The confused international roaming saga in the EU (and the Finnish solution, hopefully)

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UPDATE: on November 29, 2016 the ITRE committee of the European Parliament endorsed the proposal of MEP Kampala-Natri, with even lower prices for data.

Roaming surcharges will be definitively and completely abolished by mid-2017, according to a new proposal to be announced today by the European Commission, subject to an agreement to be found with Member States. The latter fear that full-end of roaming surcharges will allow any mobile operator to commercialize SIM cards everywhere in Europe (so-called “permanent roaming”) and they are reluctant to that, unless specific measures are established to avoid such cross-border competition. Remarkably, the Commission itself was also trying to avoid permanent roaming until yesterday, but then a corto-circuito happened amongst the wise minds of the Berlaymont (see below).

The end of roaming surcharges may sound good for European citizens, but the proposal at stake may be so disruptive for the European mobile market that many mobile operators (especially small mobile operators and MVNOs) may not be able to continue to provide roaming services abroad because they may incur unrecoverable losses (as explained below). As a consequence of that, most of these operators may be forced to stop providing roaming abroad, or they may decide to increase domestic retail tariffs. As said, most affected operators may be small mobile operators or MVNOs, that is to say the players that traditionally have been providing consumers with most competitive and innovative offers. It is a strange contrappasso that such operators may have to leave the market because of a regulation about the end international roaming, even if they never made profits with such surcharges (unlike big and dominant mobile operators).

The reason for this paradox is that mobile operators have to buy access from foreign networks when providing roaming services to their subscribers traveling abroad (so-called wholesale roaming access). However, such wholesale roaming tariffs are normally much higher than real costs and are in particular higher (by multiples) than domestic wholesale tariffs (the ones paid to provide domestic services in case of MVNO not having a mobile network). This lack of alignment between domestic and roaming wholesale costs becomes disruptive once roaming surcharges disappear by virtue of law and mobile operators have to guarantee the same retail tariff to their customers, irrespective if they are in the home country or abroad.

The only possibility to avoid this disaster would be to align domestic and roaming wholesale costs. The latter are currently capped by Regulation 531/2012, however the current caps are enormously higher than market reality. This is particularly relevant for data/internet data cap, since the current regulated wholesale roaming cap is Euro 50 for a Gigabyte. Last June the European Commission proposed to reduce such price to Euro 8,5 per Gigabyte– a price which however is still much higher than what consumers normally pay for domestic mobile services.

The Commission’s proposal is currently debated between the Parliament and Council. The Assembly’s rapporteur Miapetra Kumpula-Natri (a Finnish socialist MEP) yesterday September 20, 2016 tabled a proposal (still not available online) which honestly goes in the direction of fixing the problem, since she proposes 5 Euro per Gigabyte with a glide path bringing the roaming wholesale cap to 1 euro per Gigabyte in 2021, with a review starting in 2019. If this proposal will be agreed by others MEPs and by the Council, the end of roaming in Europe will not affect competition and consumers will get a double benefit: end of roaming surcharges and still a vibrant competitive mobile market. Kudos to Miapetra if she succeeds.

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To explain the full story, one should recall that at beginning of September the European Commission proposed to oblige mobile operators to provide customers with “just” a minimum free-roaming traffic (so called “fair usage”) amounting to 90 days a year. This limitation was due to the high level of wholesale roaming cap (the mentioned 50 Euro, to be reduced to 8,5, per Gigabyte). Nevertheless, this proposal basically covered the needs of 99% of the European citizens, given that, according to official statistics, Europeans travel abroad 12 days a year on average. Thus, the excluded people (that 1% of European people traveling abroad more than 3 months a year) were basically businessmen, rock stars, fashion models and circus staff. Nevertheless, some politicians and consumers organizations complained for the 90 days fair use rules, probably more for a matter of principle than for real understanding of the matter.

The competent EU Commissioners, Ansip and Oettinger, have been defending the ratio of the fair use rule despite populist critics. However, on September 9 the Commission suddenly withdrew the proposal and only later we learned that the action was required by President Juncker. Speculations suggested that he was fearing to get some embarrassment during the imminent State of the Union speech in Strasbourg,  or maybe he thought that by doing so he could get a personal political recognition for the end of roaming, despite of the work done by his colleagues Ansip and Oettinger so far. Whatever the political explanation may be, Juncker promised a system enabling EU citizens/consumers to “travel around in Europe […] and feel at home everywhere in Europe thanks to the new roaming rules”. Basically, Juncker was promising permanent roaming, despite the fact the the European Commission have been working hard for months in order to avoid such result.

Remarkably, Juncker also affirmed that Erasums students, who may be abroad for a semester, would not get advantage of the 90-days fair use. Probably he did not know that Erasmus students do not suffer for roaming surcharges, because they are used to get a Sim Card in the country where they go to study for various reasons: being called/call new friends at local tariffs; having a customer relationship with a local mobile operator (to manage subscriptions, charging credit, getting a new Sim Card in case of lost or disfunction; accessing the customer care); benefiting of number portability; and so on. Regrettably, nobody informed Mr. Juncker about that.

One thought on “The confused international roaming saga in the EU (and the Finnish solution, hopefully)

    […] more fighting and one should recognize that the rapporteur, the Finnish Miapetra Kumpula-Natri, has been trying to propose more competitive wholesale caps (starting at 4 Euro per Giga in 2017 and down to one […]

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