Abolition of roaming charges in EU will not lower costs unless more is done

Abolition of roaming charges in EU will not lower costs unless more is done

Market news |
By Jean-Pierre Joosting

A&B Groep finds that costs for out-of-bundle calls have increased, new subscriptions are more expensive and companies are charged higher fees due to complex contracts. Moreover, roaming charges are still applied in other European countries. Calling from Switzerland, for example, has even become more expensive than before.

The EU has put an end to the high fees charged by mobile providers for voice, SMS and internet use abroad, also known as roaming, enabling people abroad can use their standard bundle to call and use the internet from abroad.

However, as roaming charges were being dropped within the European Union, the next steps were already being discussed at the Digital Assembly 2017, where Markku Markkula, President of the European Committee of the Regions, stressed that EU citizens in all regions and cities must be able to seize the benefits of the digital revolution at the event organised by the European Commission and the Maltese Presidency of the EU Council, in Valletta.

President Markkula had this to say: “For European citizens, the end of roaming charges is the most concrete and visible example of the advantages of the Digital Single Market. The new rules specifically benefit those who are travelling, people living in border regions and the estimated 1.7 million cross-border workers in the EU. As of today, they will no longer have to worry about extra charges when their mobile phone switches to another country’s network”

However he also warned that: “In most cases people will still have to pay a surcharge when calling abroad from their country of residence. There is still work to be done when it comes to uniform prices for national and international calls within the EU.”

Re-enforcing the need for more to be done, A&B Groep gives five examples which clearly illustrate that the new regulations do not by definition lead to lower costs:

Calling other countries is not cheaper – The abolition of roaming does not mean that calling abroad will be cheaper today then it was before. The charges for calling abroad – for example, from the Netherlands to another EU member state – have not changed. In fact, some providers have even increased their charges for calling abroad. As Ron Rijkenberg, CEO of A&B Groep, asks: “Why did the European Commission avoid dealing with this ‘real abolition’ of telecom country boundaries?” He clarifies his question with a practical example: “There is a person in the Netherlands. His colleague in Belgium uses his or her mobile telephone to call that person’s mobile telephone. The call is charged a higher fee than when the Belgian colleague first crosses the border with the Netherlands and then calls from the Netherlands. That roaming call has a lower charge than the international call.”

Roaming still applies to countries outside the EU – Besides the various EU countries, there is an entire group of European countries where roaming charges are still applied. Jorg Wiedijk, global marketing director of A&B Groep, gives an example: “We work for a large European customer with subsidiaries throughout Europe. It now appears that the charges for calling from Switzerland to a EU country have even been increased over the past months. The same applies for calls made from a EU country to Switzerland.”

Out-of-bundle charges drastically increased – As of today, people in another EU country can use their standard bundle to call and use the internet. The current EU packages – as options in business telecom contracts – are voided by these new regulations. Jorg Wiedijk explains: “The perception that everything is now cheaper will lead to increased usage of data. The use of such data will now also be charged on to the national allowance. The data package limits are therefore reached sooner, as a result of which the out-of-bundle charges will be charged when those limits are exceeded. Those rates have been drastically increased over the past months.”

Existing contracts remain valid – Companies with existing contracts always receive an adjusted fee plan, as a result of which people will likely have to pay much more. Also, optimisation of telecom contracts is not always possible during the term of the contract. The outside calling fee package charges can therefore lead to an increase of costs.

Obscure calculation methods – The European telecom markets are obscure and complex. This enables telecom providers to charge higher tariffs, without the companies being able to know whether their contractual agreements are being billed correctly.

The analysts of A&B Groep conclude that an average of 11% of all telecom invoices do not tally with the underlying contracts. They state that the real problem lies in the sheer complexity of the European telecom market.

Companies are faced with the complexity of the European and global telecom markets, which makes it very difficult for them to conclude beneficial contracts with telecom providers. For example, an internationally active company is forced to enter into contracts with several providers, even if those providers operate under the same name.

Ron Rijkenberg comments: “There are numerous telecom providers. Global providers also operate in separate countries, all of which have their own laws and regulations. Reaching a global deal is therefore nearly impossible. Finding the best possible telecom contract for the entire company is an extremely difficult and complex undertaking.”

Moving forward, the EU is not done and is aiming to address these issues as the Digital Single Market Strategy of the European Commission seeks to tear down regulatory walls and move from 28 national markets to a single one. A key aspect in this strategy is based on previous opinions where the assembly of local and regional authorities has already highlighted the need to address the digital divides between urban, rural and sparsely populated areas.

Clearly this is a work in progress.

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