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EU Flexes Roaming Regulation: Horse Trading Set to Continue| July 12, 2006 | Wireless Services - Europe
| Competitive Intelligence Report Analyst: Michael Ransom
On July 12th the EU published proposed regulations to cap the high cost of using mobiles when travelling within the EU. The regulations seek to cap the wholesale charges that mobile phone operators charge each other for carrying calls from foreign networks. To ensure that the benefits of the new regulations reach consumers, the EU also proposes a price cap at retail level. Operators will be allowed to add to their wholesale cost a retail mark-up of up to 30%. Finally, mobile operators will be required to provide customers with full information on applicable roaming charges when subscriptions are taken out and to update consumers regularly about these charges. Provided that the regulations gain approval they could come into effect by summer 2007. Analytical Summary • Current Perspective: Positive on the EU’s proposal for a cap on wholesale and retail roaming charges since these will have a direct impact on reducing prices for consumers and business customers using their mobile phone whilst travelling. However these proposals will have a negative impact on mobile operators since these caps seek to limit roaming pricing and competition, which will have a direct impact on the bottom line. • Vendor Importance: High to the EU and mobile operators since the ‘roaming rip-off’ is now centre stage. With the EU’s proposals looking to cap both wholesale and retail prices, mobile operators will have to lobby hard to gain more favourable terms whilst offering the EU some form of compromise. For the EU, seeking to limit roaming charges will make it popular with business users and gain the institution some much needed creditability with consumers. • Market Impact: High on the wireless market in Europe since roaming charges are now a high-profile issue and whatever the outcome of the proposed regulation, prices still have some way to fall. Whilst the EU chooses to concentrate on the consumer benefits (nice timing; just ahead of the summer holiday period), in the overall picture, it is business customers who will gain more benefit in the longer term. Recommended Competitor Actions • Operators focused on their local market, including MVNOs should seek to capitalise on the influx of holidaying consumers and promote their own SIM cards offering a local service whilst abroad. Operators should seek agreements with hotels and resorts to include their SIM cards as part of the consumer welcome package on arrival. • MVNOs should seek to sidestep the roaming issue by offering no-frills national tariffs plus partnerships with local operators abroad to give their customers local SIM cards when they travel. This should be promoted as offering consumers the best of both worlds – low prices at home and a partnership with a low cost operator in specific countries whilst travelling. • End users should ensure that that are already taking advantage of the lower roaming packages on offer such as Vodafone’s Passport scheme. Whilst there is sometime to wait until the dust settles on the EU proposals, end users can make real savings now. • Consumers should consider purchasing a local SIM card when on holiday to ensure that they can make low priced local calls. Consumers should also heed the EU advice on understanding roaming charges before they travel. • Consumers should be aware that these regulatory moves by the EU only cover the market for voice services. SMS, MMS and data service remain outside of any proposed regulation, thus leaving consumers open to higher charges when travelling. Wireless Services - Europe
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