European Union introduces maximum prices for calls and SMS

European Union introduces maximum prices for calls and SMS
In a decision that will be counted as yet another important milestone in the digital transformation of the telecoms industry, the European Union (EU) has introduced new price caps on calls and SMS messages between member states, which came into effect from 15th May 2019.

The EU has overhauled the rules of the telecoms playing field yet again! After abolishing roaming charges within the EU back in 2017, the European Commission has now announced a maximum price which applies to calls and text messages between member states. These measures are a part of an overhaul of telecom rules in the EU, which was announced last year.
The latest regulation caps international calls between EU countries at a maximum of 19 cents per minute and text messages at 6 cents per message, both excluding VAT. The price cap has already taken effect within the 28 EU member states, and is also expected to be applied in Iceland, Norway, and Lichtenstein soon. Importantly, the regulation applies only to personal users and not to business customers who already have good deals with many service providers.

Advantage Customers

A recent Eurobarometer survey on international calls revealed that 42% of respondents contacted someone in another EU country in the last month, with 26% using traditional channels such as mobile phones, landlines and text messages.
Before the regulation came into effect, the standard price of a call within the EU was typically three times the price of a domestic call and text messages twice the price. However, in some extreme cases, the price of calls between EU member states was up to ten times higher than the standard domestic prices.
Clearly the price discrepancies for calls and messages between EU member states was detrimental to the customer experience. That too, in a region, which operates as a unified entity on many fronts.
The European Commissioners have stated that the new rules will protect customers against bill shock, which is traditionally associated with high cost international calls. Furthermore, it will meet the growing connectivity needs of EU residents and also boost the region’s competitiveness.
In effect, using the mobile phone for international calls and messages in any EU country will now be the same as using it in your home country.

What about Telcos?

Undoubtedly, telecom operators will feel the pinch of the new rules. They are already struggling with the loss of revenue on many of their traditional services, and these new rules will directly impact another one of their cash cows.
However, telcos should have seen this coming. Many customers already rely on OTT services such as WhatsApp and Skype for international calls and messages. By prolonging their digital transformation, telcos have only set themselves up for disruption of their core businesses by newer digital competitors and progressive regulations. While they have experimented with unlimited data plans and bundling multiple services to stem the tide, these have not yielded the desired results.
No doubt some telcos may choose to increase prices for international calls and SMS outside the EU in order to offset their losses. However, this will surely only accelerate their demise as customers will move to lower cost digital alternatives. It is high time that telcos accept that their future depends on moving with the times and preparing themselves for the next technology era. OTT services, Internet of Things and 5G will provide opportunities, but they will need to adopt completely new business models with transparency and customer experience at the forefront to stay relevant in the new digital world order.