European Union plans to eliminate roaming charges

With Europe’s broadband infrastructure failing, the European Union has started to consider eliminating all roaming charges in Europe. As early as next July, roaming charges for incoming calls could be banned, with the rest gone by 2016.

Europe has 50 countries on a continent slightly bigger than the United States, which makes traveling from country to country similar to state to state travel in the U.S. Whereas each of the 50 U.S. states are a part of one country and federal laws and regulations are shared, each European country is different from the rest. For commuters and travelers, using mobile phones while in another country can be both difficult and expensive.

The European Union is trying to make everything more predictable from country to country, said Bruce Gordon, professor of finance and economics.

“The whole point of the European Union was to make it fairly transparent as you go from one country to another and to make doing business in every country basically the same,” Gordon said. “However the phone plans are one place where there is still a tremendous amount of variation.”

While eliminating roaming charges is definitely realistic and doable, there are some complications, Gordon said.

“You can get rid of the roaming charges but the phone companies have got a certain expense structure that they’ve got to cover and then they’ve got to make a profit, if you still want to have phone companies,” Gordon said. “They’ve got to make money to exist so if you cut the charges here, they’re going to pop up somewhere else. It might be more efficient to cut down on the roaming charges or at least have them all the same, but I don’t think that’s necessarily going to lower the total cost of using your phone there. The more government intervention you have, the more inefficient it’s going to get. If they can do it in such a way that encourages those companies to make those investments then their aging infrastructure will get better very quickly. Companies will spend the money as long as they can make a good return.”

Doing away with roaming charges could have a positive impact on the cell phone technology available in Europe, said John Crabtree, professor of computer information systems and computer science and information systems.

“It’d be easier for the phone companies to develop new technologies for these phones in Europe if they eliminate those roaming charges,” said Crabtree. “People will be more apt to leave their phones on and travel more freely and the carriers won’t have to worry about more complexity. That’s where it really comes into play  — where phone companies have to manage the services in different ways because of the different laws (in each country). It’s very complex.”

It is highly similar in the United States, Crabtree said.

“We started out with the Bell companies,” Crabtree said. “Those were broken up and now it’s fairly complex with a lot of different phone vendors and it’s highly regulated still.”

Scrapping the roaming charges in Europe could possibly affect America as well, but not because of government intervention, Gordon said.

“I think the same thing will eventually happen in the United States,” Gordon said. “But here it will probably happen because of competition as opposed to somebody enforcing it. They’ve done it in China, they’re trying in Europe, so I just feel like eventually that sort of model will come here as well.”