By July 2014, mobile phone and data users traveling within the
European Union could see their roaming charges capped at 24 cents per
minute for outbound calls and 50 cents per megabyte transmitted, not
including sales tax.
That would be down from today's 35-cents-per minute cap for outbound
calls and a currently non-existent cap for data, the office of Neelie
Kroes, European Vice President for the Digital Agenda, announced
Wednesday.
The proposal is intended to spur market competition for roaming
charges and help meet the EU's goal that "differences between roaming
and national telecom tariffs should approach zero by 2015," according to
Kroes' office.
Consumers would also gain the right to buy roaming packages
separately from their domestic mobile phone contracts, and mobile
operators would be entitled to buy network capacity in other nations at
regulated wholesale prices.
If the proposal is adopted by the European Parliament and the EU's
Council of Ministers, it will become a binding regulation in all EU
nations. The current EU roaming regulation expires in June 2012.
Some customers fear high bills and avoid roaming charges altogether
"The proposal tackles the root cause of the problem - the lack of
competition on roaming markets - by giving customers more choice and by
giving alternative operators easier access to the roaming market," Kroes
said in a statement. "It would also immediately bring down prices for
data roaming, where operators currently enjoy outrageous profit
margins."
Lobbying against regulation
Analysts contacted by Deutsche Welle say revenues collected through
roaming fees vary between companies, but that they are generally
accepted to be 10 percent or less of total revenue. According to the
European Commission, the roaming market generated 5 billion euros ($7
billion) in revenues during 2009 - about 4 percent of the EU's mobile
market.
Germany-based Emma Mohr-McClune, research director with Current
Analysis, said mobile operators "lobby hard against regulation" and are
unified under the industry association GSMA.
"The GSMA has always taken the stance that mobile regulation on
prices, wholesale or retail, is unnecessary, and possibly
counter-productive to the self-regulation which Europe's high level of
competition ensures," she told Deutsche Welle.
"Some of the European Commissioner's arguments for data roaming
retail price regulation have started to sound like consumer
protectionism; that's not actually what the digital agenda commission is
all about," she added.
LTE (4G) projects are already under way in EuropeHowever,
Mohr-McClune pointed out that new regulations are unlikely to have an
impact on investment into mobile networks as projects for
next-generation LTE (4G) networks are already under contract and "the
ongoing trend towards shared networks within markets is anyway changing
the economics of network upgrades."
'Virtual' operators covered
The new regulations, which would grant wholesale-price access to
foreign networks, would also apply to "mobile virtual network operators"
(MVNOs), which maintain no infrastructure of their own, relying instead
on other companies' networks.
Analysts say MVNOs are likely to play an increasing role in the
mobile telecommunications and data market, as they can partner with
operators and access niche markets like youth or immigrant populations.
According to Paolo Pescatore, an analyst with CCS Insight in London,
carriers "don't necessarily see their [MVNO] partners as competitors,
but they see them as an opportunity to actually grow an audience and
traffic as well."
"I think the approach today for many operators is to work with
specific brands to focus on specific segments," he told Deutsche Welle.
"That seems to be a very sensible strategy. You're obviously not
diluting your brand - you're focusing on the need of a specific
audience."
German mobile carrier E-plus, for instance, operates Ay Yildiz, which
offers international calling packages for the Turkish diaspora in
Germany. Ay Yildiz is not an MVNO, however, but rather a wholly-owned
subsidiary of E-plus.
Current Analysis' Mohr-McClune said MVNOs are increasingly being used to fulfil functions similar to Ay Yildiz.
The MVNO market can tap into niche groups like immigrants and youth"It
has taken some years for operators to fully recognize the MVNO market
as a valuable channel proliferation boost," she said. "Of course the
best MVNO partner is one which targets a niche audience which does not
fall directly within the core brand's target segment, or is difficult or
expensive for the core brand to target directly."
Less fear of bill shock
According to Katja Ruud, a Sweden-based analyst with Gartner
Research, roaming revenues have "been under pressure for some time" in
part because wary consumers have avoided using roaming minutes or data
at all.
"The loss of revenue... may be addressed by operators who now try to
encourage usage by those consumers who have avoided data roaming
altogether or limited use in order to avoid bill shock," Ruud told
Deutsche Welle. "Lower prices may lead to mobile data use or increased
mobile data use by those subscribers who have not used it at all
before."
Author: Gerhard Schneibel
Editor: Nicole Goebel
