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Dialling Down the Cost of Mobile Roaming Charges

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Using your mobile phone abroad is set to become much cheaper, after the Parliament endorsed an agreement with the Council on lower charges. The cost of a phone call will drop from 35 euro cents a minute today to 19 cents from 1 July 2012 and thanks to MEPs the cost of using data services will be capped at 70 cents per megabyte. At the moment there is no limit.

European companies profit immensely from operating in the EU, so perhaps it is not too much to expect something in exchange. By enjoying access to the world's largest internal market, they benefit from economies of scale and are in a better position to compete globally. At the same time the EU asks them to abide by high health and safety standards to help protect consumers and workers.

It doesn't end there. The EU has always tried to respond to concerns from citizens. That is why it has also introduced stringent environmental standards such as cleaner engines for cars and high animal welfare standards, for example by specifying a minimum cage size for chickens. Rules have been drawn up specifically for certain sectors, such as passenger rights for anyone travelling by air, but as these standards and laws apply to all companies in the EU, there is still a level-playing field.

Sometimes, though, it is necessary to go a step further in order to ensure the interests of consumers are being looked after, mobile roaming prices being a case in point. It has been very expensive to use mobile phones, smartphones and tablets when travelling in another EU country, leading to hefty bill once people return home. The first regulation on public roaming was adopted in 2007 but as competition was still not bringing about satisfactory price drops, EU institutions decided to opt for a revision. This time the idea was to set price caps for phone calls, text message and data roaming at both consumer and operator level.

Charges for using data services, phone calls made and received and text messages will drop in three stages - firstly on 1 July 2012, next on 1 July 2013 and finally on 1 July 2014. So, for example, in just over two years the cost of a text message will plunge from 11 cents today to 6 cents after July 2014.

But that is not all. Consumers will be protected from "bill shocks" as from July 2012 they will receive a warning message if they are about to spend €50 on mobile roaming charges in a single month, provided the foreign network is compatible.

The revision also aims to fix the problem of a lack of competition. From 1 July 2014 it will be possible to buy domestic and roaming services separately from different operators while retaining the same phone number. In addition, from 1 July this year operators without their own networks will be able to use those of other operators, at wholesale prices, to provide roaming services. Both measures should help to boost competition, which could reward consumers with lower prices and better services.

Even operators might eventually come to appreciate the new rules. Although they now warn it could lead to less investment, lower prices will inevitably lead to more clients and more trade, while increased competition will stimulate innovation and put companies in a better shape when jousting with firms outside the EU.

EU legislation always involves some give and take but ultimately it should provide more benefits than drawbacks.