It is one of the European Commission’s prestige projects. Hardly any other measure so clearly demonstrates how Europe is growing closer together, as the abolition of roaming fees for mobile phone users.
Europeans will be able to phone or surf the Internet without paying any extra, even as they cross borders into other European nations.
For years politicians argued over the idea and it took until 2015 to come up with a plan. That plan now says that from June 15, 2017, E.U. citizens will no longer have to pay additional charges when they use their mobile phones anywhere inside the European Union.
European telecoms can still charge each other for their customers’ usage abroad. After all, they do have to manage the flow of calls and data between 28 countries, and often via several potential providers. But the European Commission, which is responsible for formulating legislation within the 28-member bloc, has ruled that prices the telecom providers can charge each other will be regulated in the future.
The breakthrough on legislation came early Wednesday morning when E.U. institutions finally agreed on stronger curbs on wholesale prices for mobile telephony and internet usage in European countries.
No wonder not everyone is pleased. Scrapping roaming surcharges will cost the telecommunications industry millions.
The compromise ensures that from June mobile phone users don’t have to pay roaming charges when travelling to other E.U. countries. Politicians had argued for this strongly.
More specifically that means that from mid-2017, network operators can bill each other a maximum €7.70 ($8.30) per gigabyte of data. Up until now the highest amount was €50 ($54) per gigabyte. By 2022, the maximum charge should scale down in a series of five drops, to €2.50 ($2.70) per gigabyte. The maximum roaming surcharge for mobile phone calls will drop from 5 to 3.2 euro cents per minute. Text messaging will also become cheaper.
The European Union has argued for more than 10 years about scrapping roaming charges. “That was the final piece of the puzzle,” Andrus Ansip, the European commissioner for digital single market, said. Malta now holds the rotating presidency in the council of member states and the Maltese government emphasized that the wholesale prices agreed upon should enable the enterprises to keep investing in their networks. The agreement still has to be ratified by the European Parliament and member states but if they do, the new rules will apply to the 28 E.U. states as well as Iceland, Norway and Liechtenstein.
Of course, not everyone was happy. Deutsche Telekom criticized the agreement. A spokesperson said that although the corporation supports the political aim of doing away with roaming surcharges, “the marked reduction in regulated maximum wholesale prices is neither necessary nor reasonable.”
Deutsche Telekom had already negotiated prices below this new maximum on its own, the spokesperson said, which also depended on quantities used. The new rules would “needlessly replace functioning market mechanisms and substitute them with regulated prices,” the spokesperson argued.
Meanwhile one of Deutsche Telekom's competitors, Telefonica, was more relaxed. A spokesperson for the company said the agreed-upon costs corresponded approximately with what they had been expecting.
Last year the European Commission abandoned plans for another idea: To restrict roaming freedoms to 90 days a year. Instead, providers are to be enabled to prevent abuse, such as excessive calling with cheap foreign SIM cards, bought in-country.
The telecoms industry warns that if the roaming charges are scrapped customers could use SIM cards that they’ve bought more cheaply abroad, back at home. That would be bad for domestic providers because they’d lose customers at home, and it would be bad for cheap phone services providers because they would eventually have to pay more to a foreign phone service.
To prevent this, the European Union has decided on a “fair use policy” by the end of 2016 to protect against such abuse. It allows them to charge extra for roaming under certain conditions.
But again, not everyone is pleased. Telefonica’s spokesperson argues that this doesn’t align with the new E.U. rules. “From our point of view, what is decisive is providers can implement the rules technically, while at the same time customers have a simple and attractive solution.” But this wasn’t the outcome, with all the newly complicated accounting methods for limiting data bundles as well as prepaid tariffs, Telefonica’s spokesperson said. Deutsche Telekom also complained that the new intervention makes it hard to take action against abuse.
Perhaps it is no wonder that telecommunications providers are still arguing and that the deal took so long. Scrapping roaming surcharges will cost the industry millions in sales. In a study, analyst Cengiz Sen, of the investment bank Equinet, wrote that the loss of roaming surcharges could reduce €50 to 60 million ($54 to 65 million) from Telekom’s revenues this year.
Till Hoppe is a Brussels correspondent for Handelsblatt. Ina Karabasz is an editor in Düsseldorf covering telecommunications, IT and security issues. To contact the authors: [email protected], [email protected]