EU prolonged the roaming reform

Someone had feared the risk that roaming costs could reappear, and the related shock-bills, if the European institutions in Brussels had failed in finding an agreement on how to extend the European regulation 2120/2015, which has (almost) eliminated this problem starting in June 2017 (thanks to the new Roaming Like at Home regime: “RLAH”). And fortunately the agreement was reached tonight, after the Council managed to obtain a new mandate from the member States to meet the requests of the European Parliament. However, as it will be seen below, at the end the concessions of the Council (supported bu the Commission) vis-à-vis the European Parliament were minimal, and the latter preferred to close an agreement “whatever it takes” due to the concern that the entire RLAH system could end up for lack of agreement.

Here the communication by the Council, Parliament and Commission.

The main object of the discord amongst the 3 European institutions was the wholesale costs that operators currently pay to allow their users to rely on foreign networks when they are abroad for tourism or work. The problem is that, while roaming has been eliminated by law for users (but with exceptions), the same elimination has not happened for the underlying network costs. Thus the tariff shocks, which once users found in their bills, have now been transferred to the invoices of some operators, with however diversified situations: while the large mobile operators remain profitable and continue to receive interesting income, the small mobile operators, including virtual ones, they often go at a loss.

An attempt has been made to solve this problem with various mechanisms, the main of which are maximum rates, the so-called caps wholesale, which should reduce the costs that certain operators may charge to others who ask for roaming. But the dossier got stuck in the Council because the issue is not only industrial, but also geopolitical: the higher the wholesale caps, the more northern European countries incur losses (due to the greater trips to the south) and, vice versa, the more the Mediterranean and tourist-oriented countries cash-in. The issue also concerns consumers: in fact, the high wholesale caps allow mobile operators to apply exceptions, allowing the additional roaming costs to be restored depending on the length of the trip abroad or the amount of data downloaded (the so called “fair use” mechanisms).

This is an unstable equilibrium, due to the European mobile market which works poorly and which is not integrated at all: they have understood it well in the United Kingdom where, due to Brexit and the disappearance of European legislation, the English operators have already restored the extra roaming costs for their users traveling in the EU (and for visiting Europeans). Without the agreement found tonight, Europe would paradoxically have adapted to London, and the political price to pay, rightly, would have been immense.

The New Roaming Agreement in nuts:

  • The roaming like at home regime is prolonged until 2032 The current regime will continue until June 2022, then it will be replaced by the new regulation. In any case, the risk to lose the RLAH regime has been avoided.
  • The wholesale caps will continue to go down. However, one should note that the reduction agreed by the Trilogue is far away from market reality. The economic issue mainly regarded data services and the cost for Gigabyte, which in Europe is, at retail level, normally around 20/30 Eurocent per Gigabute. Despite of that, the wholesale caps agreed for the new regulation are much above that retail price, since they will be: 2 €/GB in 2022, 1.8 €/GB in 2023, 1.55 €/GB in 2024, 1.3 €/GB in 2025, 1.1 €/GB in 2026 and 1 EUR/GB from 2027 onwards. As a result, some operators (especially small mobile operators or MVNOs) will face losses when providing roaming, unless they can negotiate wholesale prices below the caps (which is possible but not easy since most of them are unilateral buyers and do not have negotiation power) or they can reduce losses with some mechanisms (the “fair use” limitation, for instance) which however are not good for competition. It is interesting to note the the Parliament wanted a strong reduction of wholesales caps, while Council and Commission refused, as it can be seen in the following scheme:
  • Quality of roaming connections should be the same of domestic ones.
  • The “fair use” mechanism, which permits operators to limit the RLAH regime depending on the chosen subscription and the traffic usage of customers, will be maintaned. Possible adaptations may be proposed by the Commission in the future.
  • The discussion about the intra-EU call is reported. The Parliament wanted to mandate that domestic and international tariffs should be the same. The issue was mainly political and symbolic, because most of operator already provides bundles which cover both domestic and international calls. It was not possible to found a reasonable agreement, because the telephone market has been found competitive in all Member States, therefore fixing a mandatory retail tariff by way of a regulation would have required a previous economic impact assessment.
  • The Commission will be empowered to present new proposals, however another legislative process, including again Parliament and Council, will be needed. The request of the Commisison to proceed autonomously, with a delegated act, has been rejected. This is understandable, because the Commission has been frequently contradictory in the whole roaming legislative process, disregarding the different negotiation powers of players (big and small ones) and affecting the long-term scope of the roaming reform, which was to achieve a truly integrated mobile market. But this is another story, and a new post would be needed. In any case, the involvement of Parliament for future legislative modification appears necessary.

Categories: Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s