The  watering down of the European Commission’s efforts to curb excessive mobile roaming charges is deeply worrying for businesses in all member States.

 So vast are the profit margins (variously calculated at between 500 to 1000%) that a mere 70% reduction in roaming charges still leaves the Operators with more than a 350% mark-up and does nothing to address termination charges for the unlucky recipients of international mobile calls.

Through lax regulatory oversight, mobile operators have become addicted to massive profit margins and the freedom to cross-subsidise other areas of their business.   The operators cling to the convenient and highly profitable notion that roaming is some kind of luxury.   In reality it is a tax on business mobility – penalising the Operators’ most-profitable customers for making even greater use of mobile services.

Quite apart from the detrimental impacts on cross-border business (or even the massive bills rung up by football fans) the weak regulatory response to this long-standing issue is a failure of European imagination.  

The UK and Ireland are blessed with only one direct neighbour and the majority of us in both countries are insulated from the ‘accidental’ insult of unintentional roaming.   Those living on or near the Northern Ireland border have a much sharper everyday awareness of the perils of roaming; such is the nonsense of devolved national regulation without regard to people and radio waves that stray across borders.  

Thanks to an earlier European effort to harmonise the use of spectrum (itself the result of intense mobile industry pressure to ‘create a viable market’) we are all able to use our mobile phones without difficulty anywhere in Europe and in much of the rest of the world.   Mobile operators choose to have operational links between their own subsidiaries and/or preferred alliance partners in other countries.  These linkages provide substantial cost savings and marketing advantages but are conveniently taken out of the equation when it comes to regulation.  

One sure way of gauging the gap between what customers want and what the industry provides is to look out for really weird technical fixes.  In broadband, for example, thousands of WiFi-enabled lampposts are supposed to make up for a lack of sensibly designed mobile broadband services such as can be found in South Africa, Australia, Kenya or Azerbaijan.

For conventional mobile phone use we now see the emergence of services that rely on SMS to request calls which are then set up centrally by hubs with multiple SIM cards and clever software to deduce the lowest-cost routing – sometimes even invoking VoIP via fixed broadband to generate part of the call nearer to the called party.    That investors can identify viable markets for such ‘Heath-Robinson’ gadgetry is a sure sign of desperation and market failure. 

Obviously mobile operators need to make a profit but surely it is also reasonable to balance tariffs so that one customer segment is not exploited by levying disproportionate charges.   Short-term holiday deals from Operators are nothing other than a tactic to avoid upsetting their least profitable (but politically powerful) consumers.

The European Commission and national regulators need to get a proper grip on mobile roaming and termination charges if living and working in Europe is ever going to be a truly moving experience.

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First published in NetworkingPlus July-August 2006