Business Watch: EC roaming review puts heat on operators

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Just when the mobile phone industry thought it was safe from Brussels’ apparatchiks, along comes the European Commission with another review of roaming prices

The latest review is the brainchild of former O2 non-executive director Neelie Kroes, now the EU’s digital agenda commissioner. You may remember that her predecessor, self-styled consumer champion Viviane Reding, imposed a cap on mobile roaming charges within the EU.

But the commission is still not happy with how much punters have to shell out for calls and data while overseas within the 27-nation bloc. So it has launched a public consultation on how to improve competition in roaming.

It says it wants to cut the difference between roaming and national tariffs to zero by 2015. That is a heck of a challenge to the mobile industry, which has already seen its margins trimmed by mobile termination rate cuts imposed by regulators.

The networks haven’t helped themselves in the past by charging absurdly high amounts to unfortunate people who have, for instance, downloaded TV programmes over their networks while abroad.

But they have already had to honour rules which have meant travellers’ data-roaming bills have been automatically limited since July to £42 per month – unless they chose higher or lower limits.

They will get a say: the Commission said it was seeking the views of consumers and businesses on the matter.

But the terms of reference look threatening as they are basically centred on how to reach the 2015 target and improve services.

Since July a 0.39 euro cents per minute limit (excluding VAT) has been imposed on the cost of making a roaming voice call, while receiving a call while travelling has been limited to a 0.15 euro cents per minute maximum.

But Kroes is unhappy, saying that network operators have generally set roaming prices close to the price caps, which she says means they are still making unjustifiably high margins on roaming.

“We need to address the source of current problems, namely a lack of competition, and to find a durable solution. But we are keeping an open mind on exactly what solution would work,” she said in a statement.

It will be interesting to see how the networks react, particularly Telefonica and Vodafone, which were among the operators that took the European Commission to court over its regulatory manoeuvres but lost.

IHS Global Insight’s Peter Boyland cautions that industry complaints may once again fall on deaf ears.

“Senior telecommunications executives warn that excessive regulation could make large-scale investments less likely. The EU is currently pushing through the latest round of mobile termination rate cuts — drawing the usual protest from operators, which have variously threatened to slash investment.

“However, as mobile roaming tariffs and MTRs remain artificially high, further cuts are inevitable; the operators will have fair warning to absorb this revenue hit.”

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