Bill shock is not yet a thing of the past, but the end of the summer is less likely to bring unpleasant surprises for customers using their mobile phone abroad. What has made mobile roaming services cheaper than they were four years ago, for Europeans? The answer is a mix of EU regulation, some self-regulation by MNOs and competitive pressure.
Within the EU, retail prices of roaming voice services have declined dramatically since regulation came into force in mid-2007, from over EUR1 per minute in 2005–2006 (before regulation) to current per minute ceiling prices of EUR0.43 for calls made and EUR0.19 for calls received.1 These ceiling prices (‘Eurotariffs’) are the results of an EU directive that came into force in July 2007, and its extension in June 2009, which set further maxima for the period 2009–2011 (of EUR0.35 per minute for calls made and EUR0.11 per minute for calls received).2
Some operators in the EU offer special roaming tariffs that exceed the requirements set by Brussels. MNOs launched many of these schemes in 2005 and 2006 in an (unsuccessful) attempt to self-regulate and to pre-empt roaming regulations. Cheaper roaming tariffs are offered either as a free opt-in (for example, Vodafone Passport) or through an array of fee-paying options (for example, Orange Travel). Vodafone ran a high-profile promotion this summer ‘abolishing roaming charges’ between 1 June and 31 August 2009, between which times its Passport customers’ home tariffs applied to their voice (and non-voice) usage in 35 European countries, and in Australia and New Zealand.
For messaging, prices for roaming could only be curbed by regulatory action. Many people using mobile phones while travelling in the EU this summer will have received a push email informing them of the tariffs applicable to intra-EU roaming text messages from 1 July 2009: to send a roaming SMS message within the EU will cost EUR0.11 or less and receipt of SMS messages must be free.3 Data from the European Regulators Group (ERG) indicates that this represents a price cut of around 60% for roaming SMS messages (which cost on average EUR0.274 within the EU during 1Q 2009). The ERG data also shows that retail prices for roaming SMS messages had remained stable since 2007 (when data was first collected), making a roaming SMS roughly three times as expensive as a domestic one. It is clear that MNOs had made no attempt to self-regulate the price of SMS messages and that EU action was the sole driver for the cut in retail prices in mid-2009. (As with voice calls in 2007, wholesale SMS charges also became regulated.)
Retail roaming data transfer charges have so far escaped regulation, but wholesale charges have been subject to regulation since 1 July 2009. Operators may now demand a maximum charge of EUR1 per megabyte of transferred data from the network operator of the roaming subscriber (to be reduced to EUR0.50 per megabyte by July 2011). The EC hopes that the savings made by operators at the wholesale level will be passed on to the customers and, indeed, the market for data transfer services has exhibited some of the characteristics of a competitive market, with retail prices following the (downward) trend of wholesale charges (see Figure 1).
Figure 1: Average retail charge for roaming data transfer within the EU [Source: ERG, 2007–2009]4
Roaming data transfer services are subject to more competitive pressures than roaming voice or texting: for data, travellers can use Wi-Fi hotspots or they can simply pick up a prepaid data SIM in the country they are visiting. It may, therefore, be possible, for retail charges for roaming data transfer to avoid regulation when the current directive expires in 2012, if they decrease very significantly from today’s levels – MNOs currently apply a hefty premium for roaming, despite declining prices.
In conclusion, EU regulation has undoubtedly brought about a better deal for consumers, but some mobile consumers still need to be on their guard:
- EU regulation applies only to EU operators (and those in Norway and Iceland) and to intra-EU mobile traffic
- Retail prices for roaming data transfer remain high and use of these services can still lead to very high bills. However, bill shock should be a thing of the past from July 2010, when user-defined cut-off limits, which block mobile data transfers after a set level of spend, will come into force.
1 All prices quoted exclude VAT.
2 Regulation (EC) No 717/2007 of the European Parliament and of the Council of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC.
3 This was a result of the coming into force of Regulation (EC) No 544/2009 of the European Parliament and of the Council of 18 June 2009 amending Regulation (EC) No 717/2007 on roaming on public mobile telephone networks within the Community and Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services.
4 On-net roaming data traffic refers to that between two operators within the same group (for instance, between two Vodafone subsidiaries in different countries). Off-net roaming traffic refers to that between two unrelated operators.