FACTBOX-The European Union mobile phone roaming saga explained

Telecom operators used to charge a lot more than it cost them to keep their customers connected when they travelled abroad.

By: Reuters | Brussels | Published:September 9, 2016 11:59 pm
European Union, EU, European Union mobile network, European Union mobile network roaming charges, Mobile network roaming charges, EU mobile charges, EU membership, EU telecom operators, EU mobile network policy, mobile tarriff plans, EU telecom tarriff plans, world news, telecom news, telecos The EU sees roaming charges as out of place in a single market and ending roaming charges became a rallying cry for politicians keen to show citizens the benefits of EU membership. (Source: Reuters)

The European Commission on Friday withdrew proposals that would limit the number of days consumers can use their mobile phones abroad without paying extra after criticism that the rules were too restrictive.

Below is an explanation of roaming charges and why it has been so difficult to abolish them.

WHAT ARE ROAMING CHARGES?

When people travel abroad, their mobile operator pays the local operator to keep them connected, and then charges them a fee to recoup the cost.

Those roaming charges have been drastically cut by the EU since 2007. As of April 2016, consumers pay 5 euro cents a minute on top of their domestic price for calls, 2 euro cents per text message and 5 euro cents per megabyte of data. That is 92 percent cheaper than it was in 2007.

Telecom operators used to charge a lot more than it cost them to keep their customers connected when they travelled abroad, earning fat margins from roaming charges and eventually leading to a public backlash against getting shockingly high phone bills after holidaying in other countries within Europe.

Many industry insiders now admit they made mistakes on roaming.

WHY DOES THE EU WANT TO ABOLISH ROAMING?

The EU sees roaming charges as out of place in a single market and ending roaming charges became a rallying cry for politicians keen to show citizens the benefits of EU membership.

In 2010, the Commission unveiled a digital agenda in which it said it would ensure that the difference between national and roaming prices would be zero by 2015.

“I am pleased that year after year the European Union is putting money back in the pockets of citizens,” Neelie Kroes, former Commissioner for Digital Agenda, said in 2012.

WHY WAIT UNTIL JUNE 2017?

The Commission put forward a legislative proposal in 2013 to abolish roaming charges by 2016 at the latest.

After much wrangling between member states, who had to give their approval before the proposal could become law, a compromise ending date of June 2017 was agreed upon.

However that hinges on agreeing a reform of the wholesale roaming market first, which is being discussed by member states, to ensure telecoms firms do not operate at a loss.

The proposal also foresaw the Commission putting forward a “fair use” policy to prevent permanent roaming, whereby someone buys a foreign SIM card in a country where it is cheaper and uses it at home.

The industry had lobbied hard to delay the roaming end date on the grounds that abolishing retail roaming charges too quickly would distort the market as they would still have to pay wholesale rates to each other.

National governments largely sided with their operators, resulting in a north-south, east-west split.

In the north and east of Europe, where domestic prices are low, operators feared that removing retail roaming rates without lowering wholesale prices first would force them to raise prices at home to recoup the cost.

On the other hand, countries which host a lot of tourists, like Spain, Greece and France, have an interest in keeping wholesale rates high so they are compensated for handling the extra tourist traffic.

WHAT IS ALL THE FUSS ABOUT NOW?

On Monday the Commission published a draft fair-use proposal that would have let companies charge roaming fees to consumers who used their phones abroad for more than 90 days in a year or for more than 30 days in a row. On average EU citizens spend 12 days abroad per year.

That came under fire from the European Parliament and consumer organisations, who accused the Commission of reneging on its promises.

Telecom operators, on the other hand, pointed out that 90 days’ roaming is well above the EU average.

The Commission will now go back to the drawing table to come up with a proposal that is more friendly to consumers, expected next week.