BUSINESS
07/06/2011 08:37 am ET | Updated Sep 05, 2011

European Union Cracks Down On Mobile Roaming Charges To Spur Competition

(AP) BRUSSELS — The European Union is introducing new rules that would make it cheaper to use mobile and smartphones abroad.

The proposals from the EU's executive Commission Wednesday seek to spur competition among providers and put new caps on roaming charges.

For the first time, the EU is slapping caps on the price individuals have to pay for going online from a smartphone or tablet computer when moving from one country to another. The EU is made up of 27 countries.

The European Commission also said that from July 2014 operators will have to open their networks to providers from another EU state, which would give consumers more providers to choose from. At the same time, consumers will be able to sign a separate roaming contract, allowing them to take advantage of cheaper offers when moving about.

The new rules will kick in when the bloc's existing regulation on mobile roaming expires at the end of June next year.

While the current rules have forced the price of making calls down to 35 euro cents (about 50 U.S. cents) a minute when traveling in another EU country and kept a lid on the cost of receiving calls and sending text messages, the Commission believes that charges remain way too high.

The Commission's goal is to bring roaming prices in line with national ones by 2015, an important step in getting the 27-country bloc closer together and spurring business and freedom of movement in the EU's internal market. The new rules would also apply in non-EU states Iceland, Liechtenstein and Norway.

"This proposal tackles the root cause of the problem – the lack of competition on roaming markets – by giving customers more choice and by giving alternative operators easier access to the roaming market," Neelie Kroes, who is in charge of the EU's digital agenda, said in a statement.

For the first time, the rules would also cap the price of going online from a smartphone or tablet computer. Using mobile Internet in another EU country can quickly drive up phone bills, with prices for downloading one megabyte of data averaging euro2.23 ($3.22) but sometimes going up to euro12 ($17.35), according to the Commission.

One megabyte is equivalent to about 100 e-mails without attachments or a few seconds of streaming video online. Under the new proposal, charges for data roaming would have to come down to 90 cents a megabyte by July next year and sink to 50 cents by 2014.

By that date, the price of making calls would be capped at 24 cents a minute, while incoming calls and text messages would cost 10 cents.

At the center of the Commission's proposals are efforts to increase competition between providers. From July 2014, operators will have to open their networks to providers from another EU state, which would give consumers more services to choose from.

At the same time, consumers will be able to sign a separate roaming contract, allowing them to take advantage of cheaper offers from a different provider while keeping their regular number and SIM card.

The Commission believes that more competition is the best way of forcing operators to bring down prices and stop price ceilings from effectively becoming price floors.

The new rules still have to be approved by EU states and the European Parliament.