EU Streamlines Plan to Reduce High Roaming Charges

The European Commission has simplified its plan to curb excessive wholesale roaming charges demanded by Europe’s mobile phone operators, acknowledging that its previous approach was too cumbersome, a commission spokesman said Tuesday.

The draft regulation’s aim is to create a union-wide home market for mobile phone users that stretches from Finland in the north to Cyprus in the south, and from Portugal in the west to Poland in the east.

The commission believes the prices for international roaming for customers traveling within the European Union are far too high and that they should not be higher than the charges paid by customers when calling within their home country.

In a draft regulation due to be adopted in the coming weeks, the commission will set a formula for wholesale roaming charges based on the average cost of terminating a phone call made abroad. The commission is the union’s executive and regulatory body.

The commission originally proposed that each national telecommunications regulator calculate the average total roaming costs for each operator in its country. However, the new law would impose a maximum wholesale roaming charge set at twice the average termination cost across the union for local calls made abroad, said commission spokesman Martin Selmayr.

If you use your mobile phone to make an international call while you are abroad, the maximum wholesale price would be three times the average European termination cost, he said.

Average termination costs will be recalculated every 18 months by the 25 national regulators. The commission will then publish the union average, which will be used as a base for all roaming charge calculations.

The formula allows companies to cover the costs they incur when a phone is used abroad, said Selmayr. The commission believes that two or three times the termination cost gives a rough estimate of the total roaming cost incurred during a local or international call. The draft regulation will then allow operators to charge their customers another 20 percent to 30 percent—roughly the profit margin enjoyed by operators on domestic calls at present.

Some operators currently add a 300 percent profit margin on their wholesale roaming charges, Selmayr said.

National telecom regulators in the European Union’s 25 member states proposed this formula because they said the commission’s original calculation would have taken two to five years to complete.

Under the new formula, companies with the lowest termination costs stand to gain a competitive advantage over those that charge more.

The draft regulation will also ban charges for receiving calls on a mobile phone while abroad. Many operators now charge their subscribers for forwarding calls to them while they are abroad.

Commission officials are still unsure whether to include Short Message Service messaging and data transmission in the proposed law.

Once the commission adopts the proposed regulation, national governments from the union’s member states will discuss the proposal, and after consulting with the European Parliament, the proposal becomes law.

Unlike union directives, which must be transposed into national laws before they take effect, union regulations become enforceable as soon as they are agreed at a European level.

-Paul Meller, IDG News Service (Brussels Bureau)

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.