Europe closer to abolishing roaming fees with more price caps

Europe has taken another step towards abolishing roaming costs for consumers by introducing more price caps on calls, SMS and data usage.

As of 30th April, roaming rates for operators in Europe will be capped to a greater extent. Calls and data will be limited to €0.05 per minute/Mb, while SMS will be capped at €0.02 per message. The European Commission has called this a short transition period since June 2017 will see Europeans pay the same price for mobile use across the continent as they do in their home market.

While the price cap marks another win for consumers in the journey towards roaming abolishment, the announcement changes little for a majority of consumer-focussed operators which have already begun reducing prices domestically, and for international operators which have apparently been cutting costs so wholesale prices are pretty much at cost already, according to IDC. Europe proudly stated prices are on the way down; having reduced data roaming costs by since it first began its price-cutting crusade in 2007, with the volume of data consumed by roaming up 630% in the same period.

With operator revenue streams shrinking as a consequence of roaming fee reduction, one question which appears to have risen frequently relates to domestic price inflation. Competition and regulatory authorities at a national level will still be observant against albeit unlikely attempts by operators to hike prices tariff.

Joe Marsella of Ciena reckons operators are already beginning to see the benefits of facilitating easier and more cost-effective use of mobile data abroad across Europe, suggesting customers will be more inclined to spend money on data roaming in the long term if their home operator encourages them to do so, rather than the punishing approach with which it has long been associated. Marsella also advised operators to ready their networks for increased data flow the roaming fee abolishment will inevitably yield.

“A unified European telecoms market, working from a single pricing approach and similar cost base, is also better placed to encourage end-users to use services more often,” he said. “Networks will ultimately need to invest in more cost-effective infrastructure in the short term to support the increased use that the abolition of roaming charges will trigger.

“Yet free-flowing use across the region will replace lost roaming revenue in the medium to long term. Data from Juniper Research supports this, indicating that mobile phone operator revenues from mobile data roaming will hit $42 billion by 2018, or 47% of global mobile roaming revenues. This compares to 36% in 2013. It shows that ending punitive charges will encourage roaming, and more than replace any of the lost revenue.”

A major trend in the UK market at the moment revolves around a looming referendum over Britain’s EU membership. IDC offered some comment on how an exit from Europe could affect mobile operators, and concluded potential “Brexit” has the potential to destabilise the roaming landscape, saying Ofcom will have a major role to play.

“In the event of Brexit, that legal entitlement [to abolished consumer roaming fees] will end. It may be that a series of commercial arrangements will be agreed that have the same effect. Or it may be that they will not. Alternatively, Ofcom might intervene to try and limit roaming charges for U.K. customers when travelling in the EU. But the case for intervention is far from straightforward, and its likely outcome far from certain.”