Close the gap between domestic and international calls

November 5, 2010

By Kai Heijneman, Bart de Bruijn and Bobbie van der List

A text message from a foreign telephone provider is a first sign that you have crossed the border within the EU. Many Europeans are frustrated because of the enormous prizes they have to pay to make a call to their home country. But a decision of the European Court will change perspective of European consumers.

In June the European Commission released information about what European mobile phone operators were charging European consumers. The commissioner for telecommunication by that time was Kroes. She said that ,,more competition on the EU roaming market would provide better choice and even better rates to consumers.”

So called retail price caps, which started from July 2007 on, made a cross-border call cheaper. The costs of a phone call went down more than 70 cents compared to 2005, and a text message 60 cents cheaper.

A European Tarrif

How did the expensive rates actually began? With the creation of the internal market a sensitive sector stayed the responsibility of Member States: telecommunication. Why, one might ask? In most European countries the telecommunication sector is held captured by big companies. Thus monopolies arose, which resulted in expensive payments for cross-border phone calls. Calling someone in France, Spain, or Romania is still too expensive. Why not make an European tariff, wouldn’t that raise affection of the European citizens with the EU?

By January 1996 the Commission pushed through directives to liberalize the mobile telephone sector – the fastest growing in the EU. It was exactly two years later that a new measure was taken: the Commission had lifted restrictions on the use of alternative infrastructures for telecommunications services, and implement full competition in the EU telecommunication market. Thus, consumers would be the winners was the first thought.

Similarly as the internal market this so called single telecommunications market is strongly dependable on how strict the Commission will check up on Member States how they respect EU regulations.

Secondly it would be difficult for authorities to enforce directives in a sector that’s still overshadowed by powerful former monopolies.

European Consumers’ Organization

Levi Nietvelt, a spokesman for the European Consumers’ Organization, a lobby group based in Brussels, told that the price caps had limited some charges but had not brought down prizes enough.

The price caps mean a legal limit of 39 cents per minute for a phone call and 15 cents per minute to receive a call. The experience is that phone operators keep charging close to those legal boundaries.

Mr. Nietveld calls that kind of charging “bill shock”, meaning that it’s too expensive for Europeans without a specific reason. ,,Crossing a border should not increase costs and there is no technical reason to do so.”

Powerful national companies

The telecommunication sector is exemplary to show how powerful national companies can be. Most of the telecommunication in EU Member States are in the hands of big companies. Furthermore they have earned themselves a lonely spot in the top of telecommunication – you could call it monopolies.

But a decision of the European Court in June, in favor of the Commission’s goal to get rid of the gap between national calls and European calls within the EU, was a big hit for four giant phone operators (Vodafone, Telefónica O2, T-Mobile and Orange). The operators questioned the validity of the EC’s Roaming Regulation – that’s why the case went to the European Court. Because of the court’s decision to back the Commission, the EU is planning to totally get rid of the gap between domestic calls and international calls (within the EU).

One Response to Close the gap between domestic and international calls

  1. peter.verweij on November 5, 2010 at 4:41 pm

    Interesting story. Give good background info and the role of Commission. Interesting quote from MP’s. Would have liked an answer form from the Telcoms and perhaps a quote from a user. Finally is the gap closing for all phone calls:landlines and mobile?

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