EU discloses plans for regulation on international roaming

Stefano Nicoletti, Senior Analyst

Viviane Reding, the EU Commissioner for Information Society and Media, unveiled details of the EU's new roaming regulation yesterday, suggesting a radical intervention that will drive down roaming fees substantially.

In a press release published in the afternoon, the EC has disclosed plans to introduce cost orientation on wholesale charging and retail price controls to ensure that cost reductions are passed on to consumers, and it aims to remove the roaming fee paid while receiving a call abroad. This regulation could also introduce a new 'home-pricing principle', where as an EU mobile user abroad you pay the same call charges you do at home. You either pay a local call rate, if you call within that country, or a 'normal' international call rate. However, more clarification will be required on exactly what 'normal' means.

International roaming regulation has been a long-running saga. It has been discussed by regulators for many years, but no concrete actions have yet been enforced, meaning that we are still paying hefty charges when travelling abroad.

Since the so-called market 17 (wholesale international roaming) was introduced in the list of regulated markets in the EU's 2002 recommendations, the national regulatory authorities (NRAs) have left it alone. NRAs always claimed that this was an issue to be tackled at EU-wide level, as regulating wholesale roaming in your country means making tourists and visitors to your country better off, but does nothing for your citizens while they are travelling abroad.

The subsequent European Regulatory Group questionnaire aimed to gather information on charges, and was followed by the launch of a website on roaming fees that was intended to improve transparency, but did not substantially change the situation. NRAs still remained fairly inactive at national level. One of the few active regulatory bodies in the area was the French regulator, ARCEP. Back in January it published a market analysis consultation paper stating that wholesale charges for roaming were estimated to be three to four times the actual costs. It found that the pan-European alliances and group-based purchasing were evidence of joint dominance in the French market, and could be examined under Article 81 of the EU treaty. ARCEP also called for direct regulation from the EU, and Viviane Reding seems to have received that message.

Retail charge controls are out of the scope of the current EU regulatory framework directives, and are a very intrusive way of regulating. To our knowledge, mobile retail rates are not regulated anywhere in the world, with the exception of Korea, which is traditionally a strongly regulated economy. Therefore, if they are going to be introduced, we believe they should be used as a temporary measure and withdrawn once the market shows more competitive behaviour. In the end, the best way to serve EU citizens is to make sure that market forces work effectively, rather then imposing intrusive regulation.

It's a heavy-handed regulatory approach overall, which reflects the fact that the EU will not delay its intervention any longer. The timescale has also been tightened: a short consultation period until April and an approval process in June. The regulation will have to be approved by the Parliament and the Council of Ministers to become immediately effective. However, there could be some slack in the implementation at national level.

We expect the industry to react strongly and challenge this decision, which could take away pretty much all their roaming revenues, but it now seems that everything has been decided, so it might be too late!

Stefano is the Service Manager for the Regulation@Ovum advisory service. He is responsible for managing this service, which provides interconnect and regulation advice to more than 40 clients around the world. Stefano also contributes to projects in the area of economic regulation and interconnection.