There is good news for smartphone users heading to the continent this bank holiday weekend. From tomorrow (April 30th), new EU rules will cap the cost of using your phone when abroad in Europe at 4p per minute, 2p per text and 4p per MB of data (excluding VAT), around four times cheaper than current limits.
Three UK’s rate is dropping from 16.6p per minute, 5.2p per text and 17.4p per MB to 4.3p per minute, 1.5p per text and 4.3p per MB. Tesco Mobile has announced it will drop roaming charges altogether in more than 30 European countries between May and September this year. From July 2016, all phone companies will be required to scrap roaming fees for phone users travelling within the EU.
That’s good news for my brother-in-law who is currently in Mallorca to compete in the marathon cycle ride, the Mallorca 312 tomorrow. That’s 312 km, a lot of it on the massive mountain ridge that covers the west of the island. I thought my leaflet delivery schedule for the next few days was punishing, but this is quite some feat of endurance, so good luck, Jamie and team-mates.
This adds to a growing list of reasons to vote to remain in the EU. It maybe isn’t the biggest, but it does show that the EU is working to break down unnecessary barriers for the benefit of its half billion people.
Liberal Democrat MEP Catherine Bearder commented:
We are now one step closer to a roaming-free Europe.
This is a huge win for consumers, making it easier to keep in touch and share your memories while abroad.
Staying in the EU will mean lower prices, easier travel and more money in the pockets of British holidaymakers.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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17 Comments
Conservative and Green MEPs voted against this. It’s not thanks to the EU but thanks to Liberals specifically.
The problem with this argument is that the EU have taken at least 20 years too long to come out with anything like this. By the time the EU has got around to issuing a decree about the problem it is naturally diminishing anyway. The phone companies now know that it costs them just too much in bad publicity, so they are slowly mending their ways of their own accord.
Viewed from afar, Australia and New Zealand might seem to be one country but they are quite separate with their own separate dollars and separate everything. There’s no enthusiasm on either side of the Tasman to unify their two currencies or set up a common Parliament. Yet most phone companies will offer roaming between the two countries at a modest cost. I’ve just Googled to check on this and find that Vodafone are actually offering it for free at the moment.
Of course everyone should vote as they see fit in June but, really, the data roaming question is just a non-issue.
Catherine Bearder:
“This is a huge win for consumers”
That’s rather assuming the mobile companies will be overcome by Santa Claus-like generosity and happilly take the full impact of this loss of revenue, rather than protecting their profits by increasing charges elsewhere i.e. domestically and outside the EU.
Actually there is ample evidence that mobile companies, when faced with targeted price regulation of this sort, do indeed claw the money back (at least partially) by increasing other charges. Economists call this the “waterbed effect” – think what happens to the rest of the waterbed when you press down in one particular place.
Though it is likely that companies will absorb some of the impact – meaning that consumers as a whole will end up being better off – this will be offset by an increase in prices for non-EU-roaming services. This means that although frequent EU travellers will indeed benefit substantially, the vast majority of mobile users who do not use their devices much in the EU could very well end up paying more than they do now.
Nice to have a few crumbs – but how about going for the big fish ? :
The Independent, September, 2013 “Vodafone’s £84bn tax avoidance bonanza: Nothing for taxpayers in Verizon deal while bankers share £500m in fees”
Apparently the EU was first asked to abolish roaming charges by a global body called the International Telephone Users Group (INTUG) in 1999. However, the EU dragged its feet, so much so that eventually INTUG approached another global body, the Organisation for Economic Co-operation and Development (OECD). Remember them? They had something to say about the EU a week or so ago.
They in turn involved a third global body, the International Telecommunications Union, which used the rules of a fourth, the World Trade Organisation, to ensure that by 2013 roaming charges were being abolished right across the world, the EU well down in the queue.
So basically the EU a) dragged its feet b) was pressured to do this c) is becoming a middle-man might for global organisations. We could have done this ourselves outside the EU. What’s the point of the post?
@Jane:
No we couldn’t. Or only for calls made in the UK. We could not regulate call charges for UK customers making calls from other European countries if we were not in the EU. Roaming charges outside the EU remain exorbitant for UK (and presumably other EU) customers.
@Stuart: Telcos may do what you suggest, but the question is whether it’s desirable that telcos use artificially high roaming charges to cross-subsidise other business. Roaming charges are high principally due to the lack of proper competition when using your home mobile phone SIM card in a foreign country. The system is the last bastion of the old international telecoms cartels that up to about 20 years ago made international landline calls artificially expensive. The effective dismantling of that cartel did not lead to increased charges for domestic calls; indeed the opposite has happened.
You don’t understand the argument. I appreciate that UK travellers would still have to pay high roaming charges even if we had taken the UNTAG rules.
My point is that it has nothing much to do with the EU as they were facing pressure from the WTO and they are becoming simply a middle man for global populations – this is being replicated with a lot of other things. If we hadn’t have joined the EU and had implemented the 1999 rules it would have also made us more competitive.
The question is not whether the EU are stopping roaming charges it’s why it’s taken so long and how it’s becoming so irrelevant on such matters. This is also happening on a global state
@Alex
I agree. It would be interesting to see what the actual costs of roaming to the telco’s are.
The mobile market will always be a deeply imperfect one (in the economic sense) for several reasons, such as the incredibly high barriers to entry. The waterbed effect is certainly real – even INTUG (as referred to in Jane’s post) have acknowledged this in their submissions to the EU.
As a cynical aside, I find it amusing that many of the Lib Dems who are praising these EU price controls are the very same Lib Dems who were vehemently opposed to Labour’s proposed energy price controls on the grounds that they were (a) an illiberal imposition on private enterprise, (b) a relic of 1970s socialism, (c) would prevent companies from investing in their infrastructure, and (d) wouldn’t even benefit consumers in the long run. Apparently all these objections to price controls can be overcome simply by having the EU implement them!
@Jane: And whatever makes you think that the UK would have chosen to implement those rules outside the EU? If the UK government had proposed to do so, it would have been subject to the same lobbying from telcos that the EU had, and so would also likely have dragged its feet (and I suspect would have been even more intransigent than the EU).
The trouble with the “let’s leave the EU so that we can implement all the laws WE want” crowd is that they forget that they would then have to persuade our government to implement those laws, while the national government would be (as indeed it is) subject to the same pro-corporate lobbying as the EU, so the likely outcome would just be bad UK law instead of bad EU law.
As a result of the elimination of roaming charges, mobile phone companies will have higher domestic charges than they would otherwise have.
So people who travel frequently around countries will pay less and stay at home customers will pay more (than the would otherwise pay).
So in general, more wealthy businessmen and women and walthy tourists will pay less and poorer stay at homes will pay more.
Just pointing this out – not saying whether it is good or bad.
The regulations for reducing/abolishing roaming charges is derived from and international standards developed by the International Telephone Users Group (INTUG) and the Organisation for Economic Co-operation and Development (OECD).
The OECD involved a third global body, the International Telecommunications Union, which used the rules of a fourth, the World Trade Organisation, to ensure that by 2013 roaming charges were being abolished right across the world.
This all started back in 1999 by the (INTUG). So EU is just following international standards and are applying them because they have to due to the international agreements that they have signed. But as usual the EU are trying to take credit for abolishing roaming charges and using it to deceive people to convince them that we need the EU and we are better off in it.
@alex Macfie – just because the democratic culture of lobbying goes on at the EU doesn’t mean to say we have to suffer it here. It’s the trouble with the Remain psychology – how can anything be different from the cynical approach to politics we have today.
@David Evershed: Your assumption appears to be that telcos are operating at a loss for domestic calls and cross-subsidising this with the profits from artificially high roaming charges. I find this unlikely. The market for domestic mobile communications is highly competitive and telcos simply would not be able to get away with raising charges there in order to compensate for the loss of the easy cash cow of the roaming cartel.
@Jane: I never said we did: please do not put words into my mouth. What I said was that it is a fallacy to think it would be any easier to get the sort of laws we want outside the EU than inside it.
@Alex Macfie “Your assumption appears to be that telcos are operating at a loss for domestic calls and cross-subsidising this with the profits from artificially high roaming charges. I find this unlikely.”
Well don’t know about today’s market, but back in the 1990’s, the mobile networks in Ireland benefited greatly from the additional revenues obtained from roaming charges. The additional revenues funding a more rapid expansion of coverage and the offering of services at a lower price to domestic users than would otherwise have been the case. However, this was possible because there were significant numbers of business people jetting in and roaming on the network, in comparison to local subscribers and it was generally cheaper to use one’s mobile than the hotel’s landline phone (but then I was still having to use the hotel phone for the laptop…).
Well let’s leave aside the point that where Ireland is concerned, there are a lot of people roaming who are not “jetting” anywhere, because of the open border with the UK and resulting ease of travel there. So you can find yourself “roaming” just by travelling a few miles away (perhaps, as seems completely plausible, between home and work). I do not think it is desirable that companies should rip of one group of customers to provide better service to another. If the public benefit from additional investment in telecoms infrastructure beyond that gained through profits generated in a competitive free market, then this investment should be done by transparent public funding, not by permitting the continuation of what is essentially legalised fraud. For the technical cost of routing a call to a neighbouring country is not much more than that of routing a domestic call. The only thing making it more expensive to customers is the market distortion caused by national market segmentation. In a proper single market in mobile telecoms, it would make no difference to the customer whether a call was made in Newry or Dundalk; Strasbourg or Kehl; Aachen or Liège; Malmö or Copenhagen; the cost should not suddenly jump just because you have strayed across a national boundary. This is what the EU seems to be working towards, and I hope it completes sooner rather than later.
@Alex
Your assumption appears to be that telcos are operating at a loss for domestic calls and cross-subsidising this with the profits from artificially high roaming charges. I find this unlikely.
I don’t think David is making that assumption. I think he’s assuming instead that the mobile industry will not simply take an imposed cut to its profits lying down – which seems a much more likely assumption to make than the opposite one, unless we’ve suddenly woken up to a new world where big corporations are motivated by altruism.
As I mentioned earlier, even INTUG have acknowledged that abolishing EU roaming charges will lead to higher charges for other customers.