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Has the era of low-price in telecommunications ended?

posted onJune 1, 2017

Low mobile communication tariffs were a result of sharp competition, which historically formed after operators divided the market. Development of new technologies have made those tariffs irrelevant, Girts Rungainis, a Latvian investment banker and serial entrepreneur in banking and finance told Baltic News Network.

In addition, Rungainis also mentioned that tariff changes were dictated by two significant trends: rapid technological development and cancellation of roaming allowance in the EU  after officials in Brussels confirmed roaming surcharges will be abolished as of 15 June 2017.

Rungainis added that until now it was possible to collect part of the money from tourists travelling to Latvia and using roaming services.

The banker believes it was one of the reasons why EU agreed to cancel roaming fees. “Domestic tariffs and consumption models are very different when you travel from country to country. For example, clients in Ireland pay nearly ten times as much as we do. In addition, the fee for roaming services forms nearly 5% of mobile operators’ revenue in the EU. This makes tariff equalization very complicated and painful for some consumers.”

Mobile operators in all of Europe warned that cancellation of roaming fees would create major pressure on domestic tariffs. Not only in Latvia, but in Scandinavia too there had been concerns about the future of cheap and generous domestic service packages.

Since 2007, roaming prices have decreased by more than 90%. Prices fell for the final time in April 2016, to 5 cents per minute of voice call, 2 cents per SMS, and 5 cents per MB of data on top of national rates. In 2015, and based on a proposal of the European Commission, the European Parliament and the Council agreed to end roaming charges for people travelling periodically in the EU. The Commission adopted technical measures needed to make this happen, including a fair use policy and sustainability mechanism in December 2016. In parallel, the Telecoms Single Market Regulation entrusted the Commission with the task of reviewing the wholesale roaming markets and making appropriate proposals before 15 June 2016, in order to enable the abolition of retail roaming charges from 15 June 2017.  

According to the EU Commission, travelers are meant to be able to “call, text and surf on their mobile devices when abroad in the EU for no extra charge on top of the price they pay at home”.

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