Roaming fees When in Roam

As the European Union prepares to cap cellphone roaming fees from April 30, service providers like Vodafone have spotted an opportunity to use the rule change as a marketing tool.
Holiday call charges within the European Union are about to get a lot cheaper.

It may not be as big a revelation to European travel as the advent of low-cost flights, but the upcoming introduction of low-cost roaming charges is likely to further break down national barriers on the continent.

From April 30, roaming charges, which are fees added to domestic rates when a phone is used outside the home country, will be capped within the European Union, following the introduction of new E.U. rules. Calls, SMS ext messages and mobile Internet will all be covered by the change. And, following a decision by the European Parliament, extra fees will be banned completely from next summer.

But in the meantime, cellphone service providers have spotted an opportunity to use the surcharge change as a marketing tool. Over the weekend, Vodafone Deutschland announced that starting on April 14, it will eliminate roaming surcharges on new contracts or extensions in most price plans. “This means goodbye to roaming in this very month,” Chief Executive Hannes Ametsreiter told the Rheinische Post newspaper.

The move brings the British company in line with its competitors Telefonica Deutschland, which trades as O2, and Deutsche Telekom, both of which already offer or will soon introduce an E.U. flat rate in similar packages.

The European Union has regulated the prices for roaming down so low that they are no longer economically significant for network operators. Werner Ballhaus, PwC

But in Vodafone’s case, it is a farewell with strings attached. The deal benefits only those Vodafone customers who sign a new contract or extend an already existing one. And for the moment, only higher talk plans from around €35 ($40) per month are included in the scheme. The company had already announced that no more roaming fees will be charged to business customers.

“The European Union has regulated the prices for roaming down so low that they are no longer economically significant for network operators,” said Werner Ballhaus, an expert on telecommunications at the auditing and consulting firm PwC. “If someone wants to use the issue for marketing or for establishing a distinction to competitors, then the time is now.”

Mr. Ballhaus considers the coming summer season to be a good point in time. In the future, some users may be online more frequently while on vacation – and would then subscribe to additional data packages or fees with larger data volumes.

For a long time, roaming was a bountiful source of revenues for E.U. cellphone service providers. But ever since 2007, the European Commission, the executive arm of the bloc, has been reducing the surcharges step by step, in total by about 80 percent. The authority argues that high surcharges are a “disproportionate irritation” for commercial and private users and  they “constitute a commercial distortion for which there is no place in a unified market.”

From April 30, the maximum surcharge that can be added to the normal rate for a domestic call will be limited to 5 cents per minute plus value-added-tax, to 2 cents for an SMS text message and 5 cents for a megabyte of data. From 15 June 2017, all surcharges will be banned.

 

Christof Kerkmann is an editor for Handelsblatt Online and writes about the technology sector. To contact the author: [email protected]