3 min read Networks & Network Services

Network operators have been cutting roaming costs across Europe and North America following threats by the European Union to regulate calls abroad. EU Information Society Commissioner Viviane Reding is drafting legislation that would scrap all roaming charges for receiving a call when travelling abroad in the EU. It would also become illegal to charge more for calls made abroad than in the user’s own country.

 The operators took a while to react. Analysts estimate that roaming income accounts for 8-15% of most operators’ revenues, and it’s usually more profitable than other sources of income.
The GSM Association, the industry’s global trade body, reckons that reducing roaming rates to the level of domestic charges would cut operators’ profits by €2.3bn (£1.6bn). And that in turn would be passed on to all customers.

Ms Reding is being backed by EC president José Manuel Barroso, and still hopes to get full backing from the whole Commission sometime in July. The mobile industry thinks it has some support among the commissioners, notably from Peter Mandelson (trade) and Neelie Kroes (competition) – both of whom are sensitive to a market that is worth €150bn a year.
The UK operators’ moves may strengthen their case for soft-pedalling on the industry.
T-Mobile has introduced a new 55p per minute flat-rate for pre-pay and post-pay calls across 29 European countries, the USA and Canada. T-Mobile says this represents a reduction of 45% on its pre-pay rates in Europe and 54% in North America.
The new 55p flat rate applies automatically, so T-Mobile customers do not have to sign up or pay any charges to be eligible.
Of course this had nothing to do with the pressure from EC Commissioner Reding. “We have not needed regulation to encourage us to cut roaming rates,” said T-Mobile UK managing director Jim Hyde. “True mobility means affordable mobility and, at present, too many mobile customers just don’t use their phone abroad. That acts against their interests, and against ours.”
O2 has also introduced a new reduced roaming charge across Europe. The price looks good – the cheapest on offer, at 35p per minute – but customers will have to opt in to a specific O2 tariff called My Europe (there’s no fee for this). Otherwise they’ll be saddled with charges of up to 85p per minute on contract and £1.50 per minute on prepay. And as the name suggests, North America is not covered by MyEurope.
Later this year O2 will also introduce a
new subscription service aimed at frequent travellers. For a subscription fee of £10, subscribers will receive international calls for free and be charged around 20p per minute for outgoing calls; they’ll have to preselect one or more countries where the tariffs
will apply.
And Vodafone has promised to reduce average roaming charges by next April. This isn’t exactly a new tariff plan, though; the announcement that said “average European roaming costs for Vodafone customers will be cut by at least 40% by April 2007, when compared to last summer … the average cost of roaming in Europe [will] fall from over €0.90 to less than €0.55 per minute”.
It is unclear how Vodafone will achieve this, though we’d guess at a reduction in the connection fee for Vodafone’s Passport scheme. Currently this charges a 75p connection fee for calls made and received abroad, after which calls are billed at local rates. There’s no sign-up subscription fee.
Passport is actually a pretty good deal for roaming. As Vodafone chief executive Arun Sarin put it: “Customers want simplicity and value for money when they’re travelling abroad. They get it with Vodafone Passport, which we launched last year, allowing customers to take their home tariff abroad with a small additional per call fee. Today, Passport provides savings of at least 30% for more than 6m Vodafone customers.”
Passport does not include North America, however.
Orange has also introduced a new range of cheap roaming bundles of low-cost minutes that travellers can buy in advance. These will reduce costs for calls abroad by up to 25%, though customers will have to use their full allowance to get the most out of them.
As an example, UK pay-monthly customers can pay £25 for a bundle of 50 minutes of international calls -- representing a discount of 28% on standard roaming prices.
Orange says the 25 EU countries where the discounts will apply are the most frequent roaming destinations for Orange customers, though it actually has roaming agreements with operators in 190 countries worldwide.
Still, it looks as though Orange might be missing a trick here in terms of tariff simplicity. Vodafone is promising jam tomorrow rather than savings today. So the winners are the T-Mobile flat-rate offer -- clean and clear, covers North America too – and O2, with the cheapest Europe-only deal that requires only a free sign-up.
“The Commission welcomes everything that goes in the right direction in terms of the reduction of international roaming costs,” said a spokesperson for Ms Reding when the cuts were announced, calling them “a very good sign for the industry”. It may be enough to draw the sting of the proposed legislation.
Jim Hyde, T-Mobile:
“We have not needed regulation to encourage us to cut roaming rates”.
Arun Sarin, Vodafone:
“Customers want simplicity and value for money when they’re travelling.