Mobile operators have another reason to hate Vivienne Redding

Published
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Ladislav Kovac
  on  September 23, 2008
  in  Current events and Slovakia
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EU Commissioner, Viviane Redding, has made few friends among mobile operators. They now have another reason to grumble, according eTREND magazine.

After her successful campaign for cheaper mobile voice roaming charges in Europe, Redding is preparing for another crusade. Her goal is to lower the European mobile operator rates for roaming text messages, e-mails and Internet.

As with last year’s campaign, Redding’s reasoning is straightforward. She argues that the high costs of mobile data roaming charges limit the free movement of people and the development of pan-European businesses.

Expressed in numbers, each of 2.5 billion roaming text messages Europeans sent in 2007 were about 10-times more expensive than a domestic text message. It is a fact that mobile operaters charge roaming text messages and megabytes at premium rates.

According to the European Regulators Group (ERG) the price of one text message sent from abroad was on average 29 Euro cents.

Clients of Slovak operators pay between 30 and 40 cents (prices include VAT). The price differences between countries are fairly big. For instance a Swedish person on holiday in Spain will pay 40 cents whereas his fellow holidaymaker from the UK would pay 50% more.

It is true that roaming prices are falling. According to the GSM Association the price of text messages went down by an average of 18% year on year and one megabyte of data transferred costs 30% less on average than in 2007.

However these prices have decreased mainly for service packages positioned towards more active travelers. As far as the ratio between roaming and local tariffs is concerned the situation with text messages is the same as for regulated voice services, stated the strategy manager of Slovak Orange, Ivan Marták.

  • And don't we - customers - have reasons to hate our mobile operators? :)

    At least here, in the Czech Republic, they start to get quite lasy. Their salary costs here are certainly lower than in the western Europe and their infrastructure investment drastically slowed down over last years (for example 3G network is available through only one of three operators, and only in Prague).

    Despite of that we often pay higher fees (for example 9 euros monthly for EDGE cell phone access only), don't have a personal account contact (and have to wait on the call center line for anything we need) and are charged enormous money for text messages or calls abroad.

    As a liberal I don't like market regulations much. Nevertheless how much we would still pay for roaming without Ms. Redding's push?

    I know the official news and understand the Orange manager's logic. What is your opinion, Ladislav?
  • Leaving aside the questions of regulation and monopolistic behaviour, there's a clear case of expensive tariffs inhibiting usage. While the only data/roaming users are businesses who can expense large bills then the operators have little incentive to change.

    When, however, you have people habitualised to eating data is vast quantities (iPhone users!) then a step across a national border - from the safety of all-you-can-eat service plans to pay-as-you-go data costs at €6/Mb - is a bankruptcy-inducing experience.

    As more and more people (individuals and small businesses) bump against these tariffs the tide of resentment will rise.

    This call is also a long-overdue opportunity for the big telcos to improve and open their billing systems. Much as inter-country bank transfers needed a prod to become efficient, it's madness that charges for connectivity in France can take up to 6 months to arrive on my 02 bill in the UK.

    The big opportunity here is to jump over the whole punitive/regulatory/resentful scenario and embrace a more open and dynamic market position. There's scope for a telco (especially one operating across national borders) to carve out a new service niche.

    Rachel Hinman at Adaptive Path recently wrote an article (from a US perspective) on how post-monopolistic behaviour in the Baby Bells could and should be converted to a 'modern heroic' approach. It's a good real and relevant to us in envisaging a service beyond the present rather grudging changes:
    http://www.adaptivepath.com/ideas/essays/archiv...
  • Steven Carlson
  • Good point, Ian. Concerning iPhones users in CZ (I'm one of them) their number estimation is over 50,000 (and this includes only the official 3G sales) by the end of 2008. And my data rate (via EDGE by T-mobile) is even more expensive than I mentioned above.

    FYI the 9 euros flat tariff is covering only the phone access and only the web & mail apps transfers. You have to pay extra for the data being sent to/from your phone through any other native apps (maps, youtube, twitter, etc.) and for anything over 100MB - at 0.25 eurocents per kB. That makes the supply side (a few years ago highly innovative and competitive) pretty lagging behind.
  • Steve, I have just read about a tender for two new mobile licences (15y contract) in Hungary announced by the local telco regulator. The reason, they say, is a price stagnation since 2006. Can you see something similar I'm mentioning in my comments above?
  • Robert Nemeth
    The National Communications Authority (NHH) has announced calls for tenders that will allow new mobile operators to enter the market in order to intensify competition on the mobile telephone market and to increase broadband Internet coverage in Hungary.
    One winner will get similar frequencies (900/1800 MHz) than the current operators, however the other winner will get the formerly used 450 MHz. The latter helps to increase mobile broadband coverage.

    Concerning the currect situation, it is far better than in the Czech Republic. All the 3 operators provide 3G coverage and 3GB data costs 15 EUR a month.

    i agree with Ian. If you cross the border they charge a huge amount of money.
  • Thanks for the details, Robert. To be fair to T-mobile CZ, it also provides the 4G Internet access for 19 EUR a month - what is really fast, but usable only on devices where you can benefit out of that (not the case for affordable cell phones yet).
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