international roaming

Will Brexit put to end free mobile roaming between Uk and EU?

Schermata 2020-12-29 alle 12.25.11

The answer is: likely yes, but not automatically or immediately.

The current arrangement between UK and EU, namely the Trade and Cooperation Agreement, provides at Article SERVIN.5.36.4 that:

Nothing in this Article shall require a Party to regulate rates or conditions for international mobile roaming services”.

In other words, the current European roaming regulation (namely Regulation 531/2012, as amended by the Regulation 2015/2120 and Regulation 2017/920) which has imposed the end of retail roaming surcharges within the EU as from June 15, 2017, is not going to apply any longer between UK and EU. As a result, UK mobile operators will not be obliged to continue to provide their customer with RLAH (roaming like at home) when they are travelling in the EU; and the same will apply to EU mobile operators with respect to their customers roaming in the UK.

The above does not mean that retail roaming tariffs will immediately jump up to the crazy levels of some years ago. More likely, for the time being mobile operators will likely decide to keep their tariffs as they are, mainly because the European Parliament still has to ratify the Trade and Cooperation Agreement, and this will be done only in March 2021. Since the roaming matter has been always very sensitive for politicians, one could not exclude that something may be proposed with respect to roaming. Therefore, as long as the European Parliament’s ratification does not occur, dramatic change of roaming tariffs are unlikely.

Once the Trade and Cooperation Agreement is ratified and with its definitive entry into force, anything can happen, since mobile operators would be free to apply the rates they want. However, an automatic or immediate rebound of roaming charges between the EU and the UK cannot is not foreseeable for the moment. More likely, mobile operators will keep the current rates, so as not to anger users. Subsequently, changes in roaming tariffs could take place on the basis of competitive market developments.

One should not forget that for most operators the fixation of roaming tariffs depends on bilateral negotiations about access to networks. The European roaming rules imposed RLAH for customers, not for operators, which continue to (reciprocally) pay the use of foreign networks when their customers are roaming abroad. The European roaming rules imposed some caps upon these wholesale tariffs, with the aim to prevent the rise of wholesale price which would jeopardise the RLAH system.

The mechanism has worked only to a certain extent, because the wholesale caps decided by the European Union are still quite high if you compare them with normal retail tariffs: to make an example, the current (2020) wholesale cap for one Gigabyte is 3,50 Euro, a price which is expected to go down to Euro 3,00/Gygabyte in 2021. Such wholesale tariffs largely exceed the practice in the retail market, where users can use Internet bundle where the average price for Gigabyte is 20 Eurocent. As a result, some European mobile operators (especially the small ones and the MVNOs) are risking to lose money when their customers roam abroad.

This mechanism could now explode with Brexit, because not only the European RLAH obligation will disappear, but also the mandatory wholesale caps. As a result, domestic mobile operators could therefore charge foreign mobiles, asking for access for their travelling customers, with tariffs which are much higher than the current ones. If such scenario occurs, it will be impossible for many mobile operators to continue to offer RLAH between EU and UK.

The above scenario is not unavoidable and could mitigated by some competition emerging in the wholesale roaming market, but this is still to be proved. Fact is, the data collected so far show that such competition is still limited and weak. Although regulated caps have been declining (down from 7.7 Euro Gigabyte in 2017), the same decline of wholesale charges did not occur in the market, where important discrepancies appeared. While Mobile Network Operators (MNOs) were able to negotiate bilaterally for their wholesale roaming (the average wholesale roaming charge commercially agreed for data was €2.5/GB in 2018 and €1.74/GB in 2019 for MNOs), the wholesale prices obtained by MVNO were close to or at the level of the wholesale roaming caps (e.g. 5.1€/GB in 2018 and €3.9/GB in 2019). This means that MVNOs paid at least twice as much as what MNOs were able to agree bilaterally, because MNOs have the ability to trade traffic between themselves and MVNOs do not have the ability to trade bilaterally. The same problem may occur with small MNO against larger MNOs.

In other words, the bugs of the European roaming regulation may become more evident in the EU-UK relationships, due to the cancelation of regulated wholesale caps and the possibility for MNOs to charge other operators (especially MVNOs and smaller MNOs) with whatever and higher prices. This could result in the rise of retail roaming tariffs and the end of RLAH between EU and UK.

The Brexit agreement does not envisage for regulatory interventions to fix such scenario, it rather focusses on generic transparency solutions to be agreed amongst the parties. It will take at least one year whether they will be sufficient. 2022 will show whether roaming surcharges are back between Uk and EU.

Categories: international roaming

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