Europe to cap prices for roaming text messages and data

Price reduction seen as essential part of creating one single European telecoms market and excellent way of illustrating merits of the single European market to consumers

European telecommunications ministers gave their backing on Thursday to a plan to cap retail prices for sending SMS text messages and browsing the Internet using mobile phones while abroad.

In September the European Union's executive body, the European Commission, proposed slashing both the retail and wholesale prices for text messaging by introducing caps of €0.11 and €0.04, respectively. Average retail prices are currently estimated at around 0.29 euros, the Commission said.

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It also proposed a cap on the wholesale price for downloading data of €1 per megabyte, and called for further reductions in the cost of voice calls when roaming.

"Ministers have answered the Commission's call for a speedy response to the SMS and data roaming rip-off very positively," said Viviane Reding, the telecommunications commissioner.

E.U. citizens sent 2.5 billion SMS messages, generating €800 million for their mobile phone operators last year, the Commission said. The cost of sending messages while roaming can be 10 times more than sending a message from within the home country.

Slashing this price is seen as an essential part of creating one single European telecoms market, and an excellent way of illustrating the merits of the single European market to consumers.

"I am confident that with Parliament we will ensure that consumers travelling in the E.U. will save money when sending texts and surfing the Web with a mobile phone as of 1 July 2009. This would send a clear message of consensus that the E.U.'s single market is there to serve European citizens as well as businesses," Reding said.

Under the proposed re-drafting of the 2007 roaming regulation, roaming customers should also receive an automatic message with data roaming charges for the country they have entered. From summer 2010, consumers should be able to specify in advance how high their data roaming bill can go before the service is cut off -- a measure designed to put an end to what the Commission calls "bill shocks."

The cap of €1 per megabyte for wholesale fees should create a level playing field and stimulate competition, the Commission said.

Finally, the Commission, now with the support of the 27 member state governments of the E.U., wants to further reduce the caps on making and receiving phone calls while abroad.

In 2007 they were capped at €0.46 per minute for calls made abroad and €0.22 for calls received abroad. The plan now is to reduce these caps to €0.34 and €0.10 respectively, excluding value-added tax (VAT), by 1 July 2012.

Assuming the European Parliament supports the new roaming regulation, European consumers would also benefit from per-second billing after 30 seconds for roaming calls made and per-second billing throughout calls received. Today, mobile phone subscribers pay for 24 percent more than the minutes they actually use when making calls, and 19 percent more for received calls.

Copyright © 2008 IDG Communications, Inc.