EU sets lower roaming tariffs and encourages more competition

The new tariffs imposed by the European Union (EU) for text messages and internet surfing abroad came into force last week. The European Commission (EC) revised the regulation adopted in 2007, expanding its stipulations to encompass SMS and data communication services. The commission also extended the validity period of the regulation until 2012.
The EU reduced the maximum tariff for SMS (text messages) sent while roaming within EU territory to EUR 0.11, compared to the average EUR 0.28 per message that operators were charging until this point.
A maximum limit for data traffic in mobile networks was established at EUR 1/megabyte, compared to an average of EUR 1.68 per megabyte as charged by the operators before the new regulations came into force.
The new tariff limits also reduce the costs of calls made abroad, inside the European Union, to EUR 0.43 per minute, from EUR 0.46 per minute before. Received calls will from now on cost at most EUR 0.19 per minute compared to EUR 0.22 per minute previously.
The EC ruled that as of July 1, 2009, any telecom supplier is compelled to charge per second for received roaming calls. For calls made while abroad, the supplier can apply a minimum initial charged period that must not surpass 30 seconds.
“The commission and national regulation authorities will closely monitor roaming tariffs for data transfer and will evaluate next year if the market of roaming services has finally become competitive,” said Viviane Reding, EU commissioner for telecommunications.
The three largest operators on the local market, Orange, Vodafone and Cosmote, have already cut their tariffs in conformity with the new European norms starting on July 1.
According to Irina Pana, wholesale, international and regulatory affairs manager at Orange Romania, “The decrease in roaming tariffs as a result of EU regulations will reduce the company's cash-ins, but the resulting growth in use of roaming services will somewhat compensate for this effect.”
Romanians' main roaming destinations are in Europe. They are countries with which Romania has strong economic ties such as France, Italy, Germany, Austria, Great Britain and Spain, as well as neighboring countries such as Hungary, Bulgaria and the Republic of Moldova, says Pana.
Orange Romania has signed roaming agreements with more than 300 operators in over 150 countries and with two operators of mobile telephony through satellite.
Vodafone Romania cut its roaming tariffs on June 16 for voice services (down by 6.5 percent and 13.6 percent), SMS (between 62 percent and 68.5 percent lower) and for mobile data (a decrease of approximately 16.5 percent).
Over the last year, Cosmote has added to its roaming coverage 38 new destinations so that the company's subscribers can now use roaming services in 160 countries through 342 partner networks.
Users of Cosmote prepay services can make use of roaming services in 158 countries through 279 partner networks. GPRS services are available in 39 countries through 71 partner networks.
“The decision to bring down roaming tariffs to the level set by the European Union aims to set a reasonable limit of costs from the point of view of the consumer, and at the same time, a limit below which mobile operators can compete efficiently from an economic point of view. The regulation of these tariffs was a consequence of the fact that there was no clear and valid explanation for the very high level of roaming tariffs that were being charged,” said representatives of the National Authority for Management and Regulation of Communications in Romania (ANCOM).
The tariff limits that were introduced are generically called “euro-tariffs.” The euro-tariffs were established in such a way for operators to maintain a reasonable profit margin but also to eliminate situations such as those in the summer of 2005 when the cost of a call made from abroad could reach approximately EUR 1.70 per minute (no VAT included) for a German consumer who made a roaming call to Austria, EUR 1.47 per minute (no VAT included) for a British consumer who made a call from overseas to Italy and EUR 2.50 per minute (no VAT included) for a Belgian consumer who made a roaming call to Cyprus.
According to the European Commission, these measures will reduce roaming tariffs for Europeans by 60 percent and will therefore encourage mobile phone customers to use their cells more while abroad.
“This will cause a reduction in the profit per minute/per message but in the long term the increase in the degree of usage of these services will compensate for the diminishing of revenues they generate, which also largely depend on the number of users who travel abroad,” said officials.
According to the last statistical report published by ANCOM, roaming services for Romanian users registered significant growth between 2007 and 2008, especially at the level of voice traffic (both dialed and incoming calls).

By Otilia Haraga
otilia.haraga@business-review.ro