New price caps for mobile data roaming in the EU

The old mobile roaming regulation

The Regulation on roaming on public mobile telephone networks within the European Union introduced wholesale and retail price caps for roaming charges and included measures to increase transparency. It introduced a common approach to ensuring that users of public mobile telephone networks when travelling within the EU do not pay excessive prices for Union-wide roaming services when making calls and receiving calls, thereby achieving a high level of consumer protection, safeguarding competition between mobile operators and preserving both incentives for innovation and consumer choice. It laid down rules on the charges that may be levied by mobile operators for the provision of international roaming services for voice calls originating and terminating within the EU and applied both to charges levied between network operators at wholesale level and to charges levied by home providers at retail level [see section 17.3.6].

In 2009, the EU amended the Roaming Regulation to lower prices of text messages, voice and data services further. The amendment introduced a "Euro-SMS tariff" limiting the price of an SMS to 11 cents (excluding VAT) and a wholesale cap of €1 per MegaByte uploaded or downloaded [Regulation 717/2007]. Under the amended roaming rules adopted in June 2009, EU citizens benefit from lower tariffs for voice and SMS roaming services and are better informed about the prices that they pay for data roaming.

For data roaming, the wholesale prices have fallen to well below the EU maximum (€1per MegaByte uploaded or download). Operators were charging each other an average of €0.55 per MegaByte at the end of 2009. Average consumer prices have also fallen, from €3.62 per MegaByte to €2.66 at the end of 2009. The Commission expects operators to pass on savings at wholesale level to consumers as lower retail prices, which it will continue to monitor.

Data roaming services grew by more than 40 % in volume terms in 2009. As smart phones and other hand-held devices become more widespread, this trend is expected to continue. Despite an estimated 12% decline in travel, overall volumes of calls received and SMS sent while abroad in the EU have grown over the past two years. In particular, 20% more text messages were sent in the summer of 2009, than in the previous summer, following the introduction of the EU-wide 11 cents SMS price cap.

Although legislation has led to lower prices and despite the introduction of regulatory limits, the EU roaming market is still not competitive enough to provide the best choice and price to consumers. EU rules give operators plenty of margin to offer more attractive roaming tariffs below the regulatory limits. One of the targets in the Digital Agenda for Europe, is that differences between roaming and national tariffs should approach zero by 2015. In this way, the Commission will achieve a true Single Market for telecoms services.

An internal telecommunications market cannot be said to exist while there are significant differences between domestic and roaming prices. Therefore the ultimate aim should be to eliminate the difference between domestic charges and roaming charges, thus establishing an internal market for mobile communication services.

The high level of voice, SMS and data roaming prices payable by users of public mobile communication networks, such as students, business travellers and tourists, acts as an obstacle to using their mobile devices when travelling abroad within the Union and is a matter of concern for consumers, national regulatory authorities, and the Union institutions, constituting a significant barrier to the internal market. The excessive retail charges are resulting from high wholesale charges levied by the foreign host network operator and also, in many cases, from high retail mark-ups charged by the customer's own network operator. Due to a lack of competition, reductions in wholesale charges are often not passed on to the retail customer. Although some operators have recently introduced tariff schemes that offer customers more favourable conditions and somewhat lower prices, there is still evidence that the relationship between costs and prices is far from what would prevail in competitive markets.

The new mobile roaming regulation

Therefore Regulation 531/2012, which replaced Regulation 717/2007, introduces a common approach to ensuring that users of public mobile communications networks, when travelling within the Union, do not pay excessive prices for Union-wide roaming services in comparison with competitive national prices, when making calls and receiving calls, when sending and receiving SMS messages and when using packet switched data communication services, thereby contributing to the smooth functioning of the internal market while achieving a high level of consumer protection, fostering competition and transparency in the market and offering both incentives for innovation and consumer choice.

It lays down rules to enable the separate sale of regulated roaming services from domestic mobile communications services and sets out the conditions for wholesale access to public mobile communications networks for the purpose of providing regulated roaming services. It also lays down transitory rules on the charges that may be levied by roaming providers for the provision of regulated roaming services for voice calls and SMS messages originating and terminating within the Union and for packet switched data communication services used by roaming customers while roaming on a mobile communications network within the Union. It applies both to charges levied by network operators at wholesale level and to charges levied by roaming providers at retail level.

The new Regulation lays down rules aimed at increasing price transparency and improving the provision of information on charges to users of roaming services. The separate sale of regulated roaming services from domestic mobile communications services is a necessary intermediate step to increase competition so as to lower roaming tariffs for customers in order to achieve an internal market for mobile communication services and ultimately for there to be no differentiation between national and roaming tariffs.

Thus, from 1 July 2012, the European Union's mobile roaming regulation was extended to include price caps for data downloads which will mean significant savings for those using maps, email and social networks when travelling. This year Europeans will spend around €5 billion on roaming services, a saving of around €15 billion compared to what the same services would have cost under 2007 prices. 

Overall, the improved EU roaming regulation - taking into account calls, SMS and data - will deliver consumers savings of 75% across a range of mobile roaming services, compared to 2007 prices. For a typical businessperson travelling in the EU this will mean savings of over €1000 per year. A family taking an annual holiday in another EU country can expect to save at least €200. (Full details of these data roaming case studies are in Annex II).

Lower prices and more competition

The new prices caps, which entered into force on 1 July 2012, are:

-        29 cents per minute to make a call, plus VAT

-        8 cents per minute to receive a call, plus VAT

-        9 cents to send a text message, plus VAT

-        70 cents per Megabyte (MB) to download data or browse the Internet whilst travelling abroad (charged per Kilobyte used), plus VAT.

Downloading data previously cost more than € 4 per Megabyte from many operators in July 2009 - now those prices will be cut by around six times. By 2014, as prices are cut further, the maximum cost of downloading data will be just 20 cents per Megabyte, plus VAT, a saving of 90% on many previous rates.

Operators are free to offer cheaper rates. Price caps are a maximum level, acting as a safeguard, and competition should drive them lower.

To help avoid "bill shock" from 1^st July 2012, people travelling outside the EU will get a warning text message, email or pop-up window when they are nearing €50 of data downloads, or their pre-agreed level. Consumers will then have to confirm they are happy to go over this level in order to continue their data roaming. This extends the alert system currently in place within the EU.

From 1 July 2014, customers will have the option to shop around for a separate mobile roaming provider - either through a contract or by choosing a provider at their destination, like they would choose a Wi-Fi network. All with the same number.

Mobile network operators in visited countries will have an incentive to offer such services at rates close to national prices, on the basis of their own low national network costs. As people's mobile data use intensifies, and they want to use their devices anywhere, any time, many travelers are likely to find this Wi-Fi - like option very attractive.  These forces will reinforce each other to create lower prices and better network coverage.

Price caps will stay in place until 30 June 2017 as an extra safety net for consumers.

Annex I

Current and new retail price caps (excluding VAT)

 

Current and new wholesale price caps excluding VAT (on prices operators charge each other):

The proposed retail caps serve as a mere safety-net for consumers, while the Commission expects that the proposed competition-enhancing structural measures will deliver new pan-European offers and lower prices, significantly below the safeguard caps

Annex II

Data savings

 

Example 1

A Belgian family of 4 goes on holiday to France or Italy for a week and uses a smart phone..

 

 

 

Example 2

 

A British businessman/woman goes to France or Germany 10 times for 3 days in one year and uses her smart phone in this way:

 

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