European Commission Approves Deep Cuts in Roaming Rates As Data Roaming Cap Introduced for the First Time
The caps have been set by the commission following approval from the European Parliament, which not only backed the measures, but recommended deeper cuts be introduced.
- EU lawmakers have spent the best part of the last nine months debating the latest round of roaming regulations, and the price cuts are notably lower than originally proposed by the EC—due in a large part to increased support from the European Parliament for deeper reductions.
- The potential of the new wholesale market is less clear, with the key question being whether the mobile network operators (MNOs) will be willing to get involved in any such offerings, given that they would likely be cannibalising their own revenues.
The European Commission (EC) has approved the latest package of mobile roaming cuts, which will see current caps on voice services cut by some 46% between now and mid-2014, and introduces severe caps on mobile data roaming for the first time. The caps have been set by the EC, following a vote approving the measures in the European Parliament last month, which not only backed the measures but recommended deeper cuts than had been proposed (see Europe: 29 February 2012: EU Parliament Approves Latest Roaming Cuts As War of Words over Regulation Gets Personal). Voice services will drop some 46% to EUR0.19 (USD0.25) per minute from July 2014 from the current EUR0.35, SMS (text messages) will drop 45% to EUR0.06, while data roaming will be capped at EUR0.70 per megabyte from July 2012, dropping to EUR.0.20 from July 2014:
EC Roaming Cut Schedule Summary, 2012-2014
July 2012 (EUR)
July 2014 (EUR)
% drop (March 2012-July 2014)
Data (1 MB)
Source: EC, IHS Global Insight
The fresh legislation will now go to the European Parliament in May for approval—likely to be merely a technicality given the strong show of approval in February—and would take effect from the start of July this year, and remain in place until 2017. The new rules also include some degree of protection against "bill shock", as from July 2012 EU operators will have to send a warning message to any consumers travelling outside the EU when they are nearing EUR50 of data use, or a pre-agreed level.
The EC has also approved proposals to allow roaming customers to select which operator they use when travelling abroad, rather than the current system of roaming connection based on operator partnerships or network availability, while the EC will also slash the cost of roaming wholesale rates by up to 90% by July 2014. These measures have the potential not only to drive competition between domestic operators to offer the lowest prices to visitors from abroad, but also could create a new market of pan-European roaming specialists, who are willing to offer wholesale deals across the bloc and undercut the local players.
- EU Passes Tough Roaming Cuts: EU lawmakers have spent the best part of the last nine months debating the latest round of roaming regulation, and the price cuts are notably lower than originally proposed by the EC—due in a large part to increased support from the European Parliament for deeper reductions (see Europe: 7 July 2011: EU Announces Further Cuts to Roaming Charges to 2016, Ends Exclusive Operator Roaming Deals). The EC has dedicated a significant amount of effort over the past ten years to tackling what it calls the "roaming rip-off", levelling the playing field and bringing revenues more in line with costs, following claims that the largest operators were making profits of more than 200% for roamed mobile calls made while in another EU country, and up to 400% for calls received. Neelie Kroes, European Commission Vice-President for the Digital Agenda, said the new roaming deal will give the bloc a long-term structural solution, with lower prices, more choice and a new smart approach for data and Internet browsing, as travellers will be able to "shop around" for the best deal from July 2014.
- Operators Challenge Contradiction of Lost Revenue and Investment Expectations: The cuts, along with other EU regulation on mobile termination rates, have provoked an escalating war of words between the EC and the larger operators, culminating in some very personal exchanges at this year's Mobile World Congress conference in Barcelona (see Europe: 29 February 2012: EU Parliament Approves Latest Roaming Cuts As War of Words over Regulation Gets Personal). Vodafone has called on regulators to stop imposing controls on pricing, claiming this is damaging investment in the sector—particularly at a time when margins are tight and some heavy investment in LTE next-generation networks is expected. However, the CEO of Singapore-based mobile operator StarHub Neil Montefiore has come out in favour of the cuts, saying Starhub customers simply turn off data roaming while travelling, resulting in little-to-no revenue for the operator—and suggesting that lower global roaming rates can only benefit the market in the long term.
- Roaming Wholesale Market Potential: The EC's Neelie Kroes has stated that the new wholesale roaming regulations should provide a long-term structural solution, with lower prices, more choice and a new smart approach for data and Internet browsing. However, the potential of the new market is unclear, with a number a uncertainties in place, including network availability for dedicated wholesale players—and whether the MNO's will be willing to get involved in any such offerings, given that they would likely be cannibalising their own revenues. Perhaps surprisingly, Vodafone has showed some degree of support for the new proposals, stating it is in favour of the creation of a more competitive market—provided the development of this market allowed a move away from heavy-handed regulation from 2014.
- Indian government releases DPCO 2013, expanding price controls to 652 drugs
- Key US data releases and events
- Budget 2014: US administration signals greater willingness to compromise
- Mercedes-Benz unveils important new S-Class
- Kremlin power struggle becomes evident as influential Russian political ideologue resigns
- GDP, inflation, retail sales, public finances, and Bank of England minutes all feature in UK Economic Week starting 20 May
- Global Economic Impact of the Japanese Earthquake, Tsunami, and Nuclear Disaster
- Consumer spending and export recovery drive Japan's GDP growth in Q1
- Slow start to 2013 highlights ongoing economic challenges in Vietnam
- Chinese vehicle sales and production rise to over 2 mil. units in March, Q1 sales up 13.2% y/y – CAAM