Threat of regulation prompts lower EU roaming fees

Regardless of how a key European Parliament committee votes Thursday on a proposal to lower mobile phone roaming charges, the threat of regulation has already prompted numerous operators to begin dropping their fees.

The Industry, Research and Energy (IRE) committee of the European Parliament will make an important decision on the European Commission's proposal to reduce international roaming charges by 70 percent beginning this summer.

The vote, one in a couple still to follow, comes after years of squabbling between the Commission and mobile phone operators in the European Union over ways to reduce the fees consumers and businesses pay to make and receive calls outside their home markets.

But as committee members prepare to make their own recommendations, they can't help but notice that roaming fees have come down.

"We've been complaining for years over high roaming fears but it's been the threat of regulation that has really led to action," said Ed Vonk, CEO of the European VPN Users Association, which represents the interests of large multinational companies with global networking operations. "The operators have seen the writing on the wall and have responded."

Vodafone Group PLC has moved ahead of any E.U. regulations and lowered its retail roaming fees by more than 40 percent, largely through its Passport program, according to a company spokesman.

Customers who sign up for Passport pay €0.75 ($1.00) to make a connection and then pay according to the per-minute rate agreed in their domestic contract or bundled-minute package.

Passport is "something that is clearly bringing down prices and is achieving what regulation is intended to do," the spokesman said.

Even if mobile phone operators have responded, many acknowledge that "regulation is still likely," said David Pringle, a spokesman for the GSM Association, which represents operators. "We maintain that the market is delivering and that regulation is unnecessary. But, clearly, there is much momentum behind regulation at this point."

Key components of the proposed regulation include limiting wholesale roaming charges among operators to around €0.25 per minute and limiting retail charges for making a roaming call to around €0.50 per minute and for receiving a roaming call to around €0.25.

One of the favored plans, according to Pringle, calls for the establishment of a separate consumer protection tariff, based on fees agreed to by the Commission, the European Parliament and the European Council, which includes the 27 heads of state and the president of the European Commission. The fee would be an alternative to operators' own roaming packages, such as Vodafone's Passport.

Some Brussels policymakers would like all E.U. mobile phone customers automatically transferred to the consumer protection tariff and given the option to opt out and move to their operator's own pricing scheme for roaming calls, if they so wish.

"We're opposed to this approach," Pringle said, citing costs associated with winning roaming customers back.

Information Society and Media Commissioner Viviane Reding disagrees. It would be a much better incentive for more competition among mobile operators, the Commissioner said in a statement Wednesday, if they had to convince customers that their packages "are an even better deal than the new E.U. regulation."

The Commission hopes to complete the legislative process by the end of the first half of 2007.

But Emma Mohr-McClune, principal analyst with Current Analysis warned that additional time could be needed to implement the regulation on a national level.