Roaming Caps Approval Called Reflection of EP’s Influence

The EU Telecom Council is expected to endorse the roaming compromise when it meets June 7. Speaking for the German Presidency, Joachim Wuermeling said yesterday he'd “pull out all the stops” to have the rule in the official journal by June 29. Reding urged him to do better.

The compromise package includes caps on wholesale and retail rates: (1) A maximum retail charge -- the so-called “Eurotariff"-- for making calls abroad at 49 euro cents per minute this year, 46 next year, and 43 in 2009. (2) A maximum retail rate for receiving calls abroad of 24 euro cents this year, 22 in 2008, and 19 in 2009. (3) A maximum wholesale rate --the tariff operators charge each other to transfer roaming calls over each other’s networks -- of 30 cents in 2007, dropping to 28 next year and 26 in 2009.

Once the rule takes effect, operators will have 30 days to offer subscribers a more attractive package. Consumers who haven’t switched at the end of 3 months automatically will pay the Eurotariff. Companies must “push” information on rates to users as they cross borders, and make available free information on other services. The EC is required to monitor the regulation’s impact and report to the EP and Council within 18 months after its effective date. It also must consider whether to recommend caps on data messaging services. The roaming regulation sunsets after 3 years

Few lawmakers seemed fully satisfied with the final result, but most agreed it was needed. Some said the rates remain too high, some opposed regulating retail prices and others complained at the compromise over whether consumers should have to opt in or out of the Eurotariff. Still others pressed the EC to act on data messaging roaming rates. Several said they worry that mobile firms will offset their losses by hiking rates for other services.

Another key concern was whether the measure will set a precedent for retail market regulation. The decision sets an “historic precedent,” said Spanish MEP David Hammerstein of the Greens/European Free Alliance party. Legislators now have broken the taboo against regulating a market in an area as important as telecom, he said.

Lawmakers know regulating retail fees is a “heavy-duty instrument,” said German Christian Democrat MEP Angelika Niebler, who chairs the industry, research & energy committee, one of panels to vet the EC proposal. However, she said, this was a one-off event, something the EP isn’t likely to do regularly. The EC only acted because of the unusual circumstance of market failure, Reding said.

Nigel Farage, of the euroskeptic Independence/Democracy Group, sparked boos and laughter when he thanked the EP on behalf of international business travellers and the super- rich, who he said stand to gain the most from the roaming regulation. Because he himself will benefit from the caps to the tune of around 3,000, Farage said, he abstained from voting on what he branded “a giant publicity stunt.” Lawmakers “want to be loved,” he said, but the regulation will only lead to “another giant EU folly.”

The regulation is making headlines outside the EU, said Reding. India is one of several countries already inquiring about joining the tariff scheme, she said, and telecom regulators elsewhere are contacting European national regulators about working together, she said.

Industry Reaction

Vodafone initiatives already have cut the average cost of voice roaming over 40% since summer 2005, the company said. The Vodafone Passport rate is a better deal than the Eurotariff, and 80 million European customers get roaming information free when they travel, it said.

Roaming calls now average 59 euro cents per minute, so the rule is unnecessary, said the GSM Assn. (GSMA). The lower price reflects the lure of tariff plans operators are rolling out, it said; on some, a 2-minute outgoing roaming call costs as little as 33 euro cents per minute, well below the cap approved by the EP.

Retail price controls are “inappropriate and unprecedented on the basis of a market economy, which is the foundation of the European Community Treaty,” GSMA said. The regulation aims to “further a narrow, short-term and populist agenda and runs counter to the wider interests of consumers, the business community and ultimately the EU,” said GSMA CEO Rob Conway.

GSMA members wonder how they'll tell pre-paid customers about packages and the Eurotariff within the regulation’s 30- day time limit, a spokesman said. Contract subscribers easily are reached via their monthly bills, but operators may not have contact information for all prepaid users, many of whom may be travelling during the notification period, he told us.

Data, Text Roaming May be Next

Reding warned mobile firms that the Thurs. vote was a “wake-up call” for action on high data roaming prices. Some “quite interesting” data roaming tariffs are emerging from Vodafone, Hutchison and others, and rate experimentation is likely, the GSMA spokesman said. Voice call cost drops likely will affect text-messaging charges, he said; the situation will be fluid for a time.

Alternative telcos say the real cause of high roaming costs is lack of competition in the mobile market, said European Competitive Telecom Assn. Chmn. Innocenzo Genna. Operators are free to overcharge in a market fragmented for lack of a regulation on mobile virtual network operators (MVNOs), he said in an interview. The EC believes mobile operators will not voluntarily cut prices, so it decided to regulate, Genna said. But in countries where there’s no competition, MVNOs are the best way to open markets, he said. Example: If the Italian operator Wind created an MVNO in France, Wind subscribers could continue to use that same MVNO network while roaming in France. As it is, they have to change networks, resulting in higher tariffs.

The EC has paid MVNOs little heed but may consider them in reviewing the e-communications regulatory framework, said Genna. One issue is whether to keep Market 15 -- access and call origination on public mobile telephone networks -- on the list of markets national regulators must assess for potential pre-emptive competition regulation, he said. The Commission should keep Market 15 in the regulatory framework and use it to give non-mobile operators the chance to gain access to mobile networks, he said.