European plans to cap roaming costs for its citizens likely to reduce revenues for Asian operators

Posted on February 13, 2012  /  0 Comments

The European Union was the only regional grouping taking concerted action to curb the exploitation of the customers of others by operators. But all this time, their actions had effects only within Europe. Now they’re capping roaming costs overall. This will cause European operators to actually negotiate for lower rates from those from whom they purchase roaming services. According to the waterbed theory (which has no foundation in fact, but is trotted out every time operators see some monopoly niche being attacked), this should result in higher roaming costs for the rest of us, non-Europeans. My guess is that we will all benefit from the European push, in the same way everyone benefitted from the US push to drive down international voice termination charges in the 1990s.

Under the proposal the cost of roaming on voice calls would drop from 35 cents a minute to 25 cents on July 1 and to 15 cents by 2014. The cost of receiving a call would drop from 11 cents to 7 cents in July and to 5 cents in 2014. The price for sending a text message would fall to 8 cents in July this year and to 5 cents in July 2014.

The proposal would require that the controls remain in place until 2022 but would set specific limits only through 2015. By then, lawmakers would reconvene to adjust the caps for the next three-year period.

If the global limit on mobile roaming charges that is part of the proposal is approved for European customers of Telefónica of Spain, Deutsche Telekom of Germany, Vodafone of England and Orange of France, among others, carriers in other parts of the world — including the United States — could come under pressure to lower their fees.

Most roaming charges are set by commercial agreements between operators. Faced with new limits, European carriers may try to renegotiate existing agreements with non-E.U. operators to lower roaming charges and their own costs significantly, one expert said.

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