EC Tables Proposal To Cap Mobile Phone Roaming Charges

by Ulrika Lomas, for LawAndTax-News.com, Brussels

14 July 2006

An EU regulation that would cut the cost of using mobile phones abroad by up to 70% was tabled by the European Commission on Wednesday.

The Commission wants to ensure that prices paid by consumers for roaming services within the EU are not unjustifiably higher than those they pay for calling within their own country, as very high international mobile "roaming" charges currently affect at least 147 million EU citizens (37 million tourists and 110 million business customers).

Provided that the European Parliament and the EU Council of Ministers support the Commission's proposal, the new EU regulation – which is a legal instrument directly applicable in all EU Member States as soon as it is published in the Official Journal of the EU – could come into effect by summer 2007.

"We are tackling today one of the last borders within Europe’s internal market”, explained Viviane Reding, EU Commissioner responsible for Information Society and Media.

She continued:

“For years, mobile roaming charges have remained at unjustifiably high levels, in spite of repeated warnings to the industry. This is why Europe needs to act now. I am convinced that reducing roaming charges will not only be beneficial for citizens travelling within the EU, but will also enhance the competitiveness of Europe’s industry. 80% of roaming customers are businesses, and in particular small and medium sized companies suffer from this substantial cost factor when doing business within the internal market."

"The EU regulation we propose today will transform mobile roaming from being a nuisance for consumers into an attractive service that will encourage both citizens and businesses to profit even more from enhanced mobility within the European Union.”

The EU regulation proposed this week, which advocates the 'European Home Market Approach' would work by capping, first of all, the wholesale charges that mobile phone operators charge each other for carrying calls from foreign networks. The method used by the Commission for this cap – which takes as its starting point the tariffs for connecting mobile phone calls from other domestic networks – ensures that operators can recover at any rate the cost of providing roaming services.

As it is crucial for the Commission to guarantee that the benefits of the new EU regulation reach the level of consumers, it also proposes a price cap at retail level. Operators will be allowed to add to their wholesale cost a retail mark-up of up to 30%, which is the margin that operators can normally make with domestic phone calls.

This retail mark-up would apply to calls made and received while roaming. For calls received, this retail cap would become effective on the day of the entry into force of the new EU regulation. For calls made, the retail cap would take effect automatically after a final transition phase of 6 months.

The Commission finally proposes to enhance the transparency of roaming charges for consumers. Mobile operators will be required to provide customers with full information on applicable roaming charges when subscriptions are taken out and to update consumers regularly about these charges.

National regulators will also be required to monitor closely the development of roaming charges for SMS and multi-media message services (MMS).

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