Europe Set To Slash Those Staggering Roaming Charges

Since the early days of cell phones, American consumers haven't had much experience with “roaming charges,” which were once quite common when customers of one cell provider left their network area and entered another.

Today, nationwide networks provide largely seamless coverage for one monthly fee. That is, as long as you remain within the borders of the United States.

But U.S. consumers who travel in Europe have returned home to find bills totaling thousands of dollars waiting for them, thanks to the shockingly high roaming charges.

The problem has become worse with the proliferation of smartphones. Consumers know not to send and receive telephone calls while out of the country, but if the devices are left on, they will continue to receive data.

Now, there may be some good news for travelers. The European Commission is pushing to open the telecom market to competition and adopt caps that would cut roaming charges in member countries by as much as 78 percent.

Roaming caps

The commission proposes that roaming fees for data, which currently average 2.23 euros, or approximately $3.22, per megabyte be capped at 90 euro starting next year, then lowered to 70 euro in 2013 and 50 euro in 2014. Roaming charges for voice calls would also fall, but by a smaller percentage.

There can be a number of reasons that international roaming is so expensive, according to wireless providers and their critics. For starters, mobile phone companies say they must create agreements with wireless providers in almost every country on the globe. That's a lot of lawyers.

At the same time, these agreements tend to be long-term contracts, which provide little flexibility for dropping prices. For example, an agreement signed four years ago reflects the prevailing rates of 2007.

But perhaps the biggest reason prices have remained sky-high, say critics, is because there isn't any competition and providers haven't been motivated to lower prices. EU Telecoms Commissioner Neelie Kroes says providers currently enjoy “outrageous profit margins” on international roaming, a situation she says requires a structural change.

Structural changes

These changes would allow virtual mobile network operators, which do not have their own infrastructure or network, to piggyback on other providers' networks. Consumers could use their same phone number and SIM card, but pay for roaming through the lower-cost provider.

The idea of capping roaming charges is enormously popular with European consumers and politicians.

Telecom providers, however, are less enthusiastic, saying the caps would slow development of faster networks. They said prices are already coming down, and growing competition will eventually bring them down even more.

The EC proposal must get approval from the European Parliament and the Council of Ministers before it can take effect. Until then, make sure you leave your smartphone turned off when you travel.