End of roaming charges spells losses for EU telecoms

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End of roaming charges spells losses for EU telecoms

The pressure on telecoms providers to turn a profit in a less than buoyant market has just increased after roaming charges were suspended in Europe on June 15.

The revenue from European roaming charges outside and within the continent had been estimated to comprise around five per cent of business for providers of mobile and office based telephony solutions. However, it is thought that the main effects of the development will be different for individual and corporate clients. Senior industry analysts have commented that telecoms providers have had plenty of time to prepare for the loss of roaming revenue, as the move has been on the table for a number of years and has been expected.

In Spain, business attributed to mobile and office based telephony solutions varies a great deal seasonally, as tourism is a significant source of business activity and influences income from telecoms networks. Spanish operator Telefonica has forecast that the cessation of European roaming tariffs will lead to a reduction in business of up to 1.2 per cent in this current year.

Another industry commentator said that it was the telecoms operators’ duty to be prepared for this change, and if they were not, then they had no one but themselves to blame. ‘Operators in different countries are taking a range of approaches to updating their business systems as a result of the suspension. The French company Free had already responded by increasing the size of its free to roam region in March. Bouygues and Orange, also French, stopped charging for roaming in May, and SFR dropped the charge last month.

Over the Italian border, Wind-Tre complied with the directive two months earlier than required, and TIM stopped charging for roaming when the new rules came into effect.

As operators no longer have to list details of their revenues, putting a figure on how much the end of roaming charges will cost them will be tricky.

The entire market creates an income stream of around €4.7 billion (£4.1 billion) annually, according to figures supplied by BEREC, the European regulator. The European Commission has estimated that the loss of roaming charges will decrease revenues for providers by €1.2 billion (£1.05 billion). However, the income from roaming fees had already been in decline for a decade, as the cost of texts and calls had decreased by around 90 per cent. Since 2012 EU rules have seen the cost of data decrease by 96 per cent. Data transfer, meanwhile, has risen by a factor of a hundred.

Some countries benefited more from roaming fees than others. Business systems for each operator differ, and tourism has a marked effect on providers in the southern parts of Europe. Greece and Portugal, for example, receive an influx of temporary customers in the warmer months and have fewer long-term clients. Roaming was a bigger element of their profits and helped to fund network maintenance and development and counter the effects of seasonal surges. Providers in southern countries also called for higher prices for wholesale business systems or operators completing deals between themselves. The final result was a compromise.