EC Plan to Lower Data Roaming Rates Draws Support, Criticism at Legislative Hearing
European Commission plans to force down high data roaming prices won cautious support from some EU lawmakers, telecom industry members and a consumer group, at a Tuesday hearing before the European Parliament Industry, Research and Energy Committee. But others, including the EC’s own advisory panel, the Body of European Regulators of Electronic Communications (BEREC) providers, said the plan is too complex and lacks ambition, and that lackluster competition in the roaming market should be attacked by other means.
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The draft European Parliament response to the EC proposal welcomed the approach of setting price caps for now, combined with structural incentives such as “decoupling” of domestic from roaming contracts and giving alternative providers access to networks in other EU countries at regulated wholesale rates, said the report’s author, Angelika Niebler of Germany and the European People’s Party. She proposed an amendment to require that all requests for access to a mobile operator’s network be treated the same. On price caps, the report urges an “ambitious approach” that tries to ensure that, by 2015, national roaming costs and cross-border rates are so close that effectively there is no longer a roaming tariff, she said.
The Internal Market and Consumer Protection Committee, which is also vetting the EC proposal, backed price caps to extend beyond 2016, and for consumers to continue to receive clear information about prices and roaming packages, said its report author, Eija-Riitta Korhola, of Finland and the EPP. She also floated the idea of a €50 -- or some personally-set-- safety cap to help consumers avoid bill-shock, and said this provision should also be applied to prepaid customers.
"Roaming 3” -- the next incarnation of a series of regulations on mobile roaming -- is different from earlier versions because it seeks to come up with a permanent, structural solution, said Telefonica Director of Regulatory Policy Europe Robert Mourik. The telco was skeptical at first but now thinks the structural solution can be made to work, he said. There are things operators can add to the mix to make it work, he said. He sought an exemption from decoupling for operators whose international roaming rates are near or at domestic rates. High data rates are coming down quickly, and by 2015 the market should provide data roaming rates that are more or less the same as national rates, he said.
Parliament must ask itself whether it thinks the structural solution will work, Mourik said. If yes, then prices will drop no matter what ceilings are imposed, he said. Telefonica thinks the EC proposal for caps is fine and will ensure an interesting margin to entice new players into the market, he said. If legislators think the structural solution won’t work, then “don’t prescribe one,” he said. Suggestions floating around Parliament now appear to signal that members have already decided the structural approach won’t work and that more severe rate caps are needed, he said. But the numbers in play won’t allow mobile virtual network operators to break even, much less to make a profit, he said.
Mourik suggested formulating an alternate approach. The cost of implementing a structural solution is considerable, especially for smaller players, he said. But it’s the smaller operators who are often more nimble than large providers and the EU should welcome their attempts to break into the market with different offers that may more closely align with domestic roaming rates, he said.
The structural solution is very complex and wholesale access can have adverse effects on the market, said Emmanuel Forest, Bouygues Telecom vice president regulation and government affairs. Carrier selection was tried in the past and wasn’t a great success, and the EC proposal probably won’t be either, he said. Putting wholesale access and decoupling in place will cost smaller operators proportionately more than larger ones, he said.
It will be nearly impossible to differentiate between, say, a French resident who roams in Ireland or Luxembourg on a pan-European network and one who uses a SIM card from an Irish or Luxembourger provider to get those domestic rates, Forest said. Moreover, the best roaming operators could end up being Google or Apple, who enter the European market as MVNOs for pan-European as well as domestic roaming services, he said. This could distort the domestic markets, he said. Bouygues wants operators to have to charge an additional, fixed, flat rate for geographical extension of their tariff schemes, he said, creating a genuine Euro-tariff, he said.
Some MVNOs already offer domestic roaming rates across each territory where they do business, said Transatel CEO Jacques Bonifay, whose company gives users a SIM card and subscription that covers several countries. But Transatel only has around 10,000 subscribers, because operators in big markets such as U.K., Italy and Germany refused to deal, he said. Nor did EU institutions offer much support for pan-European MVNOs, he said. MVNOs must be able to do international roaming agreements, he said. He urged lawmakers who want to regulate to be careful not to let in non-European companies that will offer consumers good rates.
BEREC has done “heroic” work on estimating roaming costs, with limited data, said consultant Tony Shortall, director of Telage. Wholesale data roaming costs have been overstated, he said. Some operators offer great rates but people aren’t rushing to grab them because of balancing arrangements between inbound and outbound traffic, he said. Voice and SMS roaming charges are close to cost but can be lowered even further, he said. Pan-European retail offers may be possible if policymakers get wholesale prices right, but they shouldn’t be unlimited, he said. There’s no U.S. operator with a pan-American network, and all providers use roaming services, he said.
The European Consumers’ Organization welcomed the EC proposal but said it’s not strong enough. BEUC wants roaming charges abolished, said Junior Economic Officer Monika Štajnarová. Decoupling combined with guaranteed wholesale access may spark some interesting offers but price controls are still necessary, she said. Fees for roaming services should be cost-oriented, she said; and the proposed rates are too high.
Wholesale charges will have to drop significantly if companies are to offer pan-European roaming rates, said Jim Niblett of BEREC. Regulators think the EC-proposed price caps are too generous and applaud efforts to lower them even more, he said. The “Apple and Google problem” is mostly a political question but if large players enter the market and exert competitive pressures, that’s good for consumers, he said.