Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Terrific news for anyone living in the EU — the cost of voice, text and now data use while travelling within the continent is about to fall drastically.
With 578 votes to 10, the European Parliament almost unanimously voted through a new roaming regulation on Thursday. This will be the first time that there’s a retail cap on data roaming within the EU.
App providers around the world should also be delighted to hear that, since the move should lead to a hefty rise in mobile internet usage there — in particular, for content and location-based services. But mobile operators will be furious, as they have lashed out before at the European Commission’s proposals, but to no avail.
From the EC’s side, high roaming charges are a barrier to both the Holy Grail-like single market and free movement within the continent.
By putting price caps on data we have created a roaming market for the smartphone generation,” digital agenda commissioner Neelie Kroes said. “More than that, we have ended the rip-offs familiar to anyone who has used a mobile phone while travelling abroad. I am pleased that year after year the European Union is putting money back in the pockets of citizens.”
Data-roaming charges have been coming down in recent years – around 75 percent since 2007 – but not nearly enough when you consider that the actual cost of providing such services is between 1-3 euro cents per megabyte, far, far lower than most people get charged. Operators throw on massive mark-ups in the order of tens of thousands percent, but now they’re facing a cap of 90c/MB on 1 July this year.
The data-roaming cap will graduate downwards over the next couple of years, reaching 50c/MB in 2014. The maximum charges for voice and text message will also fall, although retail price caps have been in place for those services for a few years now.
But the caps aren’t the end of the story by any means. Looking for a long-term solution, the EC made sure the new regulations will also see operators forced to decouple their roaming packages from their domestic packages.
The problem is that people hardly ever select their domestic mobile contract provider on the basis of how much that operator charges when they leave the country. So, as of two years from now, consumers will be able to select competing packages from a host of carriers when they’re planning a trip.
Of course, the measures pushed through by Kroes will only affect those travelling within the EU. Internationally, the scene is still pretty bleak. It’s not unusual to see charges of $15 per megabyte, and there’s no global regulator to force a change.
For Europeans travelling outside the EU, the new regulation does at least bring in a default €50 cap on roaming bills — customers can of course opt to go past that limit, but the general idea is to stop people from getting so-called ‘bill shock’ when they get home.
The benefits of lower data-roaming charges are clear. The EC estimates savings of more than €1,000 a year for business travelers, and €200 a year for families going on their annual vacation.
But, on the supply side, the operators’ loss is the app provider’s gain. The cheaper it is to surf the web on your tablet and smartphone while you’re abroad, the more likely you are to do it.
The same goes for apps – all those location-based services out there that currently see most of their use on the domestic level will now experience much greater takeup by those who most need to use them. It may actually become viable to catch a show over a cellular connection while abroad.
Whatever your view on regulation, it’s hard to spin Thursday’s vote as bad news for consumers, the EU as a whole, or the rapidly growing app and content businesses. Not that that will stop the operators trying.