Europe’s telecommunication legislation took a step towards offering fairer roaming charges yesterday after MEPs (Members of the European Parliament) voted 534 to 25 for a package intended to reduce the roaming charges many suffer. The reasoning behind it? 94% of Europeans admitted that they limit their use of mobile services when travelling to avoid charges, something Europe’s governing bodies want to avoid.
They are pushing for a connected Europe where anyone is able to check emails, engage in social media and, most importantly, communicate across the continent. Communications are big money after all. Company business deals, job applications and personal affairs are dealt with more and more exclusively using the series of tubes which holds our modern world together. Knowing that only 6% of Europeans feel comfortable to use services due to the cost has been deemed by them unacceptable, so they decided to change how mobile roaming fees will work in Europe.
Another reason behind the decision is rather obviously a financial one for the Union as a whole. It’s estimated that this combination of high monetary cost to those who do pay the fees and the opportunity cost of lost spending/earning from those who avoid the services when roaming makes up almost 0.9% of European GDP, in real money terms that’s €110 billion. That money could be used to buy many beads or other more economically viable routes. How are they planning to solve this problem practically then I hear you ask?
Their intentions are to stop the fragmenting of policies and tariffs amongst Europe’s 200+ telecoms providers by setting in a selection of rules which will limit the cost of any data transfer to the same cost as at home. For example, if you were in Spain ‘Facebooking’ with your friends about how much you love Jon Snow then you travelled to Germany you may find that your internet usage costs would increase from €1 for a gigabyte to €10 per gigabyte. Under these rules it would cost everyone €1 per gig across the union (note: these figures are to illustrate a point and not actual figures). The actual legislation is expected to come to pass sometime after the 15th of December next year.
As part of the package, providers will also be stopped by legislation from using the unsavoury but common practise of slowing down competitor services using their own assets be they hired or somehow connected. This is all good news for the European Union’s inhabitants right? Everyone will be forced into the same rules and between the same fences, that’s a good thing?
Probably yes it is, however it could have a knock on effect on how these companies compete. Each one needs to make money after all. So if they can’t siphon unwarranted funds from those who use roaming internet they will have to look into other ways to please shareholders. These could involve increasing prices to their customers or the use of predatory pricing. Predatory pricing is offering a service, perhaps at a significant loss. to force competitors out of business. In the short-term consumers may find this a better fit for them and be happy, only for the dominant company to rise from the ashes with a huge market share and dominance over other companies. Those it hasn’t destroyed anyway.
It could even lead to the amount of investment into telecommunications networks by the private sector falling to a rock bottom level last seen in the stone ages. Why develop a better system when you’re unlikely to see any gains from it? Overall its great news for consumers initially, but it could lead to short-term problems for competing companies which may lead into long-term problems for the market as a whole.
What are you thoughts on all this? Let me know in the comments box down below.