It’s today’s news that the European Commission has withdrawn, upon request of the President’s office, the proposed measure implementing the roaming phasing-out prescribed by the EU Regulation 2015/2120 which amended the Roaming Regulation 531/2012. The draft measure imposed a minimum obligation of 90 days (per year) to abolish roaming surcharges. Beyond that limit, mobile operators may (it’s their discretion) confirm to abolish roaming surcharges or continue to apply them, although within some caps (4 cents for voice calls and 0,85 cents for Megabyte). This minimum obligation, called also as “fair usage” have attracted criticism by politicians and consumers claiming that the end of roaming surcharges is not achieved yet in Europe.
Before going into details, one should make a few substantial precisions:
– the legal fair usage provision is set by in the Roaming Regulation 531/2012 (art. 6b) as amended by Regulation 2120/2015, thus the withdrawn measure (a subordinated legislative act) is just implementing a principle contained in the primary legislation;
– the Commission has always stated that roaming surcharges would have never been completely abolished, because the Commission itself wanted to avoid the so-called “permanent roaming”, that is to say a situation whereby consumers may roam abroad indefinitely, with the result that he/she could buy a sim card in a country and use it abroad without limitation of traffic of time. In such a scenario, a consumer could therefore choose, as mobile provider, any mobile operator in the EU, not just the ones of his country of residence. This option is considered by the EU, believe it or not, an abuse (see art. 3, par. 6, of Regulation 531/2012, as amended by Regulation 2120/2015);
– Commission and Parliament were very well aware of the above. Therefore, it is a bit curious that now they are complaining or regretting. My impression is that this matter may be used to get political visibility, despite the facts that correct decisions could have been taken earlier. The intervention of the Junker Cabinet is not accidental: the head of cabinet of the president is Martin Selmayr who, while serving Commissioner Reding in the mandate 2004-2008, proposed the end of roaming and builded his career on it;
– It is true, however, that in the past some EU Commissioners (especially Nellie Kroes, the predecessors of the current Digital Agenda Commissioner) and politicians have been publicly emphasizing so much their contribution to the roaming reform that they generated also the impression in the public opinion that the roaming surcharges would finish soon and completely. It was nor false neither completely true , but this is politics, folk!
The most puzzling part of this story is that people may think that the end of roaming is just a matter of political will and common sense, that roaming surcharges could finish by just agreeing and writing down a ban. The reality is different, it is not a matter of shaking hands: roaming surcharges exist because of market structures (and costs), therefore what the legislator can and should do is intervening upon such market structures in order to prevent the conditions for roaming surcharges to exist.
To be more clear: if mobile services have to be priced at the same tariffs without distinction at home (domestic services) and abroad (roaming services), also the underlining costs should be aligned. In fact, if the cost of productions of one minute of domestic voice is 1 Eurocent, in order to maintain that price abroad (as roaming services) also the costs abroad should be more or less the same. The “cost abroad” is the so called “wholesale roaming access”, that is to say the tariff the mobile operators pay when buy access to foreign mobile networks to permit their customers to roam over there. This is unavoidable, because no mobile operator, neither a large corporation like Vodafone, own 28 mobile networks throughout Europe.
But what happens instead? The reality is that domestic and roaming access costs are currently non-aligned, with roaming costs to be sometimes 10 or 15 times multiples of domestic costs! Under such conditions, it is not possible to abolish roaming surcharges: how could a mobile operator replicate abroad a domestic offer when the costs abroad are 10 or 15 tome higher? It would go under-costs.
Why this tremendous costs discrepancy exists? This is an historical sinn of dominant mobile operators (mainly Telefonica, DT, Telecom Italia, Orange and Vodafone, but not only) which have been using roaming access costs as a barrier against foreign operators trying to attack their domestic markets. If roaming access costs would be lower, a small mobile or MVNO operator from abroad could sell Sim Cards to the domestic market competing with local offers. This scenario is called “permanent roaming”: in other words, a customers could buy a Sim Card form whoever mobile operator in the EU and roam everywhere throughout the 28-countries Union. Big mobile operators want to avoid this scenario because they prefer to defend isolated and separated domestic mobile markets, where “competition” is limited by only 3 or 4 mobile operators holding the networks (due to scarcity of spectrum).
What is doing the European Commission against this? It’s a bit schizophrenic, to tell the true. One one side, the Commission is supporting the end of roaming surcharges, but on the other side it does not take the right measure to align domestic and roaming wholesale costs. In fact, in June 2016 the European Commission tabled a proposal for reducing wholesale costs which is clear insufficient to achieve the scope. To make an example, the roaming wholesale cap for Internet is 0,85 Eurocent per Megabyte, a figure which is much higher than retail domestic prices. Also the wholesale costs for voice (4 Eurocent) is disproportionated. This disgraced proposal is now in the hands of Parliament and Council which have the opportunity to take the right technical decision, i.e. lowering the wholesale roaming costs down to the level of domestic ones, rather than continuing with populist declarations and initiatives.