokesperson. "We'll review the options that are available to us. [Our] tariffs are pretty much at the level of wholesale rates anyway, so we feel that we've done our bit."
Orange expressed similar views in a statement on Wednesday, saying: "The action that Orange and other operators have taken recently clearly indicates that competitive forces are at play and are continuing to drive roaming prices down. Orange therefore believes that it is through competition, not regulation, that customers' needs are best met."
Several UK mobile operators, including Orange, cut their roaming charges earlier this year after Commissioner Reding first announced her plans.
T-Mobile UK's managing director, Jim Hyde, said: "For a long time, we've said roaming rates are too high… We have not needed regulation to encourage us to cut roaming costs."
Hyde went on to claim that some fault lay with people who don't use their phones abroad, saying: "True mobility means affordable mobility and at present too many mobile customers just don't use their phones abroad. That acts against their interests — and against ours. Our new 55p roaming rate is as simple as it gets."
Informa analyst Mark Newman agreed that there was "a huge number of people today who are afraid to turn their phone on when they go on holiday because of the high roaming charges for both making and receiving calls".
"Operators are now going to have to find a way of stimulating the use of roaming services to compensate for the loss of inbound roaming traffic," Newman said on Wednesday.
Newman continued: "The wholesale rate caps that Brussels will impose are roughly half the rates that are charged currently. Wholesale prices in Europe have been falling anyway by around 20 percent per year in each of the last two years so the decision from the European Commission represents a substantial acceleration of this fall in prices.
"In terms of retail price levels, we believe that operators will pass these cost savings onto end users rather than risk further intervention from Brussels. However, this does not necessarily mean that operators will make prices more transparent, particularly with regards to the hidden 'extras' that get added onto the per-minute prices."
Talkback
T-Mobile stating that customers not using mobile phones while roaming is causing the higher prices is a chicken and egg argument. If prices were lower more customers would use their phones while roaming. This whole argument by the mobile operators seems to be a way for them to keep their prices high and enjoy a higher profit margin. O2 for example are owned by Telefonica (a Spanish operator) so why are their prices not the same in each country. If this is due to an internal wholesale pricing structure between O2 and telefonica then this is ridiculus. If mobile operators agree that roaming prices are too high and have been for some time and regulation is not required to bring prices down, why has it taken them so long to reduce prices.
Actually, for T-mobile to even make this idiotic statement is, I find, simply amazing! For the past 17 years I've lived in various sections of Germany. T-Online, parent company of T-mobile, has been basically offering lousy service to their customer base since before I arrived back in January 1989. Now here's where it gets a little...hmmm... All of the sudden, the laws in Germany have changed and there's a lot more competition on phone and internet pricing, with companies like Kabel Deutschland, 1und1.de and Arcor leading the way. Now, for the first time I believe in T-Online's history, T-Online is offering flat rate telephone access! To say that they have been fleecing their customer base since the beginning of time is an understatement in the grandest sense! Let's face it, the market has finally changed to favor the consumer, and T-Online is simply trying to maintain their old ways. Something like robbing from everybody and keeping it for themselves. Now that's just bad business!
The EVUA is an International Tewlecom User Group. These new proposals from the EC to cap at both wholesale and retail level are very welcome to our members, whose total annual ICT spend exceeds billions of Euros per year, of which a significant part is spent on mobile communications charges. We support rapid and vigorous implementation
The GSM Association has continually supported the current pricing regime for roaming and maintains that there is a “very competitive market, characterized by high levels of service innovation”. However, there is no sign of competition really helping to drive down roaming pricing as the GSM Association claims. Indeed the complexity of pricing factors such as set up fee, per second or per minute billing and so on, serves only to worsen and confuse the situation. So far, only the proposal from the Commission has had any effect.
EVUA will continue to endorse the adoption of the proposals and looks forward to them proceeding through the European Parliament and the Council of Ministers.
The call charges for roaming in the EU are excessive until now I have been charged about GBP 1.56 / min from O2 compared to about 8p/min in UK for my business contract. The latest O2 ploy is to launch some sort of EU cut cost promotion note the word promotion. It's unclear for how long the reduced charge for EU use will last at 30p/min ex VAT. I am obviously very pleased the EU Commision is taking action. As far as I'm concerned lower cost leads to higher usage i.e the supermarket high turn-over approach therefore leading to sensible revenue.