Mobile operators have been accused of operating a cartel over roaming prices. “There is a reluctance to compete resulting in higher charges to users,” said Ewan Sutherland, executive director of the International Telecoms Users Group in Belgium
Looking particularly at call termination charges, Sutherland said, “The roaming market looks very much like a cartel. The operators are ripping off each others’ customers. It is a wonderful scam. And there is evidence of price collusion.”
– Mobile Europe, June, 2003
The above story, the eagle-eyed will have noticed, is over three years old. So one thing is for sure, arguments about roaming pricing are not new.
But events reached a very public head with the recent issue of revised proposals from EU Commissioner responsible for information society and media, Vivian Reding.
Commissioner Reding:
Originally: Wanted to mandate retail price levels, abolishing the premium for roaming entirely, making the cost of a call whilst roaming within the EU the same as on a home network. Also wanted to stop the “called party pays” model, for those who receive calls when they are roaming.
Now: Backtracked, after consultation and industry uproar, to a capped wholesale price — which it says should start from the same level as operators charge domestically — and a capped retail price, with a maximum mark up of 30% on the wholesale price. This retail mark-up would apply to calls made and received while roaming. For calls received, this retail cap would become effective on the day of the entry into force of the new EU regulation. For calls made, the retail cap would take effect automatically after a final transition phase of 6 months.
She says: “For years, mobile roaming charges have remained at unjustifiably high levels, in spite of repeated warnings to the industry. This is why Europe needs to act now.”
The official industry response: GSMA
Then: Was miffed at the short consultation period allowed and insisted that industry competition was the best way to deliver innovation in roaming services and pricing. It said that the cost of roaming had dropped by 8% in the previous year independent of regulation, and argued that proposals to mandate prices to domestic levels took no account of the complexity of delivering a mobile call.
Now: Despite the changes, still thinks that regulation is unnecessary, and the markets will get the job done, pointing to price cuts by some operators reducing roaming prices by 40% in some cases. The price caps will stifle innovation and the ability to tailor specific packages.
They say: “Although the European Commission has dropped its unworkable ‘home pricing principle’, its new proposals still amount to a straitjacket that will stifle innovation, dampen competition and ultimately harm consumers,” said Rob Conway, CEO of the GSMA. “The Commission’s plans would represent a far-reaching and unprecedented intervention in a market, which is clearly delivering for its customers.”
VoIP community
Several not surprisingly took the opportunity to make the case for VoIP liberating consumers from the evil clutches of the mobile operators.
Typical was Kerry Ritz, managing director of Vonage, who said, “The fact that the European Commission is proposing capping the amount mobile operators can charge for European roaming can only be a good thing for the consumer. However, regulation ultimately isn’t going to be responsible for providing consumers with cheaper ways to communicate, it will be choice that leads the way. Innovative services and technologies, such as VoIP and WiFi phones, along with other communication developments will give customers a greater choice of low cost ways to communicate. It is these drivers that will ultimately put the pressure on mobile operators to bring their prices down.”
Roaming services provider
Continuing the theme that it will be innovation and new services that will enhance roaming usage, providers of cheap local SIMs for those roaming also took the chance to put the boot in. Peter Whent, Managing Director, Oneroam, said, “The networks claim that market forces will prevail and drive force prices down, but rather than regulate themselves on this issue, the networks have sought, over the last six months, to muddy the waters further with high profile announcements about cheaper roaming costs. As proof of how ineffective this has been, Oneroam has seen unprecedented growth during this period as consumers look for an alternative to paying roaming costs which remain extortionate.
“In the absence of self-regulation or evidence of market forces righting the ‘roaming rip off’, legislation is the only way. The EU initiative should be applauded.”