Making phone calls on your holiday or business trip will cost less from today as mobile phone companies are forced to reduce the price of roaming charges in Europe again.
Call charges will now cost you no more than 32ppm for outgoing and 10ppm for incoming due to a series of price reductions enforced on operators by the European Commission. Using your phone in Europe will now cost 75% less than it did six years ago.
Brussels wants to equalise roaming charges with domestic by 2015 – the reductions were challenged by UK service providers O2, T-Mobile and Orange who took their complaints to the European Court of Justice.
However their complaint was dismissed last year.
Mobile data rates were also reduced and carriers are now expected to cap data usage for customers abroad at 50 Euros to help avoid unexpectedly high bills.
However, whilst charges for contract customers are coming down across the board, PAYG users are paying more.
This is due to the falling income experienced by some operators due to the new MTR (mobile termination rates) imposed by Ofcom.
The wholesale cost of MTR to carriers far exceeds the amount charged, meaning some operators such as Vodaphone, O2, Orange and T-Mobile made large profits from them in 2009.
These companies – ‘the big four’ – maintain that reducing the income they make from MTR will mean they have less to invest in upgrading their existing infrastructure.
They also oppose the cuts on the grounds that it will affect the most vulnerable such as those on a low income and the elderly as these are more likely to use PAYG.
An Ofcom spokesperson said: “There is a lot of competition in the mobile market and we urge consumers to shop around to get the best deal for them. When we cut wholesale mobile termination rates – the high rates that mobile operators were charging each other to end calls on their networks – we did so in a way that would increase choice for consumers and lead to cheaper landlines calls. We have already seen some operators improving deals for consumers as a result of our decision.”
Whilst Vodafone and Orange have already announced rises in the PAYG tariff to offset the disparity in profits, Three have said their rates will only rise in line with inflation as opposed to up to 66% charged by the former.
As one of the smaller operators, Three have been hit hardest by MTRs which in the opinion of Ofcom ‘acting as a barrier to entry for new operators, while giving the bigger operators free money’.
As contract customers would be able to cancel existing contracts were operators to apply new charges, the only place companies can recover profits are from PAYG customers.
These only make up 10 to 20% of revenue however, so contract prices may gradually increase within the next few years, especially now that roaming charges have also been reduced.
Otherwise, it would seem that the large mobile operators may be forced to reduce the millions in profit it was enjoying every year from MTRs. God forbid.