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Gruelling roaming charges: a thing of the past?

About The Author

Jessica Johnson (Criminal Editor)

Jessica is currently undertaking a study year abroad at the University of Copenhagen, Denmark, studying modules such as Law and Literature, The Law of Armed Conflict, and EU Development Law. She aspires to be a solicitor and is currently interested in personal law, specifically criminal and tort.

Despite freedom of movement provisions, travelling across Europe is not without its hurdles. Acquiring trustworthy travel insurance, complying with baggage allowances, and securing optimum exchange rates can transform a holiday into a chore. However, once the trip is underway these anxieties dissipate into thin air… Until you return home to a particularly extortionate phone bill that is.

The hefty costs which accompany the use of a mobile phone abroad are referred to as roaming charges. The cost is incurred through the provision of services such as voicemail, text messages, and data services such as internet connection whilst in a foreign country. Nevertheless, on April 3rd the European Parliament voted in favour of abolishing roaming charges by Christmas 2015. The ultimate aim of such a move is to create a single telecoms market.

Advantages of abolishing roaming charges

The establishment of a single European telecom market is considered beneficial to businesses and citizens alike, through more effective economic integration. The European Commission’s proposal to the European Parliament outlined the various advantages of such a mechanism. With regards to businesses, it would facilitate more accessible telecom connectivity throughout Europe. With regards to the economy, a recent survey suggested if a single telecom market were achieved, the EU’s gross domestic product (GDP) could grow by up to 110 billion euros a year. Finally, the abolition would appeal greatly to Europe’s citizens. ‘Such charges are seen as unfair by many citizens, and also constitute a practical impediment to exercising single market freedoms.’

US cellular networks have already laid down provisions to assist citizens with their roaming charges. Citizens can purposefully opt into a national-coverage phone plan, allowing them to make calls, send texts, or access internet services from anywhere within the US. Considering the sizeable geographic difference between the EU Member States and the US, it seems remarkable that one can facilitate accessible cross-border phone calls and the other cannot.

The EU has acted in the past, introducing capped allowances for data roaming charges. Data roaming was in fact 91% cheaper in 2013 compared to 2007. The table below shows the EU’s previous efforts to tackle the issue through maximum prices:

1 July 2012 1 July 2013 1 July 2014
Outgoing voice calls (per minute) €0.29 €0.24 €0.19
Incoming voice calls (per minute) €0.08 €0.07 €0.05
Outgoing texts (per SMS message) €0.09 €0.08 €0.06
Online (data download, per MB) €0.70 €0.45 €0.20

According to the BBC Watchdog, using figures gathered in 2013, the ‘local networks charge UK networks a maximum wholesale price of 10-euro cents per minute for outgoing calls. However the UK operators charge consumers 24 cents per minute before VAT.’ Although the most recent caps would reduce this charge to 19 cents, that is still a profit of 9 cents per minute per consumer. Additionally, a text costs 2 cents for a UK network, with a consumer charge of 6 cents, and each megabyte of internet data costs the network 15 cents, as opposed to the current consumer cap of 20 cents. The justification that mobile networks themselves are suffering loss is wholly invalid.

Mobile networks have wholeheartedly rejected interference in roaming charges in the past, often under the illusion of a competency disagreement. In the case, Vodafone v Secretary of State for Business Enterprise [2010], the UK mobile network raised two objections concerning a reduced cap on roaming charges. Firstly, did the EU have the competence to decide on a national matter? Secondly, did the principle of subsidiarity not dictate the issue would be better resolved at national level?

The ‘harmonisation clause’ set out in Article 114 of the Lisbon Treaty, assists the standardisation of laws across Europe in matters concerning the EU’s primary objectives. In the above case, the European Court of Justice held that the ‘interdependence of retail and wholesale charges for roaming services’ would be immensely beneficial to the EU’s aims, due to the benefit it would supply on business.

With regards to the second objection, the EU held that the principle of subsidiarity established in Article 5(3) of the Maastricht Treaty was not relevant here. Article 5(3) states that:

the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, be better achieved at Union level.

Due to the cross-border nature of the issue, it was held that the EU was well within its competences to adjudicate on such a matter. It will be interesting to see what challenges mobile networks raise to this latest development, and whether they will be any more legitimate. Of course, they may decide not to challenge the decision at all. Their response may be echoed by increased national phone charges in order to cover this grave loss in profit. However, this would undoubtedly be an unpopular move amongst both the common consumer, and businesses.

The Telecom Market – A key player in the modern day economy

Of course, holiday makers may only have to face these charges several times per year, but this is not the case for multi-national, national, or even local businesses. European Commission Vice President Neelie Kroes stated that ‘millions of businesses face extra costs because of roaming, and companies like app makers lose revenue too.’ For the companies which rely on international calls on a daily basis, the abolition of roaming charges will reduce their everyday expenditure by a phenomenal sum.

The eventual effects are far more widespread than this. The telecoms sector is an ever-expanding global market. The European Commission proposal discussed above estimated that the app economy alone has generated 794,000 jobs since 2008, thus bringing a ‘much needed boost to the economy’. If a single telecom market was not the ultimate goal of the EU, we would furthermore be falling behind other key global players such as the US, Japan and South Korea, all of which have invested heavily in providing efficient broadband and telecom services within recent years. It is important Europe advances alongside the rest of the world in order to maintain its competitiveness.

The above issue is reflected in national telecom companies. It would appear that the majority of Member States have their own separate regulations for networks and telecom connections; even multinational operators use alternative standards to suit each State. The proposal suggests that by harmonising the market, consumers will feel able to seek out alternative operators and seek solace within this consistency and transparency. This in turn will increase competition within the market, and thus drive innovation. It is therefore evident that diminishing this fragmentation will, without a doubt, boost the economy.

A Citizen’s Europe?

As expected, the decision has resulted in a highly positive response amongst Member State nationals. Commenting on Parliament’s response, European Commission Vice President Neelie Kroes stated that:

"This vote is the EU delivering for citizens. This is what the EU is all about – getting rid of barriers to make life easier and less expensive.”

A survey of 28,000 citizens across Europe discovered that 25% turn their phone off whilst overseas, whilst 47% refrain from using the internet at all. It is almost understandable for mobile networks to charge such excessive prices; they are purely covering the loss that they themselves have brought about. The impact this has had on citizens’ perception of Europe cannot be ignored.

In her article, ‘The Past, Present and Future of the Purely Internal Rule in EU Law’, O’Leary refers to the concept of Union Citizenship as ‘under-defined, complex and somewhat remote.’ Citizens are told that they are free to move across Europe as they wish, but if they choose to exercise these citizenship rights they risk unreasonable phone bills. The media have of course scrutinised this with great attention, further adding to the general public’s distrust and dissatisfaction of the EU. It is this sort of inconsistency which the abolition seeks to redress.

With the European Elections looming (Thursday 22nd May for all those active voters amongst you), this proposal could not have come at a better time. The EU is forever seeking ways to score 'brownie points’ amongst the electorate, in a desperate aim to tackle the democratic deficit. The abolition of roaming charges will demonstrate the positive role the EU can play in a Member State national’s everyday life, which to be frank, is not a concept frequently conveyed by the UK tabloid media. Assuming that this matter attracts the press it deserves, a widespread shift in public attitude could be a valuable by-product of our more forgiving phone bills.

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Tagged: Commercial Law, European Union, Technology

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