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Good or bad? EU to propose worldwide roaming charge cap

New York Times reports about a new EU plan to place a worldwide cap on data roaming charges for EU citizens. Wether or not this is a good idea remains to be seen… There are still a number of countries that carry quite high roaming charges, which would cause the cap to activate pretty quickly. Not a good customer experience.

I doubt that the EU guidelines would cause non-EU operators to lower their wholesale data rates at all, so the result could be that only the ‘real’ operators (MNO’s, i.e. in the Netherlands KPN, T-Mobile, Vodafone) would be able to force enough buying power to enforce lower wholesale rates or to subsidise the charges toward the customer.

If that becomes reality, would it serve the customer? Would it offer market options and transparency? I don’t think so. In this scenario, smaller providers (i.e. MVNO’s) who are tied tightly to their MNO may not be able to compete in the market. Winners of the game would be the MNO’s with deeper pockets. The market of roaming solutions toward MVNO’s may grow, but most likely this will still only cover base costs of mobile challengers.

What will happen remains to be seen. For now I’m sceptic about this idea, but we will certainly keep a close eye.

2 Comments

  1. Arno Brevoort

    In my book, it’s a cost vs. price issue. Data *does not* cost that much. It all goes over the same pipes the internet flows over once it’s past the radio link — so the only thing I’m “purchasing” when I’m roaming is a little unplanned capacity.

    UK newspapers keep posting articles on excessive roaming charges with titles like “I watched a YouTube video on Ibiza and got a 2500 pound phone bill”.

    I don’t mind someone making a (tidy) profit on excellent service at a price the customer understands and agrees to — but I’m *quite* sure in most of these cases, the customer was not aware, and surely would have foregone the minor amusement if he/she knew it came with a 2500 pound price tag.

    However, if you’re a photo-journalist reporting on Arab Spring protests, that 2500 pound *might* be money well spend.

    The McDonald’s model of doing business is “DON’T surprise me” — you know what you get and what you’ll pay, upfront. If I don’t have a pattern of doing 2500 pound downloads abroad, hack me off by the time it reaches 100 pound, and *ASK* if that’s what I meant to do. A simple SMS is all it takes, and the 140 character limit is a nice incentive to be clear and concise.

    If that’s what the cap does, bring on the cap.

    1. Florian Author

      Hi Arno,

      If you are on the user side of things, you’re right. However, if you’re on the telco side of things, this gets less trivial pretty quickly. If mobile roaming costs 10,- per meg, filling the cap at 50,- may take less than a second. If it’s not signalled properly, costs will escalate with no means of recuperating those costs from the customer. The telco needs deep pockets to do so – meaning it will limit the opportunities for challengers.

      I agree that costs of the pipes are in reality much much lower, but smaller players have no opportunity to purchase at those lower rates, and the EU has no authority to enforce that outside of the EU. A smaller telco may be forced to choose between paying the inflated fee or stop offering roaming internet services for those countries entirely.

      My $0,02

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