Intellectual Property Law

EU Demands Mobile Roaming Fees be Lowered

By IBLS Editor

The European Union has informed mobile phone companies that they need to lower "roaming fees" for those customers traveling outside of their system by July 1 or face sanctions for non-compliance. EU Telecommunications Commissioner Viviane Reding said, "The EU cannot accept that mobile operators make up to 20 times more profit on roaming customers than on their domestic customers. To avoid regulation, the industry will have to show its responsiveness to consumer concerns by credible reductions." Reding further indicated that costs borne by tourists and business travelers who text messages or checking e-mail on wireless devices must also be pared back. The move by the EU comes in the midst of sensational stories of high phone bills from around Europe.

The goal of the warning, which affects such large cell companies as Vodafone Group PLC, Royal KPN NV of the Netherlands and Germany's E-Plus, is to bring the cost of using one's phone abroad to close to the level of using it near one's home. Rates paid by travelers have have dropped 60% since the European Commission capped fees on voice mail last year, but the cap did not cover mobile Internet or the 200 billion text messages sent annually in western Europe, yearly. Wireless groups gain from 10%-almost 20% of their yearly revenue from roaming charges, according to a study by research firm Evalueserve.

Leaving one's country to enter one of the other of the EU's 27 nations can cause the cost of texting to increase by up to 25 times, according to the European regulators' report of 2008. While sending a text at home costs from 7 to 14 U.S. cents, but the average cost of texting from abroad ranges from 42 to as high as 73 U.S. Cents. Yet the costs have not stopped Europeans from signing up, as there are almost 500 million cell phones in use in western Europe.

Reding added, "What we want to achieve is simple: Sending text messages or downloading other data via a mobile phone while being in another EU country should not be substantially more expensive for a consumer than sending text messages or downloading data at home. This is the logic of the borderless single market which we in Europe have agreed already to create 50 years ago." In the wake of the EU announcement, Vodafone, which claims the top spot as the globe's largest cellphone operator, agreed to voluntarily reduce some roaming charges for data downloads by up to 45%.

To illustrate the problem, take for example the story of a British woman who was charged in 2008 by Vodaphone £11,000 ($21,763) for downloading four episodes of the American television show "Friends" on her mobile phone, which adds fuel to the EU's charges that the mobile carriers overcharge for travelers. She started the downloads in England and they continued while she traveled to Germany. Had she stayed in the U.K. For the entire download, it would have been free. Another EU resident was presented a bill in January by Vodafone for £27,000 ($43,419) after having downloaded 20 to 30 television shows on his mobile, mistakenly believing his plan included unlimited data.

Ms. Reding claims she does not prefer to force markets to lower costs, but that such a move was necessary. She said, "I have no appetite at all for regulating again. But to avoid regulation, the industry will have to show its responsiveness to consumer concerns by credible reductions of the cost for data roaming both at the wholesale and at the retail level and by transparent offers compatible with the spirit of the single market. The market situation on 1 July 2008 will be decisive for whether regulation will be necessary or not."

Full post as published by IBLS Internet Law Blog on March 05, 2008 (boomark / email).