European Union consumers will soon be pa ying much less when using their mobile phones during trips out of the home country according to pr oposals agreed on September 23 by the European Commission. Presenting the proposals to journalists in Brussels, Viviane Reding, European Teleco ms Commissioner outlined that there will be a price cap of 11 Euro Cents excluding VAT charges per text message, compared to a current EU average price of 29 Euro Cents, sent by customers when in another EU member state. “Consumer should benefit from price reduction right at the start of Summer Holidays and not at the end, so (the implementation date) was brought forward to July 1 from end of August,” European Consumer Commissioner Megelena Kuneva told journalists.
This paves the way for the 60 percent reduction to come into effect on July 1, 2009, subject to approval by EU governments and the European Parliament. Highlighting “hidden charges,” all over the EU, Commissioner Kuneva singled out Cyprus and Greece as the only two countries which “have fully transparent charges,” and said: “This is a wake up call that markets are supposed to work for consumers.”
The Commission proposals also target web surfing and other uses of the Internet connection with a wholesale price cap of one Euro per megabyte for Europeans using their phones to surf the Internet or send emails while abroad and are to be introduced from the summer of 2010. Blaming the “bill shock” of thousands of Euro, suffered by the European consumers on “high wholesale charges,” and saying that “people are not informed,” Reding called for customers to be given “basic info,” and said “(they) should be able to set a cut off limit,” on their data roaming charges before they leave the home country.
The proposed caps are based on a recent report by the European Regulators Group (ERG). Saying, “Europe’s 37 million tourists and 110 million business travelers are waiting for the promise of the borderless single market to finally have a positive impact on their phone bills,” Reding said she wants to see a further reduction in maximum roaming charges for voice calls, as from 2012. Under the proposals, the price cap for making a call abroad would fall from the current 46 Euro Cents to 34 Euro cents, while the maximum price for receiving calls abroad would drop from 22 Euro Cents to 10 Euro cents.
Clarifying a journalist’s doubts on the fallout on research and innovation budgets of industry, Reding attributed the data roaming charges problem to “not having a single market,” adding, “in data (sector) there is a market potential that is not yet exploited.” Citing “economic analysis,” Reding said that there the relation between “income” and “investment” is a “zero sum game,” adding, “(effects on the revenue) by lowering the prices gets augmented by (subsequent) increase in traffic.” Pointing to the price cap of 11 Euro cents for sending a text message while a Da nish study recently put the cost price to mobile phone operators at only one Euro Cent, Reding said it was enough and mea - nt to give operators further leeway when setting prices.
Kuneva, at a joint press co - n ference, called for “mandatory per second billing,” across the EU in order to stop operators from rounding up bills to the next minute. Kuneva said: “If Europe wa nts to deliver concrete results for its 500 million consumers, then practices whereby operators charge for a service which th ey do not deliver should not be acceptable.” “Today, consumers are overcharged by 24 percent on average for mobile calls they make abroad as roaming calls are very often charged not by the second, but only by the minute. A priority for us is fair treatment of consumers when they cross a border and this is why the Commission decided today to introduce the principle of per second billing for all roaming calls.”
Lamenting the inaction by the industry when it had “one year to apply self-regulation,” Reding said, “I regret that I have to present new rules,” adding, “Using your mobile phone abroad in the EU should not cost unjustifiably more than at home, whether for making calls, sending texts or surfing the Web.” With text messaging especially popular among the young, Europeans last year sent a total of 2.5 billion text messages worth 800 million Euro but compared to US, there are still different tariffs across the EU. Belgians and Latvians, for instance, are currently charged more than 70 Euro cents per SMS when traveling in another EU country. On the question of if the EU consumers should also pay for receiving calls in their home country like the US, Commissioner Reding said, “(Lets) leave the operators to make business models (so long) they do it within the Regulations.”
The proposals now go to European Parliament before getting the final nod from the European Council. MEP Fiona Hall of the United Kingdom, the Liberal Democrat Industry Spokesperson, said in a statement: “The arrogance of the mobile phone operators is galling. As in 2006 when they were warned about the cost of roaming voice calls and failed to bring the charges down, they have once again been forced to slash the cost of using a mobile abroad, this time with text and data charges ... once again, action at EU level has greatly benefited the consumer.”
Throwing the weight of the European Commission behind the effort, the EU’s executive behind the proposals, Commission President Jose Manuel Barroso said in a statement, “Europe, through its GSM standard, made mobile telephony attractive across the globe. It is now time to demonstrate that there is a truly single telecoms market in which consumers can use their mobile phone in all 27 EU countries without being punished when crossing a border.” Barroso concluded, “If we get this done quickly we will see tremendous growth in SMS and data services, and send a message that lower roaming charges can be a win-win situation for all.”