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Roaming: Commission acts to cut cost of texting and mobile data services abroad – Frequently Asked Questions

European Commission - MEMO/08/578   23/09/2008

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MEMO/08/578

Brussels, 23 September 2008

Roaming: Commission acts to cut cost of texting and mobile data services abroad – Frequently Asked Questions

“What I want to achieve is simple: Sending text messages or surfing the web via a mobile phone while in another EU country should not be substantially more expensive for a consumer than sending text messages or surfing the web at home. This is the logic of the borderless single market which we in Europe agreed to create already 50 years ago. Consumers should feel at ease when sending an SMS from the beaches of Spain or when skiing in the mountains of Austria. And business customers should be able to use data communications in the EU like their competitors are doing in the single market of the United States. Higher roaming charges abroad must be justified by additional costs of operators, or they will have to disappear.”

Viviane Reding, EU Telecoms Commissioner

Today's Commission Proposals

What is the European Commission proposing?

The Commission proposal contains four main elements:

- Roamed text messages sent abroad in the EU from 1 July 2009 must not cost more than €0.11 (excl. VAT) per SMS for consumers. Receiving a text message in another EU country will remain free of charge. Wholesale charges will be capped at €0.04.

- More transparency and competition for data roaming services. Customers will receive an automatic message informing them of data roaming charges for the country they have arrived. As from summer 2010, they will also be able to determine in advance how high their bill can go before the data roaming service is cut-off. In addition, a €1 per megabyte safeguard limit for wholesale fees will be introduced to tackle the very high charges and make prices that operators charge each other more transparent and predictable and thus stimulate competition.

- Further reductions in the maximum prices of making and receiving calls while roaming in another Member State: prices will decrease to €0.43 on 1 July 2009, to €0.40, €0.37 and €0.34 the following years and until 2012 while prices for receiving a call will decrease from €0.19 on 1 July 2009 to €0.16, €0.13 and €0.10 respectively the following years and until 2012.

- The principle of per-second billing will be introduced for all roaming calls made and received. For calls made abroad, operators will be allowed to ask for a set-up charge equivalent to no more than the price for 30 seconds for the roamed call.

General

What is roaming?
Whenever you travel abroad and make or receive a mobile phone call, send text messages (SMS – Short Message Services) or download data (for electronic mails, surfing the web, photos, music, films) from the internet using a mobile connection, you are roaming. You are roaming on a mobile network of a foreign network operator because your home provider does not provide the service in the country in which you are travelling. For providing this service, the foreign network operator will charge your home operator. This charge, known as the wholesale charge, is passed on to you at a different rate, sometimes at a surprisingly high level for the consumer.

Why is the European Commission now looking at roaming charges for text messages?

The EU Roaming Regulation which entered into force on 30 June 2007 (IP/07/986) introduced limits to the wholesale and retail charges for roaming voice calls to ensure the proper functioning of the single market and a high level of consumer protection. These limits are currently at €0.46 for all calls made abroad and at €0.22 for all calls received abroad (IP/08/1276).

Following a specific request of the European Parliament, Article 11 of the EU Roaming Regulation requires the Commission to review the Regulation in the course of 2008 and decide whether or not to extend it in time and scope, especially whether to extend it to roamed text messages and data services.

In the context of this compulsory 2008 review, the Commission has considered input from the operators themselves, the European Regulators Group (ERG), which gathers the 27 national regulators, and several other studies and stakeholders. A public consultation took place form 7 May to 2 July (see IP/08/718).

The Commission had initially hoped that competition would play its role in the roaming market and that mobile operators would demonstrate their willingness to voluntarily reduce the very high roaming charges for text messages and data. In February 2008, Commissioner Viviane Reding gave mobile operators a last to avoid regulation by asking them to voluntarily and credibly bring the prices for text messages down by 1 July (SPEECH/08/70).

However, recent figures collected by the ERG show that prices for text messages have remained very high (on average €0.29 per SMS) and have shown little movement over the past years despite political pressure. In addition, the charges for roamed text messages are very high compared to actual costs incurred by operators which according to a recent study from the Danish regulator (National IT and Telecom Agency) are only at €0.008. Also data roaming charges, in spite of some first movement, remain substantially higher than data services domestically, often leading to regular “bill shocks” for consumers.

This is why the Commission is today making proposals to the European Parliament and Council to resolve Europe's continuous roaming problem on text messages.

What is an EU Regulation? Does it have to be implemented nationally?

EU Regulations are legal acts that are directly applicable in the 27 EU Member States, the day after their publication in the Official Journal of the European Union. Unlike an EU Directive, an EU Regulation does not need to be implemented into national law, but is the law throughout the EU from the day of its publication.

EU Regulation are thus instruments for achieving swift and uniform solutions in the interests of the EU’s single market, legal certainty and concrete consumer benefits.

The EU Roaming Regulation specifically applies to mobile operators in the EU, and is monitored by national regulatory authorities in the EU Member States and the European Commission itself.

To amend an EU Regulation or to extend its scope, the Commission has to make a proposal upon which the European Parliament and the Council of Ministers have to agree to make it law.

Has the public been consulted on today’s new measures on roaming? Has there been an impact assessment?

On 7 May 2008, the Commission launched an extensive public consultation to gather responses from mobile operators, businesses and consumer associations on whether to extend the EU Roaming Regulation in time and scope (IP/08/718). This public consultation came to an end on 2 July. In total, 45 contributions were sent to the Commission. All contributions (except the confidential ones) are published on the Commission's roaming website.

The Commission has also published a detailed impact assessment which accompanies this proposal. The impact assessment examines the impact on consumers and the industry of various options that the Commission could take after its review of the Roaming Regulation. The impact assessment was also submitted to an Impact Assessment Board (made up of high-level Commission officials under the authority of Commission President José Manuel Barroso) whose proposals were incorporated into the final document. It is now available on the Commission’s roaming website.

What are the next steps?

The European Commission's proposals published today will now be transmitted to the European Parliament and the Council of Ministers, which are the European co-legislators. Parliament and Council now have to negotiate to find an agreement on the final legislative text. This can take between a few months to 2 years time, depending on the EU institutions' political will. Last year’s EU Roaming Regulation (which dealt with the cost of voice roaming) was adopted in the record time of only 11 months.

If Parliament and Council agree on a final text in the months to come, the new roaming rules could take effect from 1 July 2009 so that using your mobile phone abroad will become cheaper just in time for the next summer holidays.

Text messages abroad

How high are prices for sending text messages while roaming?

Using your mobile phone to send text messages (SMS) from abroad is at the moment up to 10 times more expensive than for domestic text messaging. This has been shown in July 2008, in responses to the European Commission’s extensive public consultation, by the European Regulators Group and a specific study by the Danish National Regulatory Authority, which have shown that roaming text messages can cost up to ten times more than domestic text messages.

According to a study from the French regulator, ARCEP, the average price for sending domestic text messages in Europe is €0.08 and prices can range from €0.03 (Denmark) to €0.13 (United Kingdom). The retail price of roaming text messages is on average €0.29 per message but can range from €0.06 (for a roaming customer from Estonia) to as much as €0.70 (Latvia, 0.49 LVL) and €0.75 (Belgium).

These price differences cannot be explained or justified by the costs which operators pay when a mobile customer from another country uses their network to send a text message. A recent study from the Danish regulator (National IT and Telecom Agency) showed that these costs are negligible (€0.008).

You can find out how much your domestic operators will charge you for roaming in different EU countries using the Commission's overview of mobile roaming tariffs per EU country: http://ec.europa.eu/roaming/

How is the cost of a text message calculated by operators?

When you send a text message while roaming, your home operator pays a wholesale charge to the visited operator's network. On top of that, the operator will pay an SMS 'termination charge' if your message is sent to a customer of another operator. While the message termination charge is not regulated in most Member States, the actual costs incurred are very low for the operators concerned.

The European Regulators Group (ERG), in its response to the European Commission's public consultation on the effects of the EU Roaming Regulation (IP/08/718), noted that wholesale rates should range between €0.04 and €0.08. In its proposal, the European Commission decided to introduce a wholesale cap of €0.04.

Data roaming

How much do consumers pay today for data roaming in the EU?

Consumer prices for data services can range from €0.25 per megabyte (MB) in a number of Member States under an entire bundled offer (e.g. using the full allocation of a daily package which allows you a maximum amount of MB downloaded at a fixed price) to over €15/MB in Austria, Estonia, Belgium, Slovenia, Italy and Ireland for unbundled standard offers.

According to the Danish telecoms regulator, the real costs for providing roaming data services is €0.45.

At the moment, the use of data roaming services remains limited as consumers are discouraged by extremely high charges compared to national prices, and by a lack of transparency regarding the charging by volume of data (megabytes). High-volume users are susceptible to “bill shocks” if, for example, they surf the internet for long periods when using their datacard connection on a laptop computer (IP/08/1048).

How does the European Commission plan to tackle transparency issues for consumers as regards data roaming?

Lack of transparency has been a big problem when using an internet connection while abroad because consumers are used to cheap domestic internet rates. This has led to "bill shocks" of thousands of euros for some consumers who have surfed the internet using their mobile phone while travelling in another EU country – in one case the bill reached €40,000 for downloading a TV programme. To consumers, it has so far been unclear how much data services abroad cost exactly.

This is the reason why the European Commission today proposes that telecoms providers inform their customers about their data roaming charges when they cross the borders within the EU.

Consumers will be able to receive information on the price they will pay per megabyte (MB) for data services (1 MB allows approximately 200 e-mails without attachments or less than an hour of browsing time, but only 1 minute of MP3 compressed music). Operators will also have to give customers the possibility to set a cut-off limit which will avoid high and/or unexpected charges. This cut-off limit has to be introduced by mobile operators by summer 2010.

Why did the Commission only propose to regulate wholesale tariffs for data services?

Although data services are in the early phases of development they have a huge potential: the contribution of data roaming services to roaming has nearly doubled from Q2 2007 to Q1 2008 and currently these services constitute 8.6% of the EU roaming market. With domestic data services growing at more than 40% annually and roaming services by 20%, it is expected that they to overtake text messages as long as the fear of “bill shocks” is dealt with properly.

The Commission proposes a safeguard limit for wholesale fees between operators of €1 per Megabyte (MB). While it will help wholesale prices to decrease considerably, this safeguard limit will also be high enough to not distort competition or prevent its development. Moreover, it will ensure predictable prices for operators and therefore enable them to offer more transparent retail prices to their customers.

A review clause in the amended Roaming Regulation requires the Commission to come back to the retail prices for data roaming in 2012.

Voice Roaming calls

How high are prices for voice roaming calls today?
Until 30 June 2007, using your mobile phone abroad was on average four times higher than national mobile calls, €1.15 per minute being the average price for making a call from abroad (IP/06/978). The EU Roaming Regulation introduced the 'Eurotariff' (price caps) bringing down mobile roaming charges up to 60% (IP/07/1445). Today, the Eurotariff is the default price offer for roaming in the EU: All mobile phone operators comply with the Regulation by offering customers the Eurotariff (up to €0.46 per minute for calls made abroad and no higher than €0.22 for calls received abroad, excluding VAT). These price caps will be further reduced on 30 August 2009 to €0.43 and €0.19 respectively, €0.37 and €0.16 and €0.34 and €0.10 the following years until 2012.

Why does the Commission propose to prolong the duration of the Roaming Regulation and the Eurotariff ceiling for Roaming calls to 2013?
While the implementation of the Roaming Regulation has been a success – consumer prices have been reduced by 60% compared to 2005 levels –, the dynamics of the roaming market have not sufficiently changed since the introduction of the Regulation. As the latest ERG report has indicated, voice roaming prices have tended to cluster around the price caps. This gives evidence that innovation and competition are still not healthy enough to sustain the savings for customers if the price caps were to be removed in 2010. This is why the Commission proposes to extend the duration of the Regulation by three more years from 2010 to 2013 to make sure that consumers are not charged excessive prices while providing sufficient time for competition to develop.

Why does the European Commission include per-second billing in its proposal?

Per-minute billing is observed in the majority of Member States. Only some countries, such as France, Spain, Portugal and Lithuania have consumer legislation that protect consumers, for domestic calls, from paying excessive prices that providers could charge them on a per-minute basis. As regards roaming, however, the practice of per-minute billing risks diluting the positive effects of the Roaming Regulation for consumers.

The most recent ERG report revealed that consumers are currently paying 24% more than the minutes they actually use to make calls, and 19% more for calls they receive. This measure ensures that consumers are only charged for the service they actually use and is therefore expected to increase their savings by over 20%. Several national regulators have called upon the Commission to act against this “hidden charge” for roamed calls.

For more information please visit the European Commission's roaming website: http://ec.europa.eu/roaming/

EU roaming tariffs: http://ec.europa.eu/information_society/activities/roaming/tariffs/index_en.htm

EU Telecoms Commissioner Reding's Comments on SMS and Data Roaming:
http://ec.europa.eu/information_society/activities/roaming/docs/dataroamingcomments.pdf


Roaming Charges Today
– according to the European Regulators Group,
August 2008 figures –


Retail SMS

[ Figures and graphics available in PDF and WORD PROCESSED ]

EU average: Q1 2008: 29 cents


Wholesale SMS

[ Figures and graphics available in PDF and WORD PROCESSED ]

EU average: Q1 2008: 15.4 cents

Retail Data

[ Figures and graphics available in PDF and WORD PROCESSED ]
EU average: Q1 2008: Non-group average: €5.40


Wholesale Data

[ Figures and graphics available in PDF and WORD PROCESSED ]
EU average: Q1 2008: €2.00

Voice: Ratio of calls per second/per minute

[ Figures and graphics available in PDF and WORD PROCESSED ]




The real cost of sending roaming SMS (including VAT)
– according to a study of the Danish Telecoms Regulator NITA (June 2008) –


Figures and graphics available in PDF and WORD PROCESSED





The real cost of providing roaming data services per megabyte
– according to a study of the Danish Telecoms Regulator NITA (June 2008) –

Figures and graphics available in PDF and WORD PROCESSED

How much does it cost to send an SMS domestically:
Price charges by operators for a post-paid domestic SMS
for a large consumption basket in €, all taxes included
– according to France’s telecoms regulator ARCEP –


Figures and graphics available in PDF and WORD PROCESSED



















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