EU's Reding seeks to slash cost of text roaming

BRUSSELS Tue Jul 15, 2008 3:52pm BST

A generic picture of a Nokia mobile phone. TECOM REUTERS/Catherine Benson CRB

A generic picture of a Nokia mobile phone. TECOM

Credit: Reuters/Catherine Benson CRB

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BRUSSELS (Reuters) - "Rip off" mobile phone operators will be forced to slash by roughly two-thirds the cost of text messages for people travelling between European Union countries, the bloc's executive arm said on Tuesday.

The 2.5 billion text messages sent every year by roaming customers in the EU cost more than 10 times more than domestic short messages (SMS), EU Telecoms Commissioner Viviane Reding said in a statement.

"EU citizens should be free to text across borders without being ripped off," she said.

After the "No" vote in the Irish referendum on the EU's Lisbon reform treaty in June, Brussels is keen to show it has a role to play in the lives of the bloc's 490 million citizens.

Price caps on roamed voice calls introduced last year by Reding were one of Brussels' most popular policy moves.

Reding said Europe's mobile industry "still hasn't got the message that credible price reductions are needed to avoid regulation." Roamed texts represented 97 percent pure revenue for operators, she said.

"I will therefore recommend to my fellow commissioners that we propose a regulation of SMS roaming in October," Reding said.

Reding won full backing from the European Regulators Group of the bloc's 27 national telecoms regulators.

A roamed text currently costs an average 29 euro cents (23 pence), excluding sales tax.

"In the view of the ERG, a price cap between euro 0.11 and euro 0.15 per SMS would be appropriate," Daniel Pataki, ERG chairman and head of the Hungarian National Communications Authority, said in a joint news conference with Reding.

"We believe that roaming remains a problematic issue in the EU communications sector. It's clear that price levels need to come down," Pataki said.

Reding told Reuters on Tuesday that her proposal would be at the lower end of that range, with a long-term target of about four euro cents. In February, she gave operators a retail target of 12 cents per roamed text, but only one operator out of 90 in the EU -- in Estonia -- offers texting at this level.

Reding said the cost of surfing the Web using a mobile phone or laptop while travelling was also too high.

"We will also have to discuss in which way to address data roaming, which continues to be heavily overpriced," she said.

Operators were divided in their response.

The GSM Association, an operators' lobby that represents big players such as Vodafone, Orange and T-Mobile, said the average price of roamed texts fell 18 percent in 2007 and Reding threatened to choke growth.

"These services should be priced based on local market conditions, not on some vision of a single Europe, originating in Brussels," Tom Phillips, GSMA's chief of government affairs, said.

New entrants were supportive, however.

"It took the EC to intervene on behalf of the consumer on voice roaming, and we're glad it intends to do the same on texts. We share the Commission's concerns that data prices remain too high and are a likely cause of 'bill shock'," said Christian Salbaing, managing director of 3 Group Europe.

ENDING "BILL SHOCK"

More than 50 operators will introduce cheaper data roaming packages this month and give better news to consumers, Reding said. Operators have to persuade her over the summer that no caps on data roaming charges were needed.

Data roaming prices have fallen from 5.24 euros per megabyte last year to around 3.6 euros today but even if no mandatory caps are introduced, the "huge issue" of transparency and "bill shock" would still be tackled, Pataki said.

"There should be an obligation on operators to introduce transparency measures," Pataki said.

Last year Reding pushed through three-year price caps to 2010 on roamed voice calls to cut bills by 60 percent.

She will propose a further three-year extension to 2013, a step that won backing from national regulators.

"The data shows there is no evidence of competition. We recommend to the Commission to continue with voice regulation both wholesale and retail on a downward glide path," Pataki said.

Reding said preliminary discussions with current EU president France and senior members of the European Parliament showed backing for speedy adoption of her planned measure by June 2009, when the EU assembly breaks up for elections.

"Before next summer, the new caps would be in place," Reding said.

(Editing by Dale Hudson and David Cowell)

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