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7/2/2013
12:07 PM
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EU Limits Mobile Roaming Costs

Price of using smartphones to access services is coming down in Europe.

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European cell and mobile broadband use should be boosted by enforced reductions in cross-border charges that came into effect Monday.

The new European Union rules limit what mobile operators can charge for their services when a customer moves out of one national territory into another. Now, the maximum cost of making a call from one EU member state to another is €0.24 (31 cents) per minute. In data terms, the cap is now set at €0.45 (57 cents) per megabyte, the latter a 36% reduction.

The reductions are part of a previously announced plan, the European Commission's Roaming Regulations approved in 2012. But while doubtless welcome for consumers, what impact will these reductions have on the service operators themselves?

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The picture may be a very mixed one -- for both customers and the industry, thinks London based analyst house Ovum. While the reduction in retail rates is quite significant, it may not be all good news for consumers, claims the group's regulation analyst Luca Schiavoni, who worries that as the ruling only covers the EU, operators may recoup the lost revenue in Europe by increasing roaming charges to and from other countries.

In fact, he warned, plans to completely remove roaming charges should be "carefully evaluated before passing them" by Brussels, as roaming provisions do involve additional costs to operators and zero-rated roaming may result in the market "looking for other sources of revenue" -- perhaps by increasing domestic bundle prices, or charging higher rates for non-EU roaming. "This is already happening in many cases, and is obviously detrimental for EU citizens travelling elsewhere and for non-EU citizens travelling to Europe."

On the data front, charges for data roaming are still perceived to be very high by Europeans despite the EU's curbs, something that prompts many to turn off data connections on their smartphones when they are abroad and thus not make full use of their devices. That means, he said, that, "Either with or without regulatory pressure, the market has to find a way to reduce the cost of using data roaming now that smartphone adoption has become widespread."

Schiavoni thinks the better way forward here may not be such price caps at all, but allowing users to buy separate roaming packages in each new country they visit, or looking at other ways of opening the roaming market to new competition.

If not, he said, European mobile firms may retrench, leading to a negative impact on the level of investment.

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