Bit by Bit, Europe Leads the Way in Data Roaming Charges

Over the years we’ve covered the European Union’s attempts to unify not just the movement of goods and persons -- which are, along with a common currency, two of the hallmarks of the overall unification -- but also the movement of bits.

It started with a simple idea in 2007, under the leadership of Viviane Reding, then the European Commissioner for Information Security and Media: the reduction of voice roaming charges across Europe. Her request for self-imposed voice roaming caps was met with accusations of “straitjacket” governance from mobile phone operators and even telecommunications ministers in EU countries with significant incumbent mobile operator revenues. However, once the mandatory caps were put into place, despite a spirited debate that ensued, Europeans in general benefited.

On July 1 this year, the EU took another giant step in the direction of common -- and sane -- data roaming rates, a premise started under Reding and continued under the ongoing leadership of Neelie Kroes, the European Commissioner for Digital Agenda.

The headlines for the most recent move have replaced the talk of straitjackets and dictatorial powers with hope for the dawn of a new era. An example from U.S. News & World Report: “EU slashes maximum fees for mobile internet surfing when traveling in Europe by 55 percent.”

While it might be tempting, on this side of the pond, to sit back and chalk all this up as the fits-and-starts-attempted-through-coercion approach to bringing a continent together, it’s worth a look at how the EU’s approach to data roaming will impact residents from the EU that travel beyond the Continent and the U.K.

According to The New York Times, which notes that those with mobile contracts from European providers will benefit when traveling across Europe, the telecom “companies have already increased roaming charges for European clients traveling outside the union as a way to offset the lost revenue.”

Besides the potential spike in the cost of data roaming outside of Europe, the threat of forced data roaming caps, which have now dropped to around $0.27 per megabyte (about €0.20), was coupled with stronger internal competition by pan-European service providers that had already limited data roaming across their own networks in multiple countries. So it’s not strictly a forced approach or an “invisible hand” approach that’s bearing fruit, but a combination of the two.

The other takeaway that we should consider from a U.S. perspective is the potential for delivery technology growth. It took some time for EU consumers to be comfortable making voice calls outside their home country, even for several years after the 2007 imposition of voice roaming caps, but it eventually led to significant voice usage by holiday goers and businesses alike.

If EU consumers are able to overcome their fear of data roaming charges -- some estimates place pan-European travelers using data roaming at less than half of all travelers, due to historically high data roaming prices -- then we should see a significant upsurge in data usage across Europe.

This, in turn, may spur adoption of fourth-generation (LTE or LTE-A) network capabilities by the mobile network operators, paving the way towards higher-quality streaming throughout Europe. These upgrades need to happen, as Europe risks lagging further behind Asia and even North America, at least when it comes to throughput capabilities for mobile streaming.

For certain, mobile operators will have a tough decision to make, as they balance the cost of these next-generation-network equipment upgrades against the seemingly lower revenue models. But rest assured the upgrades will come as Smith and Marx, with a little help from Kroes, work hand in hand to drive forwards the digital agenda well into the 21st century.

This article appears in the September 2014 issue of Streaming Media as "Bit by Bit, Europe Leads the Way."