War on Roaming Fees: Barroso Wants to Eliminate Charges in EU

European Commission President Jose Manuel Barroso wants to put an end to mobile phone roaming fees within the EU. Zoom
AFP

European Commission President Jose Manuel Barroso wants to put an end to mobile phone roaming fees within the EU.

For the final months of his term in office as European Commission president, José Manuel Barroso has a lot on his agenda. He wants to eliminate mobile roaming costs in the EU and push forward a banking union. But time is short and the potential pitfalls abundant.

If you're the owner of a German mobile phone and you cross the border into neighboring Poland, roaming fees can quickly add up to a few euros for even short phone calls. The fees exist all over Europe, and nobody likes them -- except the phone companies. José Manuel Barroso, as president of the European Commission, would like to score points with voters by abolishing the fees in what will likely be one of his last big acts in office before elections for the European Parliament next May and the appointment of a new EU executive.

At the center of what will likely be his final "State of the Union" address before the European Parliament in Strasbourg on Wednesday, will be the announcement of a fundamental restructuring of the European telecommunications market. Parts of the reform have already been leaked to the press -- and they are also being met with resistance within the European Commission.

The regulatory reform is the handwork of Barroso's digital agenda commissioner, Neelie Kroes of the Netherlands, and the Commission president himself has long championed the issue.

Leading the reforms is a plan to end all roaming charges within the EU. Starting in summer 2014, telecommunications companies would gradually and voluntarily begin eliminating roaming fees. Companies that do not do so would be required to allow their customers to change to a local mobile phone service provider during the timeframe in which they are traveling, and to make the arrangements for the switch. The calculation in Brussels is that the cost of this transfer would be so high that the company holding the contract would likely just eliminate roaming fees instead. Under the new regulations, all citizens would be able to telephone at domestic rates from anywhere in the EU.

New Rules and Alliances

In order to ensure that the same mobile phone prices are offered across the EU, Barosso's plan calls for diverse national telecommunications to create international alliances similar to airline groupings like Star Alliance, which allow for cross-booking on flights.

The regulations would also ban telephone companies from blocking cheap Internet telephone services like Skype or WhatsApp or from slowing connections down when those services are used. At the same time, the rules would also allow telephone companies to enter into individual contracts with content providers that would ensure faster data delivery for premium customers. It's a highly controversial point, too, with critics warning it is a violation of net neutrality that could lead to a two-tier Internet.

The rules also call for greater transparency, with a requirement that customers be provided with a way of actually checking how fast their Internet connection is. Misleading advertising would also be investigated.

Barroso also wants to increase competition, providing new provisions that would make it easier to terminate contracts and for customers to switch to other providers.

Borderless Communication

The draft is aimed at creating the breakthrough to finally achieve an EU without roaming costs. From the perspective of the European Commission, which is responsible for such regulations, roaming fees represent a violation of the principles of the internal market. EU Digital Agenda Commissioner Neelie Kroes has argued that Europe didn't get rid of its internal borders just so that people could be reminded of them again the second they turn on their mobile phones.

Kroes had initially hoped to present the draft regulations right after Barroso speaks on Wednesday, but the issue has divided the Commission to such an extent that the new policy will not be decided on until this Thursday. A high-ranking member of the European Commission told news agency Reuters that eight or nine commissioners are still adverse to the proposed regulations.

Opposition to the plan is focused on the provision that would allow for the Internet equivalent of a toll road with higher bandwidth. Operators of Internet infrastructure in Europe, such as Deutsche Telekom and its equivalents, would be permitted to charge extra fees for faster connections. But opponents believe this would threaten the principle of net neutrality -- the equal treatment of all data, regardless of whether its sender is willing to pay a premium.

"If the new Commission draft is implemented, instead of paying a few days of roaming fees a year, we would be paying daily for so-called service classes if we wanted to continue enjoying all the services on the web we currently use," said Petra Kammerevert, a member of the European Parliament with Germany's center-left Social Democratic Party. "That would be the end of the free and open Internet."

A Project With Mass Appeal

But Barroso appears to be more concerned about roaming costs than anything else. They are one of his pet projects, because it's something Brussels can do that is quickly felt by every EU citizen. A reduction of roaming fees makes vacations and business trips cheaper. The Commission will certainly be applauded if it acts.

The European Commission president began his crusade against telephone companies during his first term in office from 2004 to 2009. In 2007, the Commission set the first ceiling on roaming charges, sinking that limit again and again over time. The price of telephoning between EU countries has since fallen by a whopping 80 percent.

However, a study by the Finnish consultancy Rewheel found there is still considerable playing room for further improvements. A comparison conducted by analysts at the consultancy found that consumers can pay a range of anywhere between €7 and €78 a month to use their smartphones across the 28-member EU.

For its part, the telecoms lobby claims that the battle against roaming is counterproductive. The downward price pressures come at the cost of urgently needed investments in improved infrastructure, they claim. The companies note that Europe is lagging far behind Asia and the United States in terms of implementing the next 4G mobile network standard. The fact is that the strong fragmentation of the European telecommunications market also creates an economic competitive disadvantage.

Still, Barroso wants to send a message. He knows that he won't be granted a third term as European Commission president. So he'd like to push the reform through the European Parliament and the powerful European Council before the European elections in May 2014. It would be a way to establish a legacy.

An Ambitious Timeframe

It's an ambitious timeframe, though, and Barroso could encounter the same kind of troubles he's experienced trying to push through a European banking union. It was at his "State of the Union" address one year ago that Barroso presented his plans for a European banking supervisory authority aimed at preventing the kind of near financial collapse seen in 2007. The authority is to be set up within the European Central Bank and it is to start its work in the coming year, but its starting date has already been pushed back several times.

Today, Barroso has little remaining influence in the banking union negotiations other than in the role of an admonisher. National governments, the ECB and the European Parliament are now battling each other to determine the shape of the future supervisory authority. On Tuesday, a scheduled vote on the issue was postponed for two days by the European Parliament because parliament President Martin Schulz and ECB President Mario Draghi haven't yet reached an agreement on the details. Members of parliament are demanding access to detailed transcripts of the proceedings of the banking supervisory agency's supervisory board. The ECB, at most, wants to provide summaries. Now members of parliament want to wait until Thursday before voting.

Of course Barroso also would have liked to be able to announce a breakthrough on the banking supervisory in his speech. That makes his announcement about telecoms reform all the more important.

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1. optional
danm 09/10/2013
Why would Germans want a banking union with countries like Greece, Italy, Spain, Ireland, Portugul and Cyprus. Even the balance sheet of Dutch banks seems scary to me. Way too many bad residential loans. Am I missing something? What is in this for Germany besides the pleasure of knowing you were able to subsidize the living standards of other Europeans at your own expense?
2. More European Eyewash
Inglenda2 09/11/2013
Does Barosso’s plan to cut the charges for roaming calls really have a chance of success, or will it, as is being done with renewable energy, put up the price for inland services? All too often, good ideas are ruined by insufficiency of thought. New rules are made without consideration of the after-effects. International firms and organisations do and will certainly not, accept a drop in profits. Barosso himself, may be convinced that he is taking the best possible action for Europe, but to judge from the past, there is no reason whatsoever to believe this will reduce the phone prices offered across the EU. Already we can observe how free sources of energy, thanks largely to the lobbyists which, in the background, control the making of laws, have been used to put the end prices up! Why should the concerns which make enormous profits in the field of telecommunications, behave differently? International alliances would appear to be far ahead of any governments, when it comes to long-run profit maximisation and dealing with price elasticity.
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