Updated March 21, 2014: now includes clarification on positive impact for non-EU citizens visiting EU countries.
The EU is dragging mobile operators into the 21st century, by outlawing roaming fees. From July 2014, the cost of roaming will be reduced – data particularly, the price of which will be more than halved to €0.20 ($0.28) per megabyte. Then, from December 15, 2015, making a call, sending an email or text, or accessing the Web from a mobile phone will cost the same abroad as at home. We will all raise a glass when the European Parliament votes the regulation into law on May 10, 2014.
This isn’t just good news for consumers and business travelers who always travel with the fear of being slapped by punitive roaming costs – dubbed “bill shock”; it is also excellent news for the domestic and international businesses that want to serve them via the mobile Web, mobile apps or text, while these travelers are visiting a new city city/country.
Update: EU Parliament has confirmed to mobiThinking that non-EU citizens should also benefit from the proposed regulation. While the EU can’t force non-EU operators axe roaming costs to US visitors to the Europe, it will cap the amount EU operators can charge non-EU operators (at the same wholesale rate that they will charge EU operators). That means that when a US citizen (for example) visits the UK from July 2014 and uses their cell phone the amount Vodafone, EE or 3 charges AT&T, Sprint or Verizon will be capped. Of course, the US operator may not pass on the savings to the roaming customer, but one hopes that competitive pressure from rivals will force a retail price cut.
mobiThinking also expects the EU’s move to curb prohibitive roaming charges to have a knock-on effect around the world: all countries must now ask whether it is logical to allow domestic/foreign operators to continue to charge visitors so much for international roaming that they’re scared to use their mobile phones overseas.
A February 2014 survey of 28,000 EU citizens (conducted on the EU’s behalf) proves that people drastically curb mobile use when abroad:
- 47 percent would never use mobile internet in another EU country.
- Only 1 out of 10 would use e-mails in the same way as at home.
- More than a quarter of us simply switch off our mobiles when we travel in the EU.
- Millions divert to SMS rather than pay for calls.
It is difficult to imagine a situation where a business person or consumer will need mobile services more than when they are in a foreign country. Think of all the mobile services they might wish to tap into, if the price was right:
- City map; transport map.
- How to find the hotel; restaurant; place of interest.
- Guides to places of interest e.g. a castle or museum.
- Guides to special events e.g. if they are attending a festival or sporting event e.g. Olympics.
- Where to purchase essentials or luxuries.
- Recommendations for where they can stay, eat, drink, have fun.
- Mobile payment, vouchers and ticketing.
- Translation services.
- Messaging and social media.
The potential for companies and organizations of all sorts to meet the mobile needs of their visitors is huge, but only if the traveler is free to use those services. Visitors will be reluctant to use maps, search the Web, use an app, sign-up for email/SMS offers or scan a QR code in a brochure or billboard, if they fear a whopping bill on their return home.
Roaming fees have always been a huge barrier to development of the mobile Web, and deprive local business of the benefits of being able to engage with, and profit from the presence of, foreign visitors.
As mobiThinking said in the mobile cities guide (back in 2011): “The major headache for all cities is how to deliver mobile services without sending foreign visitors home with a US $1,000 phone bill. WiFi is one option, but long-term, cities must persuade mobile operators to reduce roaming.”
Inevitably the EU’s move has been met with whinging from mobile operators, who threaten that they will have to put up domestic call/data charges to make up for the loss of the roaming cash cow. This seems short-sighted. Surely, if more people increase their use of mobile phones while abroad, the whole ecosystem will benefit. If a significant number of those people – 47 percent – who never used the mobile Web while abroad started to do so, then the extra data fees alone would benefit the operators. If the operators start moving into providing value-added services to capitalize on the burgeoning marketing for mobile services for travelers and tourists, then they should be able to profit from the new world of 21-century communications.
Hooray for the EU. Let’s see if the rest of the world is prepared to put the interests of foreign visitors and local business ahead of mobile-operator profits. When cross-border mobile use skyrockets in Europe, it will only a matter of time before the US, for example, will start to consider the benefit of striking reciprocal deals with Canada, Mexico, EU and other territories from where it frequently receives visitors and US citizens frequently visit.
Aside: one further thing that mobiThinking would like clarifying is domestic roaming. If customers can roam abroad for the same price as abroad, then why not at home? Why are customers of one network barred from using another if their operator’s coverage is patchy. As remarked last week in the post on the role of telecoms regulators, this becomes much more important in the Internet of things space of smart meters et al, where connection is essential.
The following graph shows the caps on the price (in Euro cents) of data, making a call, receiving a call and sending a text introduced in Europe in 2012, 2013 and to be introduced in July 2014, by the EU.
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