Commission still plans to regulate roaming despite operators' price cuts

Jeremy Green, Principal Analyst Enterprise Mobility

An agreement by six European mobile operators to cut their wholesale roaming tariffs - the rates that the operators charge each other for allowing visiting customers to use their networks - seems to have done little to satiate the European Commission's appetite for regulatory intervention.

The six operators - T-Mobile, Orange, Telecom Italia, Wind, TeliaSonera and Telenor - announced on 1 June that they would all be cutting wholesale roaming tariffs to €0.45 per minute. Delightfully, the reductions are not due to come into force until October, presumably because that is how long it will take the operators to change the relevant entries in their rating tables.

The proposed future wholesale price of €0.45 is coincidentally the same as that announced by Vodafone early in May. Vodafone's wholesale price reductions are intended to come into force no later than April 2007. Hutchison Whampoa, parent of several 3G operators around the world, has called for a reduction of wholesale tariffs to €0.25. Given its limited coverage, the group is almost certainly a net buyer of wholesale roaming services.

The six operators are to create an 'independent panel', to monitor the impact of the wholesale price cuts on retail roaming tariffs - the rates that end-customers actually pay to their home operators for roaming usage. According to a T-Mobile spokesperson, the multi-operator initiative was organised by the GSM Association, which hired consulting firm AT Kearney for the purpose.

The move seems to have cut little ice with the European Commission. A spokesperson for the Commission said that the price cuts merely demonstrated that the operators' earlier claims that there was no scope for reductions were wrong. Commissioner Viviane Reding insists that she will press ahead with plans to regulate retail roaming rates; Reding has said that roaming should be no more expensive than domestic calls, a principle vigorously opposed by mobile operators.

The European Consumers' Organisation, a consortium of 39 lobby groups in Brussels, reiterated its call for regulation, arguing that the industry had demonstrated that it would not regulate itself.

Jeremy Green is a principal analyst specialising in enterprise mobility. His specific areas of expertise include fixed-mobile convergence, enterprise services, international roaming, and new sources of revenues from voice services.