Are roaming fee cuts a smokescreen?

While mobile operators claim to be cutting the cost of roaming, their efforts are just a smoke screen and have no appreciable effect on charges overall, a European consumer rights group has said.

The lower tariffs are typically available for a limited duration, sometimes requiring payment of an additional subscription fee, and may only be cheaper for long calls made using certain networks, BEUC, the European Consumers’ Organisation, said on Tuesday.

The fees should be capped at €0.33 ($0.43) per minute for customers roaming outside their home country, consumer groups said . Their demand is considerably lower than the cap of €0.49 per minute proposed by the European Commission in draft legislation that could be voted by June.

Viviane Reding, Commissioner for Information Society and Media, announced plans last February to crack down on mobile phone roaming charges, which she said were unreasonably high.

On July 12, the Commission proposed cutting by 70 percent the cost of making and receiving calls while travelling in another European Union member state, saving European consumers €5 billion a year, according to the Commission’s figures.

Under the Commission’s proposal, operators will be allowed to charge no more than €0.16 per minute for calls received while travelling abroad, €0.33 per minute for calls made within the country being visited, or €0.49 per minute for calls made back home or to a third country while abroad.

However, that’s still too much for the consumer groups, which called for charges of €0.16, €0.25 and 0.33 per minute, respectively.

The French Consumers’ Union (UFC – Que Choisir) called for national telecommunications regulators to collect more information about the volume of incoming, outgoing and local roaming calls, and the wholesale prices charged by operators for each type of call.

Without such statistics, it’s difficult to measure the effects of tariffs and policies, the group said. Regulators and consumers are dependent on figures provided by the GSM Association, which represents 700 mobile phone operators, the French group said.

Those figures showed that the cost of making roaming calls in Europe fell by 25 percent in 2006, from €0.83 per minute to €0.62, the GSM Association said on Feb. 8. The price decline shows that regulation, especially of the retail market, is unnecessary, the Association said.

In the absence of independent measurements of the market, BEUC and UFC – Que Choisir commissioned their own economic analysis in order to determine what they consider fair price caps.

Limiting charges to €0.33 per minute will stimulate demand, and so have no adverse effect on operators’ revenue or profit, they said.

Based on mobile phone bills supplied by Members of the European Parliament, they calculated that lower charges could save MEPs an average over €1,000 each per year.

European telecommunications ministers are expected to discuss the Commission’s proposed regulations at informal meetings alongside the Cebit trade show in Hanover, Germany, next month, while the European Parliament will vote on the proposals in April. Germany, which holds the rotating presidency of the European Union, has announced its intention to push the legislation on roaming prices through by the end of June, when its term of office ends.