‘Free’ EU roaming is great for travelers like me, but at the expense of everyone else

On my last train ride between Prague and Vienna, that twice weekly jaunt I’ve commandeered for the sake of studying economics, I put down my red wine and closed my half-finished Word document to check my phone’s signal and make a call.

When I saw that I had left my Austrian mobile SIM card in my phone all day without switching over to the Czech one, after many hours sauntering on Prague’s uneven streets, a small sense of panic flooded my spine.

“The roaming fees will bankrupt me,” I exclaimed to myself, “what am I to do?”

As one familiar with intercontinental and international travel, I’ve often faced the brunt of sky-high cell phone bills I should totally have been prepared for. The MBs and the messages racked up, staring me in the face like the broken china at the feet of the browsing bull.

But in that very moment, before flinging my red wine against the grease-stained window, I read the date on my phone’s unlocked screen: June 15th. “Ah,” I sighed. Today begins the era of cost-free EU-wide roaming. I was safe after all.

Let me give you an idea about what this entails.

In a desire to better harmonize the roaming rates of cell phone users who travel outside their country at any point in time, European Union regulation abolished all roaming charges for countries within the European Union and the European Economic Area.

The first official start date was June 15, 2017, to be respected by all mobile carriers.

The desire for this regulation came from several different interest groups and interests over many years, but the people who will benefit the most are the people who travel frequently across borders, like me. And we’ll get that benefit at the expense of everyone else.

EU Roam Like at Home

Beginning in 2007, members of the European Commission responsible for the Digital Single Market began exploring the issue of mobile roaming costs for European citizens. Up until that point, users of domestic cell phone plans were required to pay extra fees in order to access bandwidth and cell phone signals in other markets, whether it was in the European Union or on another continent.

In 2007, the European Commission and Council of Ministers adopted a regulation which capped all maximum charges which could apply to accounts of those who make phone calls and received charges outside their home country .

That initial regulation was extended to 2012, and then ultimately replaced by an amendment which planned to scrap all roaming charges for EU citizens by 2017, dubbed the “Roam Like at Home” plan.

This plan was considered by the EU Commission and responsible parties for its effort in uniting the Digital Single Market and eliminating trade of mobile access. Various adjustments to this regulation have been passed, but the core idea remains the same.

After June 2017, any individual with an EU phone plan will no longer have to face roaming charges for using data and mobile minutes outside their home country. But if a user spends most of their time outside the country of contract, mobile carriers have the right to charge the domestic price.

Domestic ‘Suckers’

What is forgotten in this equation is the ultimate weighing of the costs and benefits.

Those most affected by this law, at least at face value, are those who typically travel outside of their home country and would otherwise face a barrage of mobile roaming charges, like me.

As such, a redistribution of resources at the EU or national level to better accommodate my situation is welcome news. Because costs are high, any regulatory approach or incentive to save costs is likely to be supported by people like me. The regulation promises to abolish extra costs I’d otherwise face.

But on the other side of this equation, particularly important when dealing with regulations with good intentions, there are those who are affected in an opposite way.

For mobile operators, the costs of connecting to towers and equipment in different states and markets do not suddenly disappear because of the regulation. Instead, that cost must be internalized by the companies. As one would expect, this will likely lead to higher domestic mobile phone rates at the expense of the internalized cost of the international roaming the mobile carriers and operators will not be allowed to charge extra for.

There are plenty of mobile phone users who do not travel internationally but still must pay the costs that this new regulation may represent. And many users are already having to pay higher costs for a domestic plan.

In Norway, the average price of cell phone plans has risen nearly 66 percent in the first half of 2017 . In Denmark, all mobile users are paying 60 EUR more a year than they did previously. Ouch!

Does this entire scheme make it worth it to the German tourist in Spain who wants to make a few calls on his yearly holiday? Perhaps at face value. But he will end up paying higher costs at home for the same plan he’s always had. Maybe even more than if he just got the “vacation package,” offered by so many carriers.

These are real costs that have risen in response to regulation, likely at the expense of those who would not have used the roam-free services anyway. Just so we wouldn’t have to go through “bill shock.” Just so I could enjoy using my cell phone plan across borders without care.

Conclusion

Though the plan to make “Roam Like at Home” come into effect to eradicate all roaming charges in EU countries is one that will benefit certain portions of the EU citizenry, it is still something that will ultimately end up affecting other members of the population who will pay higher costs for the same services they enjoyed.

It is, quite literally, the “seen and the unseen,” popularized by French economist Frédéric Bastiat in analyzing situations which provide clear benefits at first glance while seemingly hiding away the “unseen” costs.

Domestic mobile phone users, who have not had to incur roaming charges in the past, will likely face hikes in their own plans in order for mobile operators to internalize the costs they once were able to charge for. That’s just a fact.

References

Becker, G. (1976). “Toward a More General Theory of Regulation”. Journal of Law and Economics. Vol. 19, No. 2., pp. 245-248.

Cini, M., Šuplata, M (2017). “Policy leadership in the European Commission: the regulation of EU mobile roaming charges”. Journal of European Integration, Vol. 2, pp. 143-156.

DinSide (2017). “Mobile subscriptions 66 percent more expensive by free roaming”. Dinside. Accessed 30. June 2017. http://www.dinside.no/okonomi/se-hvor-mye-dyrere-mobildata-har-blitt/67696893.

Dr Dk News (2017). “OVERVIEW: The new EU rules: Mobile phone operators raise prices”. Dr DK News Website. Accessed 30. June 2017. http://www.dr.dk/nyheder/penge/overblik-efter-nye-eu-regler-mobilselskaber-haever-prisen.

One thought on “‘Free’ EU roaming is great for travelers like me, but at the expense of everyone else

  1. You missed one important point; the starting point of the EU directive was the fact that mobile industry costs for roaming are around 1%, but represented 15% of their profits.
    As I recall the EU said it would only act if the mobile companies themselves did not work to harmonise this discrepancy.
    So the point is the EU helped to protect the consumer from being ripped off.
    I agree this may make some companies increase their base charges for everyone, but that is a question of general competition in a hopefully competitive market.

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