Opinion: Lib Dems help end roaming charges, UKIP back higher phone bills

Screen Shot 2014-04-04 at 18.00.12Another week, another success for Lib Dems in the European Parliament. This week it was hammering the final nails into the coffin of mobile roaming charges in Europe. From the end of next year, the extra fees for using your mobile phone in another EU country – already reduced significantly in recent years – will be scrapped entirely.

It’s another practical, common sense measure which means good news for consumers – despite resistance from the telecoms sector. It’s also an example of what the EU does best: simplifying life

And it’s got the Liberal trademark stamped all over it. It’s the Dutch Liberal European Commissioner Neelie Kroes who has successfully driven the reform forward and seen it to fruition over the past four years. And Lib Dem MEPs have been at the forefront of getting the proposals agreed in the European Parliament.

The end of roaming charges is just part of a bigger reform of telecoms which also includes the crucial principle of net neutrality: an effective ban on blocking or slowing down of the internet. Kroes has made it a key aim of her term in office to protect internet freedom and the flourishing digital sector.

But where were the other parties in all this? You’ve guessed it: the Tories failed to back the reform and UKIP’s MEPs voted against. That means they voted against lower phone bills and against internet freedom.

Let’s make sure as many voters as possible know this before they go to the ballot box on 22 May!

* Giles Goodall is a Lib Dem European Parliamentary Candidate for South East England.

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32 Comments

  • Everyone uses Skype now, anyway.

  • Eddie Sammon 5th Apr '14 - 9:18am

    Simple campaigning is good, but too much simplicity insults the electorate’s intelligence and I think this is in the “too simple” category. Regards.

  • Nonconformistradical 5th Apr '14 - 9:21am

    “Everyone uses Skype now, anyway.”
    No we don’t. The excuse “everyone does it” is never a good enough reason for doing anything!!!!

  • Alex Macfie 5th Apr '14 - 10:25am

    @jedibeeftrix: Exorbitant call charges to mainland Europe on fixed phone lines used to be justified on the basis that they supposedly subsidised the cost of local calls and infrastructure. It wasn’t true then, and it isn’t true now for mobile roaming. There is no evidence that mobile operators use roaming charges to cross-subsidise domestic callers. Cheap deals for domestic calls and texts are primarily the result of strong competition. They are similarly cheap for fixed lines, where roaming is not an issue, and international calls are now much more reasonable.

  • Cheap deals for domestic calls and texts are primarily the result of strong competition

    And how exactly do you think that the mobile companies are able to cut domestic rates to the bare minimum and still pay for the fixed costs of the network? Where is that money coming from?

    It’s simple: if a company is getting a given income from several sources, and you tell them they cannot make as much from one source, then they have to make more income from one or more of the other sources to compensate. Right?

    (Either that or they make less income overall. But competition is so fierce in this are that if they could afford to do that, if they had some slack, they would already have used it to reduce domestic prices. So they mustn’t have any slack, so they must be operating at bare minimum income, so any shortfall from one area will have to be made up for by raising prices in another area.)

  • Alex Macfie 5th Apr '14 - 3:32pm

    Tim: Of course (if we accept your reasoning) it helps the telcos if one of their sources of income is free any exp osure to competition. As I noted in the other comment, the roaming market is a cartel, and if it were a properly open market the telcos would not be able to overcharge for roaming. They overcharge for roaming because they can get away with it. They do not overcharge for domestic calls because they cannot get away with it there. They would still not be able to get away with it if other revenues streams were also subject to competitive forces.

  • More competition is all that’s needed. We don’t need to surrender our country to EU control.

  • Alex Macfie 5th Apr '14 - 4:11pm

    Competition in a market that extends across borders is an issue that needs to be handled at the supranational level. Hence the EU getting involved in this issue.

  • Of course (if we accept your reasoning) it helps the telcos if one of their sources of income is free any exposure to competition

    It helps the telcos; it also helps those customers of the telcos who never use that source of income, because their prices can be lower because more income is generated from those who do use the source of income where customers can be gouged for every penny.

    They do not overcharge for domestic calls because they cannot get away with it there

    What do you mean by ‘overcharge’?

    The fact is that it costs a certain amount to run a mobile network. Therefore, if income from one area goes down, then income from other areas must rise to compensate, or the company goes bust. That’s just simple maths. At the bottom line, income must be equal to or greater than expenditure.

    Introducing competition into a market helps the customers of the market. Introducing competition into the market for roaming charges will help those who use that market. However those who do not use that market. those who stay at home most of the time and don’t travel to Europe much or at all, will suffer, because the introduction of competition to the roaming market will result in less income from that market for companies, which will mean that income from other markets, like the domestic market, must rise in order that they maintain the same bottom-line income.

    This is just arithmetic. A + B + C = X. If C falls, because competition has been introduced into a market which was previously fixed, then A or B or both must rise in order to keep X the same.

  • “We don’t need to surrender our country to EU control.”

    @David: Well said! I demand we leave the EU so I can enjoy the freedom to be overcharged!

  • This discussion seems to have turned into one about free trade and tariffs. We are supposed to have an open market inside the EU. Why have the TelCos been allowed to get away with applying tariffs to cross border trade?
    The mobile phone industry is remarkably profitable. The number of shops on the High Street selling phones is testament to that. I do not think this measure will bankrupt any of them. The changes will help out people living on the South Coast & near the Irish border who can not get a UK signal on their phone. Tourists both to mainland Europe and visitors to the South coast will no longer be hit by roaming charges.

  • Most people read the papers and wouldn’t expect UKIP to vote to make the EU stronger. Everyone knows doing that would go against all UKIP stands for. However, the fact remains we don’t really need an EU Directive to ban roaming charges. We are perfectly capable of doing that for ourselves. Whether or not we remain in the EU, the same or broadly similar law could easily be passed independently by Westminster MPs, should they choose to do so. Frankly, I doubt the world would end if the EU didn’t even exist.

  • Why have the TelCos been allowed to get away with applying tariffs to cross border trade?

    I don’t think you understand what ‘tariff’s (in the ‘cross-border’) sense are. A tariff in this sense is a tax on an import or an export levied by a government. A telco cannot ‘apply a tariff’ because only governments can apply taxes on imports and exports and telcos are not governments.

  • We need roaming charges removed like a hole in the head here in the UK, it will only benefit people in Europe here we will see costs going up as a result. Our costs on mobiles is a lot cheaper than Europe where there is no competition to speak of so the net result will likely be that our costs will creep up to match theirs, seems obvious to me that it shopuld have been voted against by LibDem and Conservative MEP’s even though as always the UK is outvoted by the other 26 countries

  • I see Skype mentioned in these comments, it is all well and good here in the UK but once you move to another country it changes, the data charges then come into play, for myself I have found satellite internet is the answer at around £200 a year, a satellite phone can be now run within reason and could be useful but there is no one size fit’s all and likely never will be

  • Alex Macfie 6th Apr '14 - 1:39pm

    Dave:

    “as always the UK is outvoted by the other 26 countries”

    This practically never happens in the European Parliament. MEPs do not vote en bloc by nationality; they organise and vote by party groups based on ideology. Also I’m not sure why you are expecting Lib Dem and Conservative MEPs would vote together. They are not bound by the Coalition agreement for UK government, and are members of separate European Parliamentary groups.

  • Alex Macfie 6th Apr '14 - 2:00pm

    “If the suggestion is that phone companies giving domestic customers freebies and are swindling (perhaps) roaming customers to pay for it, I think that is quite wrong.”

    Amen to that. For some reason Tim thinks it is desirable that telcos should be permitted to swindle one group of customers to allegedly benefit another. Even if it happens (which I doubt) it is wrong.
    And Tim’s simplistic economic analysis appears t o assume that company operations and phone usage will not change as a result of reductions in mobile roaming charges. This is quite obviously not true: for instance, roaming usage will increase as users who had previously been put off by the high charges would use their phones abroad more.
    Also Tim, barriers to cross-border trade can come from business as well as government, and EU single market law is designed to guard against both types of artificial trade barrier. High roaming charges are exactly such a barrier.

  • Chris Manners 6th Apr '14 - 2:53pm

    Excellent posts from Alex Macfie here.

  • barriers to cross-border trade can come from business as well as government

    Tariffs, however, which was the subject under discussion, can only be imposed by a government.

    (‘Why have the TelCos been allowed to get away with applying tariffs to cross border trade?’, Hugh, 5th Apr ’14 – 9:39pm)

  • Alex Macfie 6th Apr '14 - 3:07pm

    Theresa-1

    However, the fact remains we don’t really need an EU Directive to ban roaming charges. We are perfectly capable of doing that for ourselves.

    Roaming, by definition, only happens across borders. If the UK were to unilaterally ban roaming charges, this would only affect people coming into the UK and using their foreign mobile phones here. The UK has no control over charges levied on UK phone users in other countries. So this is something that is only worth doing if it is by agreement among a number of countries, which is why the EU is doing it.

  • This issue is essentially one of price regulation. There have undoubtedly been excesses in the past in roaming charges, but the pendulum has now swung too far to an excess of regulation. The key point is that differences in pricing should be proportionate and transparent. Therefore, if there are additional costs in roaming, there is no justification in forcing the charges to be identical – for comparison, there is no regulation in the costs of online retailers charging different postage rates for delivery to different EU countries.

    It is disappointing that our MEPs have devoted so much attention to a consumer issue that mainly affects the more affluent in society who are able to travel internationally (of which MEPs are a prime example) rather than issues that affect the more needy in society. Frankly, it smacks of “grandstanding”, and is not an issue that makes me proud to be a Liberal Democrat.

    Some of the reasons given by both Giles Goodall and commenters may be nice things (for example, “simplifying life”), but they are not jutification for regulatory intervention. By the same rationale, the EU should ban designer goods from being sold a a larger mark-up to the manufacturing cost than equivalent unbranded items.

    (for transparency, I should declare that I am employed by a mobile phone company, but I posting is entirely my personal view).

  • It is disappointing that our MEPs have devoted so much attention to a consumer issue that mainly affects the more affluent in society who are able to travel internationally

    That wouldn’t be such a problem (better the MEPs devote their time to such tinkering than to some of their other interferences in domestic law) except that it’s solving a problem that mainly affects the more affluent at the cost of the less affluent who will have to bear the higher domestic charges necessitated by the drop in income from roaming charges.

    Solve a problem for the affluent, fine.

    Impose an extra cost on non-travellers in order to make things cheaper for those who either travel for business or take holidays in the EU? Not fine, not fine at all.

  • Alex Macfie 7th Apr '14 - 4:09am

    Tim: I think you know perfectly well that “Hugh” did not mean “tariffs” in the literal, technical sense, but financial barriers to trade erected by companies through their business model.

  • Alex Macfie 7th Apr '14 - 8:48am

    Tim: You seem to suppose that only “jetsetters” would have any significant use for cheaper roaming charges. What you fail to understand is that that outheghout most of the EU it is very easy to find yourself roaming on a foreign network without significant fanfare. The possibility of accidentally being on (for instance) a Polish network when in the Czech Republic (because the Polish antenna happens to be closer to you) has already been mentioned. But also the fact that in the absence of passport controls it is possible to casually hop across the border means that anyone can be a “traveller” even if they do not intend to be such. For instance, it is possible to travel between Strasbourg and Kehl, or between Malmö and Copenhagen, as straightforwardly as between Surbiton and Esher. It is absolutely feasible to commute across any border in the Schengen area; why should people who choose to do this be forced to have two mobile numbers (one for each country) or pay through the nose for roaming?
    And before you say that that’s all very well for those Continentals in the Schengen area and we can’t travel so straightforwardly to France, it is an issue for those living on the UK/Irish border, which also has no passport controls. People can and do live and work on either side of that border, and it is equally unfair that they should be penalised.

  • It is absolutely feasible to commute across any border in the Schengen area; why should people who choose to do this be forced to have two mobile numbers (one for each country) or pay through the nose for roaming?

    Why should people in Britain face higher domestic call charges to help out those who commute across borders in the Schengen area?

    it is an issue for those living on the UK/Irish border, which also has no passport controls. People can and do live and work on either side of that border, and it is equally unfair that they should be penalised.

    That, again, is a tiny number of people. Admittedly a more sympathetic group than the jet-setters but still tiny. The one I knew had no trouble having a second, Irish mobile for contact during term times while studying at Trinity Dublin.

  • Alex Macfie 7th Apr '14 - 2:28pm

    “Why should people in Britain face higher domestic call charges to help out those who commute across borders in the Schengen area?”

    You assume that they would only because of your simplistic analysis of the economics that supposes that mobile phone companies will not adapt to the changed market situation. It’s not about “helping out” anybody, but about creating a fair open market in which no-one is ripped off. If the marginal cost for a roaming call is not significantly higher than that of a domestic call, then the telephone costs would reflect this if subject to market forces .

    You are essentially saying that it’s acceptable for companies to rip off one group of customers in order to benefit another. To say this is to say that it’s acceptable for companies to rip off customers. And on this we shall have to agree to disagree. Good bye.

  • Alex Macfie 7th Apr '14 - 2:39pm

    Simon Pike: The increase in marginal cost of roaming (mostly due to the payment of settlements between the different national operators) is very marginal (pardon the pun), so one would not expect the price to customers to be much higher than that of a domestic call if it were subject to market forces..
    The analogy with designer goods is poor because people are actually willing to pay the huge markup for the designer label: they goods are prices at a level that the market will bear. I don’t think market forces would accept such a high markup for international/roaming telephone calls.

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