Reding Set to Rip Into Data Roaming

European Commissioner Viviane Reding is expected to come out of her corner swinging at Europe's mobile operators tomorrow and announce plans to regulate the prices they charge for sending and receiving data and SMS messages while abroad, which are known as roaming fees.

Reding will announce tomorrow that regulation is needed at wholesale and retail levels for SMS messaging to bring down the price consumers pay to send and receive texts abroad, according to an industry source. That means mobile operators can expect regulated price caps on SMS messages much like the price caps imposed on them last year for voice roaming. (See EU Adds Mobile Law, EC Welcomes Roaming Caps, and Carriers Wrestle With Roaming Caps.)

Mobile operators are still reeling from the voice roaming price caps and ongoing cuts to mobile termination rates across Europe. Now they are braced for another round of regulated price cuts, this time to SMS and data roaming fees.

Reding is disappointed in the mobile industry's response to the warning she issued in February. At that time, she said mobile operators needed to reduce SMS and data roaming charges substantially by July 1 or she would be forced to intervene and introduce price caps. Her benchmark for a reasonable price was €0.12 (US$0.19) per SMS. (See Reding Guns for Data Roaming Cuts, T-Mob Cuts Data Roaming, and Operators Cut Data Roaming.)

According to data gathered by the European Regulators Group (ERG) , the average price of an SMS while roaming was €0.29 ($0.46) in January and it is still €0.29 ($0.46) today. While the mobile industry argues that data roaming prices have indeed come down, the reductions are not enough to pacify Reding who now appears determined to introduce price caps.

Reding is expected to say tomorrow that by next summer European consumers will see price cuts of about 70 percent for SMS messaging while abroad, according to the industry source.

But she will stop short of recommending tomorrow what the price caps should be. Those details will come when she makes her official proposal to amend the EU Roaming Regulation in late September or early October.

There is already some indication of the range the European Commission is considering for SMS roaming price caps. The ERG recommends a retail price cap between €0.11 ($0.17) and €0.15 ($0.24) per SMS message while abroad and a wholesale price cap between €0.04 ($0.06) and €0.08 ($0.13) per SMS message. But the European Commission will also take into account a study by the Danish regulator, which recommends a retail price cap of about €0.04 ($0.06) per SMS.

For data roaming, the European Commission wants to make data pricing more transparent to prevent "bill shock," but it has not yet decided whether further regulation at the wholesale or retail level is necessary at this time. Operators pricing tactics for data roaming this summer will be a factor in the Commission's decision, according to the source.

Reding is expected to propose an amendment to the Roaming Regulation this fall, which will need approval from the European Parliament and Council. The Commission's goal is to make SMS and data roaming cheaper by summer 2009.

— Michelle Donegan, European Editor, Unstrung