The end of international roaming, the beginning for the Single Market?

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Immagine

Today Commissioner Kroes announced a radical reform of international roaming in the European Union. The Dutsch Commissioner, leading the European Directorate for the Digital Agenda, proposed a plan whereby international roaming tariffs should disappear by 2014. Although the details of the proposal are still unknown, the message is clear: according to the European Commission, the mobile tariffs should not differentiate any longer between domestic and roaming services. Users should be able to rely on the same tariff within the European Union, irrespective of the country where they are.

Should this plan work out, it would result in a real disruptive intervention of the European regulator into the structure of the European market, currently fragmented country by country. To better explain: by virtue of this reform, any mobile operator in Europe will become able to reach the entire European customerbase. Thus, an Italian operator (like TIM or Wind) will be able to serve more then 300 million European customers, instead of 60 million of Italians. The competition will become fierce: all European mobile operators, almost 100, will start to compete against each other. This scenario will bring to a rapid consolidation of the market, and only a dozen of paneuropean operators will likely survive, while others will be merged or bought. The consolidation in the mobile sector will likely facilitate the same process in the fixed sector. This is exactly the virtous circle the European Commission is looking for to create a unified telecom market.

The benefit for the consumers and the market will be evident: mobile users will finally have the experience of a true single market (same tariffs everywhere, without additionation charges abroad or bill-shocks) and they probably pay cheaper bills, because the increased competition will reduce prices. The industry will pass through a fondamental reconstruction: the consolidation process will finally create European champions operating in a integrated European market similar to US and China for value and number of customers.

If everything is so good, where is the trick?

Firstly, mobile operators they do not like this plan, they will oppose it with all means. They would rather prefer to continue with the current system, where competition is fragmented across various national markets, with small oligopolies of 3 or 4 operators (much better than a market with 100 competitors!). This market structure permits to keep domestic prices relatively high and also to charge very profitable roaming tariffs to travelling customers.

Secondly, Kroes’s disruptive plan is not so easy to implement. On one side, an effective and harmonised price regulation should be mandate to permit MNOs and MVNO to access mobile networks abroad and everywhere in Europe; on the other side, retail and consumers protection rules should be unified throughout Europe, and the creation of a European regulator may be necessary.

Thirdly: one should decide what to do with the current roaming regulation (Regulation 531/2012) which is still in course of implementation, as some specific rules are deemed to become effective only in 2014. The coexistence between the new regime and the current regulation will be problematic and probably the former should prevail. A decision should be taken rapidly because the implementation of Regulation 531/2012 may be costly and therefore a waste of money should be avoided in time. In any case, admitting the the current international roaming regime is useless (even before to complete implementation) will be a bizarre story.

To sum up: the proposal of Commissioner Kroes may be historical and disruptive, however the concrete implementation will be really hard. She will find some allies with the European Parliament, the consumers and new entrants operators like MVNOs. But incumbents operators like Telecom Italia, Deutsche Telekom, Orange and Telefonica will fight against, while Member States will remain quite skeptical. Thus, Commissioner Kroes is still in time to announce the plan, likely in October 2013, however it is uncertain whether she will have the time to enforce it in practice, since her mandate expires in 2014.

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