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News & Advice

News: Talk Ain't Cheap

Promised lower overseas charges won't be so easy to implement. Mark MacKenzie reports

Maintaining that feeling of inner calm after arriving home from a holiday has never been easy. Flight delays, lost luggage and, to cap it all, a lack of taxis at the airport all contribute to the sense that a seven-day break is precisely that and not a minute more. In recent years, the fire of resentment felt by returnees has been fuelled by the appearance, several weeks after our homecoming, of your mobile phone bill. Those "Guess-where-I-am?" calls from the beach that seemed such a good idea at the time lose their appeal when it's time to pay up.

Earlier this year, the European Commission tabled a piece of draft legislation which suggested that this might be about to change, at least for those choosing to spend their holidays on the Continent. By imposing a cap on roaming charges for outgoing and incoming calls, bureaucrats in Brussels hope to force operators to make dramatic cuts to the cost of using a mobile telephone within the EU.

According to industry figures released this year, calling the UK from a popular destination such as Spain currently costs somewhere between £2 and £4 per minute, depending on your choice of operator and whether or not you choose to call in peak hours. Receiving a call from the UK in Spain, on the other hand, sets the customer back anywhere between £1 and £3.

If, as looks likely, the commission gets its way and charges are capped, a UK consumer phoning home from another EU country could pay around 34p a minute, or as little as 11p for an incoming call. Making a local call within an EU country, meanwhile would, under the new proposals, cost around 23p.

Not surprisingly, the proposals were not widely welcomed by those service providers for whom the EU's roaming market is worth an estimated £6bn a year. Earlier this month, Margaret Hodge, Britain's minister for industry and the regions, attended a meeting of the EU's Telecoms Council to discuss the matter, arguing that operators should be given the opportunity to make cuts voluntarily.

With the proposals due to come into effect next summer at the very earliest, it seems the benefits for consumers might not be as straightforward as they first appear.

"The main beef we have is the way this is being done," explains David Pringle of the GSM Association, an industry body which represents more than 700 mobile phone operators around the world. "Some providers, for example, already offer high-volume bundles of roaming minutes which, if you use all of them, can cost as little as 22p a minute for outgoing calls. Other operators allow you to combine your mobile package with your home landline."

Mr Pringle is concerned that the imposition of a flat rate will remove such flexibility from an already highly personalised market.

"The various parts of the telecoms market are all interconnected - you can't simply tweak one bit of it without there being knock- on effect. Domestic [mobile] tariffs have been falling for years, but that could change. Customers, quite rightly, like the idea of cheaper roaming charges, but for the rest of the industry there will be unintended consequences. There is also the danger that smaller operators will be harder hit."

Mr Pringle points out that the market is already delivering cuts in the roaming sector, with prices down an average 22 per cent from last year. One of the options being considered by mobile operators in response to a charge cap would include restricting user access to roaming services, most probably in favour of those users on higher tariffs.

Any reform is likely to be a lengthy process, Mr Pringle observes, so it could be some time before you might see a change in that post-holiday phone bill. "The original plan was to have the system in place for 2007 but there is sufficient concern about the rigid nature of the legislation to suggest that might not happen. Changes to the draft legislation are inevitable and we think this needs to be given a great deal more thought."