The European Parliament, European Commission and the European Council have reached a preliminary agreement on further cuts to international roaming tariffs in the period 2012-14. The price caps will remain in effect until at least mid-2017, after which market competition is expected to take over. The Parliament will vote on the agreement in May and the Council in June.
In addition to voice and SMS, the proposal will impact the data market. A retail price of EUR 0.70 per MB will take effect mid-2012, falling to EUR 0.20 by mid-2014. The wholesale tariff will fall from EUR 0.50 per MB now to EUR 0.05 from mid-2014. In addition, end-users will get the choice from mid-2014 of taking a contract from a local operator in the country where they are roaming, while still keeping their same phone number. The requirement to alert customers when they are approaching EUR 50 spent on international data roaming will also be expanded to roaming outside the EU.
Neelie Kroes, the EU commissioner responsible for the Digital Agenda, did not mince words when she announced the tariff cuts: “Consumers are fed up with being ripped off by high roaming charges”. Subscribers may be satisfied, but what's the effect on operators? KPN announced in its last quarterly report that the negative impact of the roaming regulation in 2011 was EUR 27 million on sales and EUR 11 million in EBITDA lost. One can assume then that the effect will be visible through 2014. These are still relatively small amounts (KPN's total revenues in 2011 were EUR 13.2 billion), but a few tens of million currently make the difference between positive and negative growth at KPN.
Still, it's questionable whether the net effect for operators will be negative. Subscribers will be more likely to use roaming during their vacations, and the price elasticity will contribute to growth in the international data market. It also diminishes some of the negative image of operators. How it exactly works out may be visible from this summer already.
The requirement for end-users to be able to choose a separate roaming contract from local operators also has interesting consequences. For example, a German consumer who travels to France can buy a roaming plan from Orange, SFR, Bouygues or Free. And of course not only consumers, but also MVNOs can profit from this. That can be existing MVNOs or new market entrants, such as Apple or Google or other mobile network operators. In short, competition could increase significantly on the international data market, and the opportunities for MVNOs and MNOs will also contribute to more competition on the national data markets. In the end retail prices should start moving closer to wholesale tariffs, and international rates toward national prices - exactly what the EC had in mind.
