Perspective: When in 'Roam' (or Brussels), elites protect their own

perspective Europeans on August vacations got one small break: the European Union capped (admittedly confusing and inconsistent) roaming charges at a flat rate, just in time for the holiday season. Yet there is some static in the air: major mobile providers are rumored to have a legal case ready, challenging the roaming cap on grounds of inequitable implementation.

No wonder that cross-border roaming charges were at the top of the agenda of Members of the European Parliament (MEPs): international roaming charges deeply affect 99.9 percent of all such parliamentarians.

Truth be told, the charges occasionally affect these authors, too. But unlike the politicians who clamor for the limelight in crediting who cuts the mobile phone industries' profit margins most, they don't necessarily think that it is the job of the government to set price levels (directly or indirectly) for services offered on the free market. And so Europe caps roaming charges.

Were these politicians judges, they'd have to recuse themselves from the issue, since most are bound to save several thousands of euros a year from the legislation they are so busily trying to pass. As U.K. MEP Syed Kamall put it: "The consequence of this legislation will be higher prices for the 65 percent of consumers who do not roam, for the sake of the elite (MEPs?) who frequently do. Legislation should be a last resort tool to correct market flaws, not for boundary setting."

Forcing the average customer to pay for international legislators' (and their staffs') international phone charges--which is what the European Parliament is doing--surely isn't the answer.

Fortunately, such archaic notions as recusal don't apply to parliamentarians. Nor does, in some cases, the conscience of those allegedly in favor of free markets interfere.

Roaming charges are rather high when traveling from one European country to another--and those invisible borders do seem a little archaic when passport-free travel and a common currency make everything else seem as though Europe had grown into a convenient "one." But the dividing lines call themselves back into memory when the phone and Short Message Service (SMS) bill arrives. Little wonder that European politicians, known for some roaming of their own, soon zoomed in on those seemingly egregious charges.

They have now--it seems--agreed to cap roaming charges for three years (then what?), at .49 euros for outgoing and .24 euros for incoming calls. This is convenient for those who travel and chat a lot, but it's not actually good for the majority of consumers or the long-term health of the telecom industry.

The parliament's initiative is proudly labeled, "Roaming Charges: For Affordability and Transparency." Indeed genuine transparency would serve the market very well. Most people are not aware of the extraordinary premiums they pay for international calls and messages (a Short Message always reminds the user that his or her phone works in the new network, also, and how it is used...but with no word about the additional charges), and those who suspect have a difficult time informing themselves about such charges in advance. Asking the industry to list its charges--and enabling the customer to compare--is what would be necessary to let the market work.

Liberalizing the telecommunications market so that national carriers can offer services in any European country they wish is another, better, way to give the customer meaningful choice. If international roaming charges were still higher than national ones, it might have to do with the fact that international roaming services cost the telecommunication company more than national ones--and that relatively few customers so regularly follow routines where international roaming charges matter much to them. By zeroing in only on unpopular roaming fees, politicians press telecom companies to squeeze more profit out of the rest of the service bundle.

The result? Average prices are likely to rise, while neo-populist politicos brag about "consumer protection."

Only because everyone in Brussels is personally concerned about roaming--and everyone they know, too, as Mr. Kamall points out--doesn't mean that the problem is universal, nor even large, or even important. Forcing the average customer to pay for international legislators' (and their staffs') international phone charges--which is what the European Parliament is doing--surely isn't the answer.

Biography
Jens F. Laurson is editor-in-chief of the International Affairs Forum. George A. Pieler is a senior fellow with the Institute for Policy Innovation.

More Perspectives

[lmasanti]

This is what the telcos want!

With this "cap" they got the excuse to charge more from the 99%
of the national calls!
Surely, if they not "feeding the legislators" they won't oppose to
it.

[NickH]

I live on a border....

I reside 4km from my office - it's in another country. I'm not complaining!

Anyway, didn't something like this happen before to ATM withdrawl charges - Bank's were forbidden from charging more for "international" withdrawls, so the just upped the cost of national ones.

There are supposed to be no barriers to trade within the EU. The commission are (rightly) looking into Apple charging different amounts in different member states (which they can do), but also preventing customers shopping around - if you have a credit card at a UK bank, you are limited to the UK web site (which they shouldn't do).

There are only so many mobile providers in Europe, and if I'm an 02 customer in the UK, then there really is no reason why, if I use the 02 network in Germany, it should cost a great deal more.

[lixpaulian]

The authors have no clue

Yet another ill documented article (probably the authors are
Americans, where cellular telephony is still in the pre-historic
era).

First of all, from some reasons, the authors tend to confuse
roaming with international calls. There is no discussion here that
international calls should be expensive compared to national
calls. But this is not the issue: for example, I am traveling from
Austria (my home country) to Germany and I call some friends
living in Germany. This is a local call, right? Why then should I
pay 75 cents per minute (now 49) when a local call with the
same porvider is only at most 9 cents?

The exorbitant prices in roaming are baseless, from a technical
standpoint there is no big difference between a local call with a
local SIM or a local call with a foreign SIM; it's only some data
interchange between the local GSM provider and the home GSM
provider to verify that the caller is a valid one, and at the end of
the call to pass along the billing information. In the age of the
Internet this should cost the providers almost nothing.

This is a fact that the GSM providers extorted unjustified huge
amounts of money from the users who really are roaming
dependent; and as the article correctly points out, in today's
borderless Europe, roaming tariffs are a strange anachrony!

And the story that the lower roaming tariffs imposed by the
European Parliament will burden the normal users is a cheap,
populist argument: this has yet to be demonstrated, we can only
see that prices are going lower and lower, mostly due to the cut-
throat competition. As there are no more new customers to
aquire (in Austria the mobile phone penetration is over 100%),
the sole solution to increase market is to steal customers from
your competitor!

In fact, this is what I predict will probably happen in the end: the
GSM operators will start to steal cross-border customers, and
this will be the end of roaming. Suppose I get a better contract
from a provider in Germany, even if I use the phone mostly in
Austria, then guess what? I will cancel my austrian subscription
and I'll go for the german one, right? If you don;t believe this,
think about where cellular telephony was 10 years ago and
where it is today, then try to imagine how this will be after
another 10 years...

[inetdog]

An extreme case example

This relates to both International call tarrifs and to cell phone "roaming", but also links them in an unusual way.

On the Carribean Island of St. Martin, there are two different "countries" even though the entire island is only 37 square miles. In the north is the French dependency of Saint-Martin, while in the south is Sint Maarten, part of the Netherlands Antilles.
The first language of communication is English, but the second language in the North is French and in the south is Dutch. There is a delineated border (i.e. signs on the road) but there is no travel control, export control, etc.
They have different telephone country codes and they have cell phone providers who give service in both parts of the island.
A land line call from one side of the island to the other is an International call and is charged at $4.50/minute, the same as a call to the US from either side.
If you call from a cell phone with one country code to a cell or land phone with the other country code, the charges are air time plus $4.50 an hour, apparently because of binding agreements between the two land phone companies.
As a consequence, islanders who do any significant amount of business by phone carry two cell phones, one for each side, to allow their customers or friends to call them cheaply.
If they are not in the service area of one of the phones, their caller can leave voicemail on that phone number and the cell user can pick it up later.

[marc.cornelius]

Oh Dear

Frankly I think that people ought to stick to subjects they know about. These authors obviously don't have a clue. The so-called elite probably don't give a monkey's what the roaming fees are as they're almost certainly business expenses. Roaming charges hit 'ordinary' people far more than the authors might imagine. Writing from the depths of the USA I suppose it's easy to forget that in certain parts of the world it's not unusual to have large numbers of people living within easy reach of multiple national borders - and crossing those borders on a regular basis. The mobile operators were making enormous margins on these calls - and they are still amking substantial margins. I think it's quite clear that there agenda is against regulatory interference and pro big-business - have a look at the nonsense at http://www.ipi.org/.

[J.G.]

Silly season is here

This article is based on two fallacies:

?That most people who use roaming across European borders are politicians.

Considering the small number of pols per capita that is certainly not true. Most people who use roaming are likely business persons doing business across national borders. Other roamers may actually live in one country and travel often to one or more others.

?That the cost of capped roaming charges will be passed on to all users by the providers.

That may not be true at all. If the higher charges were just gravy, that is an incentive not to pass them on. Or, there may be other services that are more likely to generate increased profit, multimedia downloads for example.

Most opinion pieces from third parties that appear on C/NET are self-serving. This one is just plain stupid.