The European Union has dramatically slashed the rates that wireless carriers can charge consumers roaming across the EU's member states.
Previous rate reductions introduced in 2007 cut the cost of voice roaming calls within the EU by 70 percent. Under the new rules that went into effect Wednesday, noted EU Telecommunications Commissioner Viviane Reding, EU roaming charges have been reduced by a further 60 percent.
"The roaming rip-off is now coming to an end, thanks to the determined action of the European Commission, the European Parliament, and all 27 EU member states," Reding said. "From today, all Europeans making calls or sending texts with their mobiles can experience the EU's single market without borders."
The Downside for Carriers
Though the new EU rules are limited to reducing the rates that wireless operators charge each other, Reding expects the changes will make it much cheaper for roaming consumers to place and receive calls, send text messages, and surf the Web on mobile phones.
"I call on the mobile industry to pass these savings on to data roaming customers swiftly," Reding said. "The commission and national regulators will monitor data roaming charges very carefully and assess next year whether the roaming market is finally becoming competitive."
The new rules come at an inopportune time for the region's wireless carriers. The EU's earlier roaming cuts have already had a negative impact on the carriers, which previously had "made margins on inter-country calls, and particularly on data roaming," said Jessica Ekholm, a Gartner principal research analyst. T-Mobile said earlier this year that "lower roaming revenues and newly introduced regulation on roaming and termination charges had a negative impact on revenues."
Due to foreign-exchange fluctuations, the recession, and higher unemployment, there has been a decrease in the number of people traveling, which has led to lower roaming revenues as well, Ekholm observed. However, the carriers are likely responsible for at least some of the revenue shortfall.
"I just recently saw research saying that consumers avoid calling and using data while being abroad, as they do not know the cost of calling and using data," Ekholm explained. "They would consider increasing their voice and data usage if operators make billing more transparent to the customers."
Avoiding 'Bill Shock'
Beginning Wednesday, holiday travelers and road warriors roaming the European Union will be able to surf the Web, download movies, or send photos without fear of receiving future "bill shocks," thanks to the EU's wholesale download cap price of EU1 (US$1.41) per megabyte. By contrast, the previous average wholesale download price was EU1.68 (US$2.38) per megabyte, with price peaks of EU5.10, EU5.30 or even EU6.82 (US$7.22, $7.50 or $9.66) in countries such as Estonia, Greece and Ireland.
The new roaming rules also introduce a cutoff mechanism once a consumer's wireless bill reaches EU50 (US$70.87), unless the user establishes a different cutoff limit. The goal is to eliminate cellular horror stories such as the EU46,000 (US$65,149) bill recently incurred by a German downloading a TV program while roaming in France.
EU-wide text-messaging costs are now almost three times cheaper than the previous EU average. What's more, outgoing call charges are now capped at EU0.43 (US$0.60) per minute when roaming, with billing incurred by the second after the first 30 seconds instead of by the minute. Additionally, received calls are being charged at a maximum rate of EU0.19 (US$0.27) per minute.