The European Union will cut roaming fees for mobile Internet services and reduce charges for making mobile-phone calls from outside a user’s home country starting in July.
The legislation sets a price limit for data roaming for the first time and extends a cap on call charges first imposed in 2007. The European Parliament voted 578-10 in favor of the new rules, the final step for a proposal agreed upon by lawmakers and EU governments in March.
France Telecom SA (FTE) and other telecommunication companies have complained that they may lose revenue as a result of price limits and other regulation. The caps will pressure operators because data roaming provides about 5 percent to 10 percent of wireless data revenue, according to research from Bloomberg Industries.
High roaming charges are “a constraint on businesses and a constraint on economic growth (EUGNEMUQ:US)” because they discourage people from mobile Internet use when they are abroad, Neelie Kroes, the EU’s Internet commissioner, told lawmakers yesterday.
Under the new rules, which apply to mobile-phone contracts agreed to in the EU, customers will choose which operator they want to use outside their home country starting in July 2014. People traveling outside the EU will also be warned when their mobile Internet use exceeds 50 euros ($65) and must give their consent to continue using data.
“This welcome news is the latest step down from sky-high roaming costs,” Monique Goyens, director general of the European Consumers’ Organisation, said in a statement. “What is significant here is the first-ever cap on data roaming.”
Charges for using the Internet while traveling within the EU must not exceed 70 cents per megabyte starting July 1, and 20 cents from July 2014. Call limits will be reduced to 29 cents per minute starting in July and 19 cents from July 2014. Text messages must cost no more than 9 cents from July 1 and 6 cents from July 2014.
For families and people who travel on business in Europe outside their home countries, the limits will mean an average annual savings of more than 200 euros and 1,000 euros respectively, according to the European Commission.
Vodafone Group Plc (VOD) Chief Executive Officer Vittorio Colao has said regulators “should stop having this continuous intervention on prices” to allow companies to invest in new technology. Vodafone “has led the industry in offering roaming services that are innovative and affordable, whatever the regulatory environment,” Simon Gordon, a spokesman for the U.K. company, said today.
Deutsche Telekom AG (DTE), Europe’s second-biggest phone company, loses more than it receives in roaming charges because its clients use their phones more abroad than its network is used by foreign roamers.
“It’s a good thing that roaming prices are declining,” CEO Rene Obermann said on a conference call today. “As part of the FreeMove alliance, we have fought for a lowering of voice and data tariffs in Europe.”
Telekom Austria AG (TKA) said today that the “regulatory burden” such as lower roaming charges and reductions in national and international mobile termination rates will continue to impact the company this year. Roaming revenue fell about 11 percent in the first quarter after “higher volumes could not compensate” for regulatory cuts in tariffs.
France Telecom will lose about 1 billion euros of revenue in 2012 as a result of a “very heavy burden coming from regulation and tax policies” including the roaming rules, CEO Stephane Richard said in February.
The regulation has cut into annual revenue from international roaming fees, which amounted to 8.5 billion euros for European phone companies in 2006, according to the EU. Vodafone, Telefonica SA (TEF)’s O2 and other mobile-phone companies lost a challenge in 2010 at the EU’s highest court that sought to overturn the legislation.
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