Mobile-phone operators fume at 'populist' roaming-fee cuts
Holidaymakers should see their mobile-phone bills reduced this summer after Parliament backed a compromise reached with member states on the disputed roaming regulation but operators said the move was driven by a "populist agenda".
In a plenary vote held on 23 May, MEPs backed a compromise text, reached with the Council, that would cut charges on mobile phone calls placed and received abroad. According to the compromise, roaming tariffs will be lowered in three steps:
- Outgoing calls will be capped at €0.49 cent (€0.24 for incoming calls) immediately after the regulation is published in the Official Journal;
- one year later (2008), the cap will be lowered to €0.46 (€0.22 for incoming calls), and;
- after another year (2009), it will be lowered again to €0.43 (€0.19 for incoming calls).
At the same time, the wholesale rate that network operators charge each other to connect a call will be limited to €0.30 a minute in the first year and lowered to €0.26 in 2009.
It was also agreed that operators will have to lower roaming tariffs for all users, not just those who have requested it, at the latest three months after the entry into force of the Regulation.
When making mobile-phone calls away from their home EU country, consumers have to pay so-called roaming fees for using local operators' network installations. These are often excessive - up to €5 per minute - and have earned mobile operators some €8.5 billion in 2006 alone, according to Commission estimates.
In Parliament, some MEPs criticised these caps as not going far enough. But many governments (especially in Mediterranean countries, where mobile operators make billions of euro annually from calls placed by tourists) opposed them, arguing that they were too low.
While MEPs and consumer organisations have hailed the new Regulation, industry has condemned it.
The GSM Association (GSMA), which represents more than 700 mobile operators around the world, said the regulation was “unnecessary because operators are delivering increasingly good value to consumers on roaming services”, pointing to a 29% decrease in roaming costs since 2005.
It added that Parliament's vote would curb competition and innovation because it "will force many European mobile operators to offer roaming services at a level that leaves them no scope to compete with each other on price and on new services".
The association said the price caps were "arbitrary and bear no relation to the expected evolution of roaming costs", adding that consumers could actually be hit in the long-term as phone companies are forced to increase domestic charges in order to make up the shortfall.
Moreover, it added that the regulation would present practical difficulties for some operators, because the obligation to inform all customers of their tariff choices and to move them on to new tariff packages "in the very short timeframe set out in the proposed regulation" would be a "huge exercise in logistics".
"These proposals are designed to further a narrow, short-term and populist agenda and run counter to the wider interests of consumers, the business community and ultimately the European Union," said GSMA CEO Rob Conway.
However, the European Consumers' Organisation BEUC welcomed the vote, although it said that tariffs remain "still rather comfortable for operators".
"Unfortunately, the price caps are still too high and are not linked to the actual costs for operators," said the group. Director Jim Murray warned: "We will continue to be vigilant in watching how operators try to persuade consumers not to take the regulated rates and also in watching the price of text messages, mms and internet services, which are not covered by the regulation."
"Today is a good day for consumers and business travellers in the EU," said EU Telecoms Commissioner Viviane Reding. "Already from this summer, mobile- phone customers will start benefiting from substantially reduced roaming charges when travelling from one EU country to another. Europe's internal market will finally become truly borderless, even for mobile phone bills."
EPP-ED MEP Paul Rübig, rapporteur on the roaming regulation, said: "We went for the best possible deal: Prices are falling, better information on costs is secured and all consumers can decide for themselves which tariff they want. Now millions of consumers are waiting for these improvements to become a reality very soon."
"This agreement is a step forward. However, it is regrettable that, due to pressure from the Council, we had to find an accord before summer. This compromise is not entirely satisfactory,” said the EP’s Industry Committee Vice-President Catherine Trautmann (PES).
French socialist MEP Béatrice Patrie added that, because the new tariffs will only apply three months after the regulation enters into force: "This summer, consumers will continue to see their bill multiplied by four."
ALDE leader Graham Watson said: "It is clear that only the threat of regulation is forcing the hand of operators to reduce prices. As a group, we do not agree with regulating retail prices through legislation. However, this is a special case of clear market failure and limited in time to three years. The present agreement is therefore satisfactory. We should not make the best the enemy of the good."
Spanish Green MEP and shadow rapporteur David Hammerstein said: "The existing market model has enabled mobile phone operators to rip off their customers by setting grossly inflated prices for roaming calls without any consumer transparency. The EP has broken a taboo that the EU should not regulate a market and intervened to defend consumer rights where the market has failed its customers. This has been achieved despite the efforts of member states to defend tooth and nail the position of big telecommunications companies.” He nevertheless lamented that the caps had not been set even lower.
"The margins for manoeuvre left to telecommunications companies are still too wide," said GUE/NGL MEP Umberto Guidoni, adding that his group had nevertheless agreed to the compromise because "this oligopolistic market, which is extremely bad for consumers, must be urgently dealt with".
MEP Nigel Farage, leader of the UK Independence Party (UKIP), however accused the European institutions of staging a "giant publicity stunt" aimed at making the EU popular. He said that the deal would mainly benefit MEPs themselves and rich international businesses, whose staff spend time travelling around Europe, rather than holidaymakers. "Frankly, it smacks of Communist central planning when bureaucrats and politicians think they know what the right market price is. They are always wrong. This will lead to higher costs for domestic consumers. It will lead to less competition and innovation in the market place. It is yet another giant EU folly," he said.