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EU legislation on roaming within the Union – is it still in the interest of consumers?

14 Jun 2017 - 5 min read

In 2007, the European Union Parliament approved legislation to cap voice roaming rates across the entire European Union. This legislation came into effect across all EU member states that same year and was a first and important step to what has become a cornerstone of the EU vision of a single telecommunications market. Viviane Reding, the then European Commissioner for Information Society and Media, drove this initiative with passion and consequently became a focal point within the mobile operator community who were striving to preserve a “don’t rock the boat” status quo. Her drive and willingness to take on the powerful telecommunications community challenged the industry dynamics which ten years later puts consumers on the brink of seeing an EU that by law largely bans retail roaming charges. No roaming from the mountains of Sweden to the boot of Italy, from the beaches of Portugal to the Polish border to Belarus. Who would have thought that just ten years ago?

The Regulation EEC No 717/2007 approved by the EU Commission in 2007 created the foundation that set the boundaries for what mobile operators within the EU can charge their retail customers and each other through the wholesale rates for roaming services. The outspoken EU agenda at that point in time was to revisit this annually with the implicit intent on reducing these charges over time. As a T-Mobile UK retail customer in 2007, I was coughing up £7 (€8.50) per megabyte of data while roaming on the T-Mobile network in Germany. A price of £7 per megabyte for an inter-operator group transaction is of course ridiculous and limiting to the growth prospects within the Union. Even in a pre-iPhone era, this could quickly become very expensive and I was one of the beneficiaries when roaming charges in the following years were reduced annually in time for the European vacation periodIt is indisputable that this gradual reduction in roaming charges has spurred growth, increased competition and reduced bill chock occurrences for consumers across the EU. In fact, a UK subscriber today pays less than 3% of what I paid in 2007 for a megabyte of roaming data within the EU. This all sounds fantastic and, yes, it is! International businesses within the EU are better off, utilization of roaming services have increased dramatically (largely or fully offsetting the reduction introduced by the cap) and EU consumers pay significantly less than their American counterparts for the same mobile services. A good deal for everyone, right?

It is arguable that mobile operators and EU customers collectively in 2016 reached the maximum benefit from this EU mandated cap on roaming charges and here is why. In comparing the argument of when the level of taxation on personal income discourages individuals to strive for a higher wage or to work harder, there is a limit of when the net wholesale revenue for inbound roaming becomes negligible and the will of operators to serve visiting businessmen and beachgoers vanishes. An operator with a net surplus in inbound roaming traffic could now question network investments to serve transient customers that provide little additional revenue for the full year.

During the past few months, we have already seen examples of European operators increasing the base package prices or trying to reduce the included monthly data buckets. These actions are aimed not only at customers who roam extensively but across the board. While “free roaming” sounds attractive at first, most ordinary consumers will come to learn that no-added-charges to post Facebook pictures from a beach in a foreign land a few days per year won’t measure up to the increased charges that will affect the bill everymonth of the year. There is no free lunch. For subscribers who do not roam, there is no upside at all.

So, who will benefit from this? Well, while large operators with a membership in large roaming alliances might slow their revenue losses, the winners will be individual customers with abnormal usage patterns. Take for instance a close relative of mine. He is Swedish but working from a home office in the Mediterranean. He uses a moderate amount of data but extensively makes and receives phone calls during the business day. As he wants to accentuate the appearance of being a part of the Swedish based team, a Swedish mobile number is essential to him. In 2014, an average monthly mobile services bill was close to €600. When I told him that he, with retained consumption patterns, most likely would enjoy a monthly access bill of €30 after June 15th2017, he was more in disbelief than thankful. Fair use policies will most likely not affect him as he regularly travels within Europe, including to Sweden.

Is this fair? Did most European citizens actually request roaming to be completely scrapped? Is there not an accepted understanding that while outrageous roaming fees by your operator is unacceptable, a reasonable charge can be expected while travelling to other countries?

I believe that the introduction of Roam-Like-at-Home in the end will not be of benefit to the European citizens it was designed to protect. A European telecom market with a few large mobile operators, few challenger mobile operators, a restricted market window for virtual operators and less flexibility and drive in offering tailored services will result in increased monthly charges for all citizens and a reduced choice.

In retrospect, I believe that we will find the balance between EU operator roaming revenue and consumer roaming retail pricing achieved in 2016 provided the best and most fair market conditions for EU operators, businesses and EU consumers.
Petter Näslund – VP Product Management.

Originally posted on www.symsoft.com, find out more about Symsoft’s rebrand to Sinch in the press release here.

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