EU Commissioner bans roaming charges

This is a big deal. And potentially a huge opportunity for mobile operators.

Europeans could see a sharp drop in international phone costs in time for their summer holidays next year as a result of planned laws being rushed through by the European Commission.

The EU Telecoms Commissioner, Viviane Reding, has decreed that roaming charges violate the principles of the free transfer of goods and services within the EU. Mobile operators have essentially been "punishing" their subscribers for travelling.

While the MNOs will certainly complain bitterly and challenge the ruling, it appears that this is really going to happen. The European Commission has been arguing with the mobile industry for some time and is fed up that operators haven't done anything on their own to eliminate roaming fees.

But the cloud has a silver lining for sure. There is very clear price elasticity when it comes to making calls abroad. It costs a lot more so people make shorter or no calls at all. So by getting rid of roaming charges, subs will make more phone calls and send more SMSs. In fact SMS substitutes for voice calls for many people while abroad - it's cheaper to keep in touch with people back home via SMS. The demand is there, but the pricing is inefficient to maximising revenue. Basic microeconomics.

Forward thinking mobile operators will take advantage of the ruling by scrapping roaming charges early and using it as a marketing gimick. Tomi Ahonen explains this in more detail.

It really is good news for everyone - the industry and its customers.