RSSEU Wireless Carriers Threaten to Raise Domestic Fees
By Nate Mook | Published April 23, 2007, 12:10 PM
The ongoing disagreement between the European Union and the mobile phone industry continues to heat up over a proposal to cap the cost of roaming fees. The GSM Association says carriers may be forced to raise domestic fees in order to balance the loss of roaming revenue.
Last July, the European Commission said it wanted to cut roaming fees by up to 70 percent, claiming that consumers were being taken advantage of while wireless carriers reaped huge profits. However, it said legislation would be a last resort, and it hoped the networks work make the changes on their own.
But the GSM Association, which represents about 700 cellular carriers around the world, says the recommended pricing was far too low. In turn, the bill was introduced to the EU Parliament. The Commission proposed roaming fees should be capped at 40 cents for an outgoing call and 15 cents for an incoming call.
In addition, the EU Parliament's industry committee voted for further cuts to long distance calls made to other EU countries. Those recommendations will be voted on next month, and if approved, taken to the 27 EU member nations for a final vote. The Commission wants price caps in place by summer, but such swift action is unlikely.
The GSM Association cited a study that says industry revenues from roaming will drop from around 5 billion euros to 2.4 billion euros, forcing companies to look elsewhere to make up the amount - namely by raising costs in their home region.
"Operators would have to sit back and take a good hard look at holistically how they might recoup their charges, and the knock-on effect could be potentially in the domestic market," GSM Association's acting head of regulatory affairs, Aoife Sexton, was quoted by AP telling reporters.
Sexton says the industry would oppose all regulation, but was willing to compromise with price caps set at 65 cents for outgoing calls and 30 cents for incoming calls. In addition, the GSM Association wants the price cap to be opt-in, which means consumers would be forced to specifically request the cost savings.
While the EU Parliament has pushed back against such industry demands in the past, the GSM Association may have found an ally in Germany - the country currently holding the EU Presidency. Germany on Monday said it would propose roaming fee caps of 60 cents outgoing and 30 cents incoming.
Germany also backed the opt-in proposal, which consumer advocates say would make the effort far less effective, as many customers would not know of the option. On Tuesday, the country will meet with both the EU Commission and Parliament in an attempt to reach a compromise on the plan.
Either way, consumers are likely to save money from any legislation that meets the approval of all EU members. Current roaming fees are around 1.15 euros, which amounts to a 500 percent profit margin, according to the EU Commission.
However, the discount to traveling mobile phone users may not come right away: the wireless industry wants a delay of one year in implementing any such price caps.
I think this is all a moot point. The EU is dying off unfortunatley (check the stats - negative birth rate means that more people are dying than being born - keep it up and soon no more EU).
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|With a population of 494 million it's hardly an issue yet. And of course don't forget that a trend can be reversed at any time.
The EU is certainly not "dying off"...
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|Till some months ago i payed a lot of roaming charges - when traveling in the bay area (from europe) for example. One trip and 600 to 1000 euros were normal.
Now i am using WLAN and Skype (PocketPC) and other VoiP clients (S60) on my cells and the cost dropped to about 30 euros. No matter what they charge now - i moved away. 500 per cent profit margin: well, not with me anymore.
Some goes with data costs: it is easy to spend thousands a day with the current data plans (50 cent per MB) - just move to WLAN and you're fine. WiMax - i am waiting.
:-)
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|Greedy GSM Association. Although we in the US don't typically pay roaming fees anymore, they are so insignicant to carriers that it is easy to bundle it in with the price.
Wow. EU is ahead of the US in many ways in the cell business, but behind us in service? What gives there? if they have unified money, shouldn't they have an open cell plan that allows country to country roaming? that doesn't seem fair to consumers there.
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|ROFLMAO!
Yup, the EUs's attempt at socialism is great!
And roaming fees are insignificant? You might want to check with the carriers! The primary reason they can 'absorb' them is that they have converged and are earning as much as they are giving away as each has grown to include such large coverage areas!
And tell us about pricing. In Europe, cell phone users are not charged for incoming calls, whereas in the US, BOTH parties pay for a call!
So, calls across across coverage areas are not paid for on both ends, and roaming becomes a significant charge due to the difference in their pricing structures. Thus, not realizing the roaming charge means that one carrier is left out entirely. Oh. But its nice to listen to someone else assume all is like the US.
And while its simple to simply decree roaming charges dead, they account for up to ~30% of revenue. Of course, in the name of fairness and equity, I guess you wouldn't mind some arbitrary party suggesting that you take a ~30% wage cut, would you? Yeah, I didn't think so!
What is funny is that in Europe they should be encouraging competition instead of one size fits all!
And in the US where we talk competition, we don't.
And European Cell service behind the US??? You obviously have not used their services. It is hilarious to watch friends come over from Europe and wonder just what 3rd world country they have landed in, as their Orange or whatever service is transfered to TMobile or one of the domestic carriers.
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|The UK doesn't have unified money. But yes, all true.
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|"And tell us about pricing. In Europe, cell phone users are not charged for incoming calls, whereas in the US, BOTH parties pay for a call!"
Ouch. Thank you for teaching me something I didn't know. (Seriously - not sarcasm)
"And European Cell service behind the US??? You obviously have not used their services. It is hilarious to watch friends come over from Europe and wonder just what 3rd world country they have landed in, as their Orange or whatever service is transfered to TMobile or one of the domestic carriers."
What a wonderful night in that must be.
(Ok, now that *is* sarcasm)
The same happens to US people coming in to Europe too. So erm... it's about equal really.
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|Their 3G and 4G services have been rolled out far ahead of the US.
And their top of the line phones make ours look like iPod wannabes.
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|The illustrious foxfyre has spoken so take his word for fact. yeah right.
first of all, carriers build cell towers and power is always on for these. This goes the same way with land based telecom. the use is an antiquated way of charging by the minute. Since the big bells were in charge and decided that it would be fair to pay as you go largely because not all areas were able to get the service.It has changed in the way that a majority of households have the ability to to have land service, it is not necessary to charge by the minute. To connect a call costs them nothing. the real fees you pay are for future and past investment in the systems ability to connect these calls through other carriers. Since there is no reform in this, cell carriers followed this and now that most of the country is covered with the ability to obtain coverage almost anywhere, it is also antiquated in charging by the minute for cell service.
roaming fees are insignificant to the carrier, not the customer. This point specifically is what I intended you to understand. If you misunderstood, you should not form your opinion so quickly.
There are plans in the US for free incoming! Not all carriers, but there is at lease one and it is national.
If you are out of your home area and the main carriers already pay other cell carriers for transmitting calls, this is why roaming is insignificant. they have negotiated rates with the other cell companies. this is also why I don't need to take a 30% pay cut. add to it that they have a 500% markup- a typical retailer makes a 10-30% margin on what they sell. so this amounts to significant investment/profit.
if you were as smart as you try to be; by doing research regarding how the service works instead of based on user price/experience in Europe vs US, you would know that prices gouge the consumer and only benefit people who can afford to receive video on their phone.
I know they have better phones, and service 3g 4g, but what I meant is that they are so far ahead in other areas, it is hard to believe that the US is ahead in this one thing (Roaming).
I don't disagree with everything you say, but Europe is largely socialist. so what is your point with that? is that sarcasm?
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|"The Commission proposed roaming fees should be capped at 40 cents for an outgoing call and 15 cents for an incoming call."
They are charged for incoming if they are roaming. there are carriers in the US that do not charge for incoming. Nextel/Sprint is one of them.
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