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European Commission threatens mobile data price cap

OUT-LAW News, 19/02/2008

The European Commission will regulate the cost of text messages sent and received abroad if the industry does not tackle overcharging, Information Society Commissioner Viviane Reding has said.

The Commission last summer set caps on the cost of voice calls while a user is 'roaming' on another country's network. But Reding said that if it had to intervene in the mobile data market it would only be in wholesale prices, not retail ones.

"Sending text messages or downloading data via a mobile phone while in another EU country should not be substantially more expensive for a consumer than sending text messages or downloading data at home," Reding told a mobile industry conference in Barcelona.

"This is the logic of the borderless single market which we in Europe agreed to create already 50 years ago. Higher retail charges abroad must be justified by additional cost of operators, or they will have to disappear," she said.

"The real breakthrough for data roaming will only come when the inter operator tariffs start to fall to a substantial level," she said. "It is these wholesale tariffs where the real problem lies for data roaming. Substantial retail price reductions are certainly desirable, but unless the inter operator tariffs also fall there is a danger of price squeeze."

Reding told reporters at the conference that it was not appropriate to regulate consumer prices in such a young and developing market, which is why she would tackle wholesale prices.

She said that the range of prices networks charged each other was very large. "While I hear on the one side about wholesale tariffs of up to seven euro per megabyte, I have also learnt with interest of some of the wholesale deals that are being negotiated on a voluntary basis – for example €0.25 cents per megabyte. This certainly indicates that there is a lot of commercial scope for substantial reductions over the average rates that are quite common today," she said.

The Commission ordered the mobile industry to reduce voice roaming charges last year, but when unhappy with the progress it set a ceiling for voice call charges. The price caps were set at €0.49 for calls made abroad within Europe and €0.24 cents for calls received.

The costs will decrease each year, by three cents for two years for outgoing calls and by two cents next year then three cents the following year for incoming calls.

Reding said that high roaming charges undermined the entire purpose of the EU. "I want to see the end of these artificial borders between networks and nations which are both preventing private consumers and business customers to benefit fully from the single borderless market we have created between 27 EU countries so far," she said.