High price of SMS & data roaming in the EU - guide

15 July 2008
by eub2 -- last modified 15 July 2008

The 2.5 billion text messages sent every year by roaming customers in the EU cost over 10 times more than domestic short messages (SMS), show figures released on 15 July by the European Commission. The average cost of a roaming text message in the EU between October 2007 and March 2008 was EUR 0.29 according to the European Regulators’ Group (ERG), but can be as high as EUR 0.80 for travellers from Belgium. Calls on the industry for self-regulation and voluntary reductions of roaming prices for text messages have not been answered. The Commission therefore says it will start working on measures to ensure that consumers benefit from a truly single market for mobile text services. The Commission will also seek to put an end to "bill shocks" that can hit roaming customers using a mobile connection to surf the Internet. New measures could be proposed by the Commission to the European Parliament and the Council in early autumn.

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 (texts, photos, music, films) from the internet with 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 a service in the country in which you are travelling. For providing this service, the foreign network operator will charge your home operator. This 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 and data services?

The EU Roaming Regulation which entered into force on 30 June 2007 capped 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.

The same EU Regulation requires the Commission and national regulators to closely monitor price developments for text messages and data services.

The European Parliament and the Council have asked the Commission to review the Regulation in 2008 and to decide whether or not to include text messages and data services. As part of this review, the Commission has considered input from the operators themselves, the European Regulators Group (ERG) and several other studies.

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

This evidence shows that text and data roaming prices have remained too high compared to the actual costs incurred by operators. The Commission will therefore examine how to make proportionate proposals to the European Parliament and the Council in autumn in order to resolve Europe's continuous roaming problem.

Text messages (SMS)

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 national text messaging. 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) and €0.12 (Latvia) per message to as much as €0.50 (United Kingdom) and €0.80 (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 new study by the Danish regulator (National IT and Telecom Agency) shows that these costs are negligible (€0.008).

How is the cost of a text message calculated?
When you send a text message while roaming, your home operator pays a wholesale charge to the visited network's operator. 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, noted that wholesale rates should range between €0.04 and €0.08.

Data services

What are data services?

Data services enable users to access the internet using a mobile network. This can be done either through a handheld device such as a mobile phone, a personal digital assistant (PDA), a wireless handheld device (like a Blackberry) or more commonly a laptop using a datacard connection.

How high are prices for surfing the internet while roaming?

Standard prices for unbundled offers can typically range from €5 to €10 per megabyte (MB) though they can be even higher. 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.

What is a 'bill shock' and is there a 'lack of transparency' for text message and data services roaming?

Lack of transparency is a big problem for both sending text messages and using data services abroad within the EU. To consumers, it is unclear how much these services cost exactly, especially for those accustomed to unlimited flat-rate bundles at home. This uncertainty can lead to nasty surprises with data roaming, since the amount of data downloaded during different activities varies significantly. 1 megabyte allows approximately 200 e-mails without attachments or less than an hour of browsing time, but only 1 minute of MP3 compressed music. As a result, high-volume users of data services have found themselves confronted with unpleasant 'bill shocks' running to thousands of euro when they return from their travels.

Does the European Commission plan to regulate text messages and data services in the EU?

The figures released today by the Commission show that the average cost of a roaming text message in the EU is €0.29. Moreover, text roaming tariffs range from €0.06 in Estonia to €0.80 in Belgium.

As for data services, prices can range from €0.25 per megabyte (MB) in a number of Member States under an entire bundled offer to over €15/MB in Austria, Estonia, Belgium, Slovenia, Italy and Ireland for unbundled standard offers.

On the basis of these data and the results of a public consultation that closed on 2 July, the Commission will now start to prepare proposals for a regulation of text messages, together with a full regulatory impact assessment. The Commission will also further analyse data services to explore whether there are alternatives to price regulation. New figures from the ERG on the implementation of the EU Roaming Regulation will play an important role in the Commission's assessment.

What is a regulation? Does it have to be transposed nationally?

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. 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 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 would then have to agree together. This can take between a few months to 2 years time, depending on the EU institutions' political will.

Has the public been consulted on SMS and data roaming?

On 7 May 2008, the Commission launched a public consultation to gather responses from mobile operators, businesses and consumer associations on whether to extend the EU Roaming Regulation in time and scope. This public consultation came to an end on 2 July.

In total, 41 contributions were sent to the Commission. All contributions (except the confidential ones) are published on the Commission's new roaming website as of today.

In its contribution to the public consultation, the ERG noted that, despite strong calls from national regulatory authorities and politicians to reduce text roaming prices, there has been little movement up to April 2008. The ERG proposes that the maximum price for a text message should be set at either €0.11 or €0.15. Consumer organisations and business users associations even favour both wholesale and retail regulation of text messages and data services. On the other hand, the GSM Association, representing mobile operators noted that regulation for these services is not necessary since retail prices are evolving rapidly. The contributions also show that mobile operators are generally not in favour of regulation of text messages and data services though smaller operators tend to favour wholesale regulation for both text messages and data.

Commissioner Reding also sent a letter to the CEOs of mobile operators asking them for the prices they will be charging customers as of 1 July for roamed and domestic text messages as well as data services.

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 . The EU Roaming Regulation which entered into force on 30 June 2007 introduced the 'Eurotariff' (price caps) bringing down mobile roaming charges up to 60% over the last year . 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 €0.49 per minute for calls made abroad and no higher than €0.24 for calls received abroad, excluding VAT). These price caps will be further reduced on 30 August to €0.46 and €0.22 and in 2009 to €0.43 and €0.19 respectively.

Is it true that some operators have circumvented the effects of the voice roaming caps by changing from per second to per minute billing?

In its response to the public consultation, the ERG has stated that per second billing with or without a set-up or minimum charge is relatively uncommon for roaming voice calls. Per minute billing is observed in the majority of Member States. The ERG estimates that on average, these billing practices add around 24% to a typical retail bill for calls made and 19% for calls received using the Eurotariff. Consumer legislation helps to protect consumers from such practices in some countries, e.g. France, Spain and Portugal.

What are the next steps?

Following internal Commission deliberations and a detailed regulatory impact assessment, the Commission could adopt a legislative proposal in early October. It will then be for the European Parliament and the Council of Ministers to decide when to bring the new roaming rules into effect.

Source: European Commission