Both new and existing telecoms operators have expressed caution about the European Union’s plans to extend price caps on European roaming charges.
The current caps run out at the end of June 2012, but both the European Commission and the Parliament are looking at plans to put more regulation in place. “We are in a hurry,” Digital Agenda Commissioner Neelie Kroes told the European Telecoms Council last week.
During the summer, Kroes proposed two important changes to the European market for mobile-phone roaming services — decoupling and virtual operators.
Decoupling allows customers to switch operators when they are abroad, allowing them to choose the best deal in any given country without having to change SIM cards.
Virtual operators, generally new entrants to the market, do not have a network of their own and rely on established national telecoms firms, which have developed their networks over the years. Without decoupling, it would be impossible for them to enter the roaming market.
The Parliament’s Industry Research and Energy (ITRE) Committee will vote on the proposals in February. But the GSM Association, which represents nearly 800 mobile operators in more than 220 countries, expressed concern about the caps being considered.
“We share the European Commission’s view that stimulating competition with a combination of structural measures and safeguard price caps will be an effective way of reaching the political objectives to lower roaming prices. The proposal to decouple roaming from domestic markets can stimulate further competition and exert downward pressure on prices if retail price caps are set at safeguard levels that incentivize market entry rather than discourage it. However we are concerned that the level of retail price caps being considered in the draft ITRE report will compromise the effectiveness of these competition-enhancing structural measures,” explained Martin Whitehead, director of GSMA Europe.
Besides placing limits on prices, both retail and wholesale (what operators charge each other), the Commission will be looking at more structural changes to bring greater competitive pressure into play.
The European Competitive Telecommunications Association (ECTA) which represents new-entrant telecoms operators would prefer to see a simpler option included in the roaming regulation to reduce roaming charges.
“Competitive mobile operators suggest the voluntary reduction of roaming charges as an alternative to decoupling roaming services from domestic services. Those operators that are willing to offer roaming prices significantly close to domestic tariffs — a concept to be defined by BEREC — would not have to implement the complex decoupling measures, but their customers would benefit from very low roaming charges from July 2014,” said ECTA Director of Regulatory Affairs Erzsebet Fitori.
But it is not just the operators that are concerned about the legislative proposals. The Telecoms Council too, gave a measured response. Although most members welcomed the proposal, they also wanted more clarification about the exact scope of the wholesale access obligation, and inquired about the technical and practical feasibility of decoupling domestic mobile services and international roaming services. The new roaming regulation “should not include technical solutions but only general principles,” the ministers said.
There was also some concern about the level of the proposed price caps and the margin of the price caps at wholesale and retail level. However, Kroes has said that retail caps should be kept only as a safety net. But the Commission wants the difference between roaming and national tariffs to approach zero by 2015.
The first roaming regulation, adopted in June 2007, covered only voice traffic. In June 2009, it was extended to include SMS and wholesale-level data roaming services too. The new proposal, which would run until June 30, 2022, will most likely be put before the European Parliament in early 2012 ahead of the Parliament’s plenary session in April.
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