International roaming

Pál Belényesi University of VeronaNovember 2006

Why do we talk about this?

We experience high charges Existence of Single European Market 11th Report on European Electronic

Communications Regulation and Markets – indication

Int. Roaming regulation is in process

What is international roaming? International roaming is the ability of

mobile phone subscribers to use their phones whilst traveling abroad

(National roaming is different!) The importance of international

roaming agreements (by MNOs) Wholesale level: MNOs (foreign-home)

IOTs Retail level: Consumers traveling

Int. Roaming in the Electronic Communications Framework

Comm. Rec. 2003/311/EC: market No. 17 – Wholesale Int. Roaming (WIR)

Given the particularities of the market (buyer-seller location): concerted practice in the ERG or Regulation

ERG Common position on the coordinated analysis of the markets for Wholesale Int. Roaming – May 2005

The Commission’s involvement

July 2004: United Kingdom – O2 and Vodafone (statement of objections)

February 2005: Germany – T-Mobile and Vodafone (statement of objections)

December 2004: EU-wide investigation on roaming charges – July 2005: first result

The UK case (O2, Vodafone) Time period: 1997-2003 Charge: both companies exploited

their dominant position on the market of WIR

Findings: Each mobile network is a separate

market Both are dominant in their networks IOTs are unfair, excessive, high

The UK case (O2, Vodafone) II.

Income on IOTs ISPs with regards to IOTs Domestic roaming / Intern. roaming

Similarity Enormous price difference

Statement of objections – Hearing June 2005

The German case (Vodafone, T-Mobile)

Time period: 1997 (2000) – 2003 Charge: Their practice may be

contrary to Art. 82. of the EC Treaty (abuse of dominant position)

Allegations: The companies charge IOTs at a price being excessively high to other MNOs.

The German case (Vodafone, T-Mobile) II.

Findings: Each individual German network is a

separate market They enjoy dominant position on their

markets Roaming charges accumulate to higher

profits than national roaming charges (airtime access supplied to national roaming for other MNOs)

Commission starts EU-wide investigation

December 2004: (ERG) – questionnaire sent to MNOs to indicate roaming charges – sector inquiry

Reason: Serious concern about charges

To help NRAs to analyze Foretells a EU-level Regulation July 2005: transparency announced

General conclusions Retail charges are very high – no

justification Reductions on wholesale charges

are not passed to the consumers Users have no clear information

about International Roaming charges

Linkages between national markets

Issues Competitors claim more competition

to bring down prices Interdependence (?) National market specificities (?) – GSM

Association Prices are high at retail level

Wholesale price reduction is not passed onto costumers

Traffic direction technique

Ideas Remedies within the framework of

market analysis (Joint dominance)? Gencor, CMB, Airtours

Investigation under Article 81 could lead to concerted practice?

Direct Regulation at EU-level (compare to banking)? – NRAs are not fully equipped to deal with the issues at national level

Action is taken

February 2006: speech at the ERG meeting in Paris (Reding) followed by the official proposal of the EC on the 28th of March

Regulation is proposed similar to cross-border payments

International roaming page updated Cost-based regulation

Problems

What happens to those who only offer national roaming?

Multiple commercial agreements hard to implement

Missing cost data (in the NRAs) Retail price regulation is fortunate?

Current state of art

Neither wholesale nor retail prices are justified by the underlying costs of the service

existing regulatory tools NOT ENOUGH

Market cannot deliver alone Everyone welcomed the initiation of

the regulation safe for operators

Cont’d

„home pricing principle” No pay for receiving the call ERG favoured wholesale regulation

instead of retail regulation

Possible content of the regulation Prices paid for international roaming will not be

unjustifiably higher than the charges for calls paid within the user’s country.

Consumers will benefit from lower prices for making calls in the visited country, back home or to any other EU Member State

Prices that operators charge each other (wholesale charges) will be considerably lower than what they are today.

Mobile operators will be required to provide customers with full information on applicable roaming charges

National regulators will also be tasked to monitor closely the development of roaming charges for SMS and multi-media message services (MMS)