Euro cap will force mobile players into fixed market

23 May 2007

The forthcoming EU introduction of a cap on roaming charges will force mobile operators into broadband and fixed-line telecoms, an expert has told

The European Parliament had voted strongly in favour of an EU regulation that will cut the cost of mobile roaming charges by up to 70pc.

The regulation, which was proposed in July of last year, will be endorsed by the Council of EU Telecom Ministers on 7 June before it goes into effect from mid June.

This means that from this summer mobile phone customers will start benefiting from substantially reduced roaming charges when travelling from one EU country to another. “Europe’s internal market will finally become truly borderless, even for mobile phone bills,” said EU Telecoms Commissioner Viviane Reding.

According to the EU Roaming Regulation, the price cap, or Eurotariff, on making mobile calls from abroad will begin at 49c and will be reduced further to 46c by summer of 2008, dropping to 43c by 2009.

This Eurotariff introduction to regulate the high roaming prices charged by mobile telecoms operators was referred to by Reding as “tackling one of the last border’s within Europe’s internal market”.

An industry source said this cap on roaming charges was a long time coming and that it represents a challenge for mobile operators to keep their profit margins as high as in the past.

However, he said that “they have been making an absolute fortune for the past five to 10 years and all that will happen now is that they will be making slightly less of a vast fortune”.

The final outcome of agreed roaming rates is not as painful for mobile operators as they had expected, he said. “It will hit them a bit but they have big pockets.”

He said he believes that operators are already preparing for the dent in profits to be made by the Eurotariff by making a foray into the broadband or fixed-line space.

“Maybe this will spur them forward to do this more quickly,” he said. “Basically they’ll be going after Eircom which will make for an interesting situation to watch.”

By Marie Boran