Roaming in the European Union: How new rules impact VoIP arbitrage
Posted by talkster on November 28, 2006
By James Wanless
President and COO of Talkster
If you are a European mobile phone user and paying your own bills (or you are a business and paying lots of mobile bills) then you are only too aware of the exorbitant cost of roaming. It doesn’t matter if you are receiving incoming calls, making calls in the country in which you are roaming, calls back home or (in the worst case) calls to other international destinations, you are going to run up a big bill very quickly. You can’t simply stop calling. The mobile phone and associated number are links to colleagues, customers and your business – your life and livelihood. You have to find ways to make those calls but to make them for less.
The European Union has reaffirmed its intention to bring in price caps to force the operators. Commissioner Viviane Reding is leading the attack on roaming charges and has committed to implementing them before summer 2007. Operators have begun to reduce costs in an effort to avoid regulation but it is widely believed that they will not do enough soon enough to avoid legislation.
What do pricing caps means practically? In order to understand the impact of pricing caps, the current situation should be analyzed. Many operators have special pricing plans and offers, so consider my broad statement that follows as a reference to the general model of pricing. Essentially, if you are for example a UK mobile user roaming in France, then you will pay the same for a call within France as you would pay for a call home to the UK. Such pricing creates a very high margin for the operators but at the same time is a reason why many people — other than those aforementioned business users who must make a call — avoid placing such a call.
The new EU legislation looks to break this price structure down so that the cost of a call within the country in which you are roaming (e.g. France) will be significantly less expensive than a call home (e.g. UK). The legislation allows operators to charge not more than a 30 percent premium on the wholesale price they pay to transport the call.
An example of actual costs given by the commission is:
A Belgian traveling in Spain would pay a maximum roaming fee of 0.38 euro per minute for a local call within Spain, 0.59 euro to call home to Belgium and 0.20 euro to receive a call from abroad, compared to the current pricing of 1.50 euros, 1.50 euros and 0.75 euro respectively.
Talkster is poised to take advantage of this reduction in roaming charges to offer its users the ability to make calls anywhere in the world for less. A Belgian user of the Talkster service would have his calls routed through a Talkster network access point in Spain so that a call home to his office in Belgium would cost significantly less than if dialling Belgium direct (0.38 euros per minute as opposed to 0.59 euros per minute as noted above).
A figure that is not mentioned in the EU example is the cost of this same Belgian user to call France, Germany or other EU destinations other than their home country, not to mention calls to the USA, Canada or other non-European destinations. The cost of a roaming call to a country that is not the caller’s home will still be very high. With Talkster, the cost to call most European and North American destinations is the same as the cost of a call home to Belgium. All of this coupled with access to not only regular phones, but also to instant messaging networks, IP phones and centralized billing control makes the solution a winning combination for businesses and individual users alike.
It’s going to be a hot summer in Europe! Sign up for the Talkster service at