Current measures not enough to counter “roaming rip-offs” and “outrageous margins”
Neelie Kroes, European Commission Vice President for the Digital Agenda has outlined plans for “profound structural changes” to the European roaming market. “Count your blessings, because this is a breakthrough,” Kroes said.
Clearly frustrated at the lack of progress in the mobile industry in eliminating what she termed “roaming rip offs”, Kroes said that the Commission has been forced to move beyond price caps to focus on fostering increasing competition in the market, by making “profound structural changes”.
The chief proposal is that by 1 July 2014, consumers will be able to choose a different roaming contract from their domestic contract, without changing their number or SIM.
Kroes said that the proposed changes, which need to be agreed by the European Council and Parliament, are the “most effective and sustainable way of reaching the Digital Agenda target of assuring that the difference between roaming and national tariffs should approach zero by 2015.”
The EC thinks the proposals will make it easier for alternative providers to offer competitive services, as well as increase opportunities for existing operators to compete in other markets. She said the proposal would give mobile operators the right to use other operators’ networks in other Member States at regulated wholesale prices, and so encourage more operators to compete on the roaming market.
The EC is also proposing to privide a “safety net” to consumers while the structural changes take effect; Kroes proposed renewed retail price caps, so that by 1 July 2014, roaming consumers would pay no more than 24 cents per minute to make a call, a maximum 10 cents per minute to receive a call, maximum 10 cents to send a text message and maximum 50 cents per Megabyte (MB) to download data or browse the Internet whilst travelling abroad (charged per Kilobyte used).
These caps would remain in place until 2016, by when Kroes thinks the enhanced competitive structure of the industry will have taken effect. Caps on wholesale prices between operators for all roaming services will remain until 2022, under the proposals.
Kroes added that the market changes would also serve as a “wake up call to national regulators” and would make them “rethink what is going on.”
“We have examined the roaming market very closely, and I feel sorry to say we have been forced to conclude that the market has not moved on. Competition is still very weak, customers still get a raw deal when they cross borders, operators still enjoy outrageous margins, particularly on data downloads,” Kroes said.
“The measures so far have been a been temporary stop gap and not a durable solution. The latest evidence is that operators are still charging close to the maximum and consumers are not getting the benefit of wholesale price caps. Retail price caps have become price floors, and operators have no incentive to offer prices below the regulated caps.”