Overseas mobile phone costs set to fall on 1 July
The cost of watching video, using Facebook and checking emails on a mobile phone is set to fall by over a third, across the European Union (EU), from 1 July 2013.
The introduction of the EU's Roaming Regulation on 1 July means mobile phone operators must cap the price on data downloads, as well as calls and texts – potentially putting an end to "bill shock".
Some consumers have suffered bill shock after unknowingly running-up thousands of pounds worth of charges while using their mobile on holiday. Often, people have no idea expensive, data-hungry apps are running in the background.
The new rules will cut the cost of downloading data across the EU by 36%, according to the European Commission (EC).
EC vice president Neelie Kroes said: "The latest price cuts put more money in your pocket for summer, and are a critical step towards getting rid of these premiums once and for all. This is good for both consumers and companies, because it takes fear out of the market, and it grows the market."
In July 2012, EU rules forced mobile phone operators to cap roaming costs at 80p (€0.90) per megabyte. But the new rules halve this cost (before VAT), meaning data roaming will now be up to 91% cheaper in 2013 compared to 2007.
The new price caps are:
- Data downloads or internet usage: data or browsing the internet: 40p (€0.45) per megabyte plus VAT (36% lower than 2012 prices).
- Making calls: 24 cents (20p) a minute plus VAT (17% lower than 2012 prices).
- Receiving calls: 7 cents (6p) a minute plus VAT (12.5% lower than 2012).
- Sending a text message: 8 cents (7p) plus VAT (11% lower than 2012).
People using their mobiles in Croatia, joining the EU on 1 July, will benefit from the price caps. But the EU rule does not affect the prices providers can charge for data roaming outside the European Union.
Rules for non-EU countries state that people in those countries should receive a warning text message, email or pop-up window from their mobile provider when they are nearing €50 of data downloads, or their pre-agreed level.
Consumers must then confirm they are happy to go over this level in order to continue their roaming.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.