THE BLOG

Higher Phone Bills Inside the EU

21/06/2016 16:00

Despite the white noise from the Remain campaign, this referendum is fundamentally a question about our democracy. However, some Remain campaigners believe our democratic rights are less important than the cost of a phone call; Nick Clegg is clearly of this view. They seem to believe saving a couple of pounds on a holiday to Spain is of greater significance than our right to hire and fire our leaders. It will be no surprise to readers, we at Get Britain Out do not believe this for one moment.

Even this choice between the cost of your phone bill and democracy is not as straightforward as we were first led to believe. It's true the EU will - by June 2017 - have abolished the difference in cost between using your phone in this country and in another EU country, with the process of harmonising the prices having already begun. On the face of it this sounds like a rare EU success story, but rather than looking at the headline of this policy, it is important to understand who pays for this reduction in fees. You!

All companies want to make the maximum amount of profit for their shareholders - this is the sole reason for their existence. Contrary to popular belief Topshop doesn't exist merely out of the kindness of Sir Philip Green's heart. Those who celebrate the EU's roaming charges policy, celebrate it out of economic ignorance. They celebrate it by claiming the customer will be charged less. Unfortunately this ignores the profit incentive which drives companies to satisfy their shareholders.

Does Nick Clegg really believe phone companies will sacrifice the profit they earn from tourists making phone calls home to mum and dad? I don't even think Mr Clegg is naive enough to believe they would.

Phone companies will not voluntarily sacrifice a single penny of profit. They will either save money on the cost of providing the service which will reduce customer satisfaction, and/or put their prices up. The shareholders of these companies will not be picking up the bill for this.

As these rules force phone companies to charge the same price for an individual to use his/her phone in Spain as for using a phone in Skegness, the company would - without taking any remedial action - be faced with losing profit. However, the phone companies have already planned to keep profits high. They will raise prices regardless of where the phone is used. The cost of using a mobile anywhere in Britain is about to become more expensive in order for holiday phone calls to become cheaper. It's clearly a no-brainer for the phone companies where profit is everything.

Does this sound fair to you? As a result your phone bill will be higher for 50 weeks of the year, whereas it may be lower for the 2-week holiday. In addition, this policy is strikingly regressive. Who will benefit from this policy? The middle classes going to the Alps three times a year on skiing holidays. Who will pay for it? Those who can't afford to go on holiday.

This is not simply an elaborate theory of ours. This has already begun. Despite EU rules being implemented piece by piece - with the full brunt yet to come into force - mobile bills have already started to rise. EE and O2 have already raised their prices to the maximum allowed before triggering the ability for the customer to tear up the contract - and Vodafone have even passed this figure. Prices will only rise further as June 2017 approaches.

Not only is the suggestion of phone bills being more important than our democracy ludicrous, but the EU's policy on this subject is failing, like so much of the EU. The EU's unelected bureaucracy revels in thinking up grand plans to harmonise area after area, but what results time and time again? Failure after failure. Whereas the naivety of this policy is not a reason to vote 'Leave' on Thursday, the future of UK democracy is. Vote 'Leave' on June 23rd and let's Get Britain Out of the EU.

Matthew Ellery is a Research Executive at Get Britain Out.

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