EU Commission Curbs Roaming Tariffs for Mobile Operators

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Chinese Low-End Mobile Handset

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So, here we are: The European Council of Telecommunication ministers agreed, yesterday, at the world's largest trade fair for IT and computers in Hanover (Germany) to curb roaming fees for international phone calls inside the European Union to around 50 Euro Cent per minute.

Spokespersons for the two top players in the German market for mobile telephony, Vodafone and T-Mobile have shown strong disapproval of the EU legislation to be introduced, saying that market solutions would produce more effective prices for the consumer.

If one judges the mobile operators on their record, the new EU legislation may actually save their survival without the operators admitting to the fact. Every year, at holiday season, whole sectors of the media industry could make a living out of stock-stories advising consumers to leave their cellular at home, buy a prepaid card in their host country and by no means use mobile data when travelling.

Last summer, horrific reports had emerged of travellers paying up to 3,000 (three thousand) Euros for around one hundred Megabyte worth of surfing the Internet whilst abroad. One Megabyte of data, without special pricing plans (which of course come at a price) were priced at an average of EUR 20 or significantly above, rendering mobile data virtually useless for the consumer.

All this brought Germany's minister for the economy, Michel Glos, to the conclusion that pricing in the case of mobile communications could not be left to the free market. Comparing mobile communications to other markets, such as the labor market, one wonders if the close contact that the golden seniors in politics have with mobile communications leads to that unusually enlightened conclusion that leaving things to the free market alone in an unbalanced environment will eventually lead to Hobbesian conditions. In the labour market, by contrast, most European governments are still too happy to make themselves part of the employer side blackmail campaign in the rollback of labour rights. Then again, very few politicians are employees.

The mobile industry - operators and vendors alike - have long since dreamed of tapping new revenue streams with mobile data. Services like terrestrial mobile broadcast TV and proprietary messaging solutions were presented at every CeBIT, while prices for network services complacently floated and bloated at the upper end of the range.

Now, so called Virtual Mobile Operators, using Germany's number three (E-Plus) player's network have begun offering rates which virtually render pricing schemes by mobile operators to the tune of Vodafone or T-Mobile obsolete. While the self appointed bellwethers of mobile communications are in a hurry to adapt their pricing schemes, the impression of too little, too late lingers and the market is bound to be changing into a place where extremely intransparent monthly package plans (mainly a measure to secure a minimum per-user-revenue, or ARPU as its is known in the industry) and gagging 24-months-contracts (the norm for mobile contracts in Germany) will be a thing of the past.

Add to that a strong entry to the world market by Chinese hardware makers for mobile handsets, and the industry's last leverage to establish their terms and conditions - gagging obligations for the consumers in return for a China-made but brand labelled, subsidized handset in return - could be melting in this year's summer sun.