Europe’s roaming data cuts are welcome, but not the end of the story

From Tuesday, Europeans traveling around the union will pay a lot less for mobile data, voice and SMS. The most drastic cut will be for data, with the retail price cap dropping from 45 euro cents ($0.62) per megabyte to 20 cents ($0.27).

This represents the last stage in the grading-down of data roaming premiums within the European Union (there were no retail caps on roaming data before mid-2012, when a 70 cent cap was introduced). It’s far from being the end of the story, though — a major package of telecoms reform that’s almost been signed into law will do away with intra-EU roaming premiums altogether.

There’s a huge political driver behind all of this, in the creation of a true EU single market – in practical terms, EU politicians are trying to erase the borders between member states, and that’s not possible when crossing a border results in massive bill shock.

For European startups, this is essential, particularly if their apps and services are intended to be used on the move. While it’s true that the gradual cuts in retail roaming caps have inspired carriers to offer fairly good deals, these still mostly require the user to opt in. Using mobile data while crossing borders needs to be a frictionless experience — a no-brainer.

The complete elimination of roaming fees within the EU will take place at the end of 2015, if member states give final approval to measures already backed by the European Commission and the European Parliament.

Of course, there’s a flipside to this: the consolidation of Europe’s telecoms industry. Facing falling profits, carriers are trying like crazy to buy and merge with one another, and lower or non-existent roaming fees play a part in this.

At the same time, the market is theoretically opened up for smaller players who will in theory be able to sell their mobile services more widely — if roaming is no longer an issue and the digital market is unified, why not just buy a SIM card from a carrier in a neighboring country, if it’s cheaper than the carriers at home? Again, this increased competition could lead to lower prices and, as a result, greater consolidation.

In other words, Europe’s major roaming reforms aren’t just a matter of cheaper holidays for consumers; they form part of a wider picture in which the continent’s telecoms industry is being radically shaken up. There are risks inherent in that, particularly if too much consolidation takes place, but potential benefits too.