2 Comments

Summary:

European politicians have just voted up proposals to slash roaming charges for mobile users who stray across the continent’s borders. But it’s drawn a violent response from Vodafone boss Vittorio Colao who thinks it could create “hell” for operators.

European Union

Updated: For the last few years European regulators have been pushing mobile companies to slash the roaming charges they slap on customers who cross the continent’s borders. Although operators have grumbled and griped about lost profits, for the most part they have taken the hits. Apparently, though, the gloves are now off.

At a press briefing held at Mobile World Congress in Barcelona, Vodafone boss Vittoria Colao said that it was time for the cuts to stop. According to The Guardian, Colao told reporters that the more the regulation stops mobile companies charging users what they like, the less investment mobile companies will make in their networks.

“Does Europe need employment, or does Europe need rate cuts?” he asked. “We should stop having this continuous intervention on prices and let the industry reinvest the money.”

He then went on to describe what he saw as “hell”: a worst-case scenario in which profits fall, reinvestment is impossible, development ceases, jobs are cut, and a whole range of related industries — media, software, entertainment.

Hyperbole?

The prospect that terrified Colao so much was the upcoming vote by European parliamentarians over roaming charges, who wanted to cap the amount customers paid in order to prevent them being unfairly levied in what is, after all, meant to be a single market.

And it has come to pass. Just hours after Vodafone’s fit of pique, the vote went ahead and the agreement was made: now a proposals has been outlined suggesting that by July 2014, operators will not be able to charge roaming customers any more than €0.15 a minute for calls, €0.04 to text, or (perhaps most importantly) €0.20 a megabyte for data. It could soon be the law.

So will we see the “hell” Colao envisions?

That’s not going to be obvious for a while. But there are plenty of arguments to suggest that his anger is more than a little hypocritical. The biggest? That cutting roaming charges isn’t going to kill anyone. After all, Vodafone made nearly $12 billion in profit over the last six months.

Then there’s the fact that not every operator has the same issue with the proposals as Colao. Although Telefonica similarly argued that it would be counter-productive to cut roaming rates, British network 3 responded positively to the vote.

“The committee’s proposed data caps will pave the way for greater  competition and lower consumer prices,” said the business’s deputy chairman Christian Salbaing. “This proposal is a great result for smartphone and mobile data users across Europe.”

But perhaps the real trend to watch here is the pushback against regulators. After years of rolling over, corporates are now stinging — and making direct, targeted, public attacks. This could be the spark that sets a fire.

Update: Neelie Kroes, the European Commission’s vice president who has championed many of the regulations around mobile issues, has fired back at Colao on Twitter — saying she doesn’t believe it.

It’s also worth pointing out that some had been lobbying for roaming charges to be scrapped entirely, or made dramatically lower than those which made it through the committee. The ultimate vote, which would make the cuts law, is due to take place in April.

You’re subscribed! If you like, you can update your settings

  1. I’m very sorry Vodafone, but this kind of money-grabbing attitude doesn’t get the banks much sympathy, and neither will it you. Roaming charges worldwide – particularly for data, are an inexcusable rip-off. It’s a way for carriers to make untold profit. As consumers, we have no way to know how much roaming ACTUALLY costs our home carrier. It might be expensive, or on the other hand, it might cost them buttons. The whole system is completely opaque to consumers, and anyone outside the whole price-fixing arrangement. Consumers don’t know what they are paying for, and don’t understand why it should cost so much, so why on earth should they continue to pay such exorbitant rates. As a former European resident, I haven’t always agreed with everything the EU does, but for their campaign to control voice and data roaming costs within Europe, I wholeheartedly applaud them. Now, if only there were some body who could fight for those of us outside the EU, where there is no regulation at all, and prices can be up to USD20 per MB – or more. It’s insane, and it needs to stop.

    1. The whole roaming thing is a price fixing cartel among mobile phone companies. I’m surprised its never come under scrutiny of competion bureaus. Probably because the price fixing is between a domestic and foreign carriers?

      The fact that your home carrier can control the network you roam on by way of the SIM card opens roaming up to concerted manipulation. How do we know that our carrier is not steering us to the roaming partner that gives them the best margin or roaming revenue?

Comments have been disabled for this post