Is it safe to send text messages in Europe? Mobile caps and the corporate user

The following is a guest post by TC2 Senior Consultant Mark Sheard, who is based in London.

Did 2009 mark the end of overcharging for text messaging and data applications while roaming in Europe? You might think so because of last year's European Union roaming caps on texting and data and video applications, as well as an accompanying overall mechanism designed to put a brake on soaring mobile bills.

But that's only part of the story. European and multinational enterprises can only get the full benefit of these measures to solve the chronic problem of runaway mobile charges if they take additional steps. These corporate 'bill shocks' (as the EU put it) might not be as immediately obvious as those, for example, on my teenage daughter's mobile, but close inspection could be more shocking than you thought!

Telecom managers with responsibility for users traveling through Europe should remember the unique aspect of mobile cost management within the EU. The "single market" paradoxically can make it more difficult to keep costs under control. Roaming charges often begin at every national boundary even as users freely move about the continent.

Viviane Reding, the EU Telecoms Commissioner, was addressing this when she described the EU's objective in enacting mobile caps: "What we want to achieve is simple: sending text messages or downloading data via a mobile phone while being in another EU country should not be substantially more expensive than at home. This is the logic of the borderless single market."

Accordingly, since July 1st of 2009, roaming charges for SMS (text messages) have been capped by the EU at a retail cost of €0.11, which compare very favorably with the average cost of a "roamed" text message in the EU between October 2007 and March 2008 of €0.29. The key elements of the regulation are as follows:

-- Limits the price for sending a text message while abroad at €0.11. Receiving an SMS in another EU country remains free of charge.

-- Reduces the cost of surfing the web and downloading movies or video programs with a mobile phone while abroad by introducing a maximum wholesale cap of €1 per megabyte downloaded. This limit will be decreased each year.

-- Further reduces prices for mobile roaming calls with a maximum tariff of €0.43 for making a call and €0.19 for receiving one.

-- Introduces per-second billing after the first 30 seconds for calls made and immediately for calls received.

But these regulations are only a start. Most businesses of scale should be securing competitive rates that are better than the regulated capped rates. If a quick review of your contracts shows that you haven't got better rates, yet you have many roaming users, it is time to plan for a review of your wireless telecoms spend. This should start with an early interview with your incumbent provider's account manager.

In negotiated custom corporate wireless contracts, market leading pricing for roaming usage tracks substantially below the regulated price caps. The significance of the roaming rates cannot be underestimated -- for many MNCs roaming spend can be 50% or more of their mobile costs. Hence, securing competitive rates for voice, data and SMS (texting) is crucial.

Determining whether you have good rates for voice, SMS and data might start with a look at the EU provided information on tariffs. The EU site will give you rates for roaming across Europe. Some might find it a useful starting point to see whether or not their negotiated rates are any better than standard supplier pricing.

Remember that this site is restricted to European countries and published rates. As good as it is to see efforts to provide more open information to consumers, spotting whether you are securing rates commensurate with your corporate spend is not in reality possible from the EU's site. But an interesting exercise is to click on the little timeline down the side of the rate tables and see the differences in prices over time. Immediately, it shows the continued downward trend in charges that telecoms managers should be seeking to emulate for their own contracts.

For one thing, it illustrates that operators really do need some help and encouragement to pass on price reductions to the consumer. Note particularly the drop in voice pricing in 2007 when EU regulation was first brought in! Would these have dropped so significantly without regulation?

For SMS and data, the recent step change down is initially likely to mean some stagnation in the rate of change, but in reality for most MNCs, the recent regulation should have a pull through effect on roaming data pricing. But negotiating improved SMS and data roaming rates in isolation may not be straightforward. Ideally, a structured competitive process will bring the greatest returns in terms of cost reduction, and typically the greatest opportunity for the provider to give you the best deal will be if you widen the scope of the procurement.

Mobile SMS and mobile access to the Internet and corporate networks are growing exponentially, and whilst the EU capping on roaming charges is very good news the caps should be regarded as the starting point for your negotiations, not the end.