Want to save money texting friends? Go abroad first (for now) (CentreForum blog)

Each year, around this time, the press extends a little warmth to the EU for its falling caps on roaming charges. On 1 July, the maximum price for text messages between EU countries will, for example, fall from 9 cents to 8 cents (excluding VAT). These limits, however, do not apply to communications within a member state. This means that it can be cheaper to contact someone in Britain while in Cyprus or Estonia than while standing next to them.

The difference grows larger each year. In 2014, the maximum roaming SMS charge is scheduled to fall to around 6 pence (including VAT). But those who have used pay-as-you-go or exceeded their contract may notice that 12 pence is more typical from the big UK operators. Calls can be similarly overpriced.

UK: O2 UK: Vodafone UK: EE EU: 2012-13 EU: 2013-14 EU: 2014-15 (current plan)
Texts 12p 12p 14p 9c 8c 6c
Calls 35p 25p 35p 29c 24c 19c

(Prices in cents exc. VAT roughly equal price in pence inc. VAT. UK prices are from typical packages. Data pricing is more complex and not included here.)

It may seem like most people these days are on contracts, but the latest Ofcom figures show that 50.8% of subscribers are “pre-pay”, rising to around 92% for over 75s. What’s more, high pre-pay charges affect how contract prices are judged, helping to keep everyone’s prices high.

The EU caps are not set at an unprofitable level. EE will make a profit charging 6 pence for that cross-continental text from Cyprus, so why do they charge 14 pence for texts within the UK? Smaller services like giffgaff do in fact charge 6 pence per UK text.

It’s right that the Commission’s rules do not apply to prices within member states, and despite these typical utility problems, introducing domestic price controls might be excessive. But the change in cap on 1 July is a chance for MPs to point out this absurdity and stick up for consumers, particularly amongst pensioners.

Having said all that, the Commission is now considering whether to end roaming charges entirely. Your usual domestic charges would then apply no matter where you are in the EU. This might happen as early as next year, providing a useful message for the European Parliament elections. They envision this single market leading to alliances and eventual mergers, plus greater investment (hopefully). In the short term, operators will reportedly be 2% worse off overall, but will gain in the long term as people increase their phone use abroad (so much for time off!).

A single market will remove any differences in price between UK-UK and EU-UK communications. This will be great news for those on contracts and bundles. But those pay-as-you-go users who have benefited from EU roaming caps set lower than UK prices will perversely see their price when abroad increase, undoing years of falls. Perhaps in the long-term, competition between 100 EU operators will drive down prices, but for now, any change is a chance for customers and politicians to question some of the prices offered by the UK’s big operators.

Originally published at https://centreforumblog.wordpress.com/2013/06/27/adam-corlett-want-to-save-money-texting-friends-go-abroad-first-for-now/

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