The European Commission announced on 12 July 2006 that it has tabled an EU Regulation that would cut the cost of using mobile phones abroad. If the European Parliament and EU Council of Ministers support the Commission’s proposal, the new Regulation could come into effect by summer 2007.
The European Commission has been concerned with the issue of reducing mobile roaming charges for several years. It has issued several consumer warnings and called for self-regulation of the industry. It launched a sector inquiry into national and international roaming charges in 2000 which resulted in competition law proceedings being launched against German and UK mobile operators for excessive wholesale international roaming tariffs which are still ongoing. It is also looking at the application of Article 81 to two strategic alliances created to improve international roaming services, Starmap and Freemove.
National regulators were also empowered to take action at a national level under the 2002 EU framework on electronic communications. The wholesale national market for international roaming on public mobile networks was listed as a “relevant” market in the EC's 2003 Recommendation on Relevant Markets in Electronic Communications. National regulatory authorities were therefore encouraged to assess this market in order to impose ex-ante regulatory obligations on companies that are found to be dominant on the market, although to date national regulatory authorities have not generally done so.
Due to the cross-border nature of roaming the European Commission has found that these initiatives have had limited success. The European Commission states that the average retail charge for a roamed call is still more than five times higher than the actual cost of providing the wholesale service.
The European Commission consulted on its proposals for the Regulation in March 2006 and has now tabled the full proposed Regulation. Even though the European Commission states that it prefers not to regulate retail markets, the proposed EU Regulation addresses both retail and wholesale markets as follows:
- The wholesale charges that mobile phone operators charge each other for carrying calls from foreign networks will be capped. The method used seeks to ensure that operators can recover the cost of providing roaming services by taking as its starting point the tariffs for connecting mobile phone calls from other domestic networks.
- Operators will only be allowed to add to their wholesale cost a retail mark-up of up to 30 per cent both for calls made and for calls received while roaming. The European Commission considers this is the margin that operators can normally make with domestic phone calls. There will be a six-month transition period for the cap on retail calls made but the Regulation will apply immediately it comes into force for calls received.
- Mobile operators will be required to provide customers with full information on applicable roaming charges when subscriptions are taken out and consumers must be updated regularly about these charges. These measures will enhance the transparency of roaming charges.
The Regulation only applies for international roaming for voice services not text or data services. However the proposed Regulation also provides that national regulatory authorities will have the task of closely monitoring the development of roaming charges for SMS and multi-media message services.
The European Commission considers that operators remain free to compete beneath the proposed wholesale and retail price caps by offering cheaper roaming services or by offering cheaper packages of services differentiated according to customer demand. It also does not consider that there is a risk of the proposed Regulation leading to higher domestic prices due to the high level of competition and national regulatory powers available.
If the Regulation is approved by the European Parliament and the Council of Ministers, the European Commission hopes it will come into effect in the summer of 2007.
Source: European Commission press release dated 12 July 2006, IP/06/978 and proposal for the Regulation which can be found at: