Explanatory Memorandum to COM(2008)580 - Amendment of Regulation (EC) No 717/2007 on roaming on public mobile telephone networks within the EC and Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2008)580 - Amendment of Regulation (EC) No 717/2007 on roaming on public mobile telephone networks within the EC and Directive ... |
|---|---|
| source | COM(2008)580  |
| date | 23-09-2008 |
- Grounds for and objectives of the proposal
In response to persistent concerns over the lack of competitive pressures in the market for international roaming services and the resulting high charges payable by European consumers for the provision of roaming services while travelling in the Community, on 27 June 2007 the European Parliament and the Council adopted Regulation (EC) No 717/2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC. This Regulation introduced a common approach to ensure that users of public mobile telephone networks did not pay excessive prices for Community-wide roaming services, by imposing limits on the charges that may be levied by mobile operators, at wholesale and retail levels, for the provision of voice roaming calls originating and terminating within the Community. The Regulation also laid down rules aimed at increasing price transparency and improving the provision of customer information to users of Community-wide roaming services.
The European Parliament and the Council decided that the Commission should review the functioning of Regulation (EC) No 717/2007 and report to Parliament and Council no later than 30 December 2008 (Article 11 of the Regulation).
Although Regulation (EC) No 717/2007 only imposed upper limits on the pricing of roaming voice calls, the Community legislators recognised that concerns persisted with regard to the level of prices for data roaming services within the Community, as well as SMS. They therefore specifically charged the Commission with reviewing developments in wholesale and retail charges for the provision to roaming customers of voice and data communication services, including SMS and MMS, and with making recommendations regarding the need to regulate those services, if appropriate.
This proposal accompanies the Commission's Communication to the European Parliament and the Council, reporting on its review of the functioning of Regulation (EC) No 717/2007.
Its objective is to amend Regulation (EC) No 717/2007, in order to further strengthen the single market for electronic communications by ensuring that prices paid by users of public mobile networks for Community-wide roaming services when travelling within the Community are not unjustifiably higher than the charges payable when calling, sending SMS messages or transferring data within their home country and that users have the information they need to understand and control their expenditure on roaming services.
- General context
The Commission's Communication to the European Parliament and the Council on its review of the functioning of Regulation (EC) No 717/2007 concluded that, while implementation of the Regulation has in general been smooth, the structural problems that constrain competitive forces in the roaming market have remained. These are principally due to the fact that roaming is only one element in a broader mobile bundle purchased by customers and therefore does not normally dictate their choice of operator.
In addition, data collected by the European Regulators Group (ERG), which includes all 27 EU national regulators (NRAs), show that prices for voice roaming calls at wholesale and retail level do not vary sufficiently below the maximum levels set by the Regulation to provide evidence of healthy competition. The Commission therefore concluded that to preserve its benefits the Regulation should be extended for a further period of three years beyond 2010.
The Commission also noted that the billing practices applied by mobile operators to voice roaming calls, whereby calls are often charged on the basis of units of up to 60 seconds, represent a hidden charge to the consumer which the ERG has estimated adds around 24% to a typical Eurotariff roaming bill for calls made and 19% for calls received.
The Commission's analysis of the SMS segment of the intra-Community roaming market also shows that prices at both wholesale and retail levels are not justified by underlying costs and that, for the same reasons as apply to voice roaming, there is insufficient competitive pressure on operators to bring these prices down. Data gathered by the ERG show that prices at wholesale and retail levels remained stable and high in the run-up to this proposal.
The Commission's review of the data roaming segment of the market concluded that prices for this service were high when compared to the charges for equivalent domestic services or to underlying costs of provision and that this problem was compounded by lack of transparency. This makes it difficult for consumers to understand how much they will pay for data roaming and has resulted in many cases of 'bill shock', where travellers unwittingly incur bills of thousands of euros for downloading data while abroad.
On the other hand, the Commission's review showed that while prices may be falling for data roaming services, they continue to be unjustifiably high for wholesale and retail when compared to domestic prices for equivalent services. There is accordingly a clear need for measures to enable roaming customers to understand and control their expenditure on data roaming services more effectively and to prevent bill shocks, as well as to eliminate barriers to the utilisation of mobile data roaming services throughout the internal market and remove appreciable distortions of competition.
- Existing provisions in the area of the proposal
The key existing provision in the area of this proposal is Regulation (EC) No 717/2007 itself, which this proposal will amend in order to extend its application in time and its scope.
The existing 2002 regulatory framework for electronic communications, which was amended by Regulation (EC) No 717/2007 to take account of the need for specific measures on roaming within the Community, provides a mechanism for the imposition of ex ante regulatory obligations on undertakings within the electronic communications sector, on the basis of the definition of relevant markets susceptible to ex ante regulation, market analysis and findings of dominance by NRAs. However, for the reasons explained at the time of the proposal for Regulation (EC) No 717/2007, the specific characteristics of the markets for international roaming and the cross-border nature of those services mean that the tools otherwise available under the framework do not offer NRAs an effective means of tackling the lack of competitive pressure and the resulting high prices. These reasons are equally relevant to the extension of the Regulation in time and in scope, to cover SMS and data roaming services.
National consumer protection laws in some Member States also apply to activities falling within Regulation (EC) No 717/2007. For example, a number of Member States have imposed requirements on mobile operators regarding the billing of voice services on a per second basis. This creates divergent regulatory conditions for operators in different Member States which, in the context of a cross-border activity subject to harmonised rules such as Community-wide roaming, is not conducive to the smooth functioning of the single market.
- Consistency with the other policies and objectives of the Union
This proposal is in line with the renewed Lisbon Strategy for promoting growth and jobs through greater competitiveness, the Commission's associated i-2010 initiative and the initiative of a 'Europe of Results'.
- Consultation of interested parties
Consultation methods, main sectors targeted and general profile of respondents
The Commission departments launched a wide-ranging consultation in May 2008 asking for comments on the review of Regulation (EC) No 717/2007 and its possible extension to SMS and data roaming services. 39 questions were asked on the functioning of the Regulation as well as specific issues such as inadvertent roaming, the effect on smaller operators and domestic prices and the issue of actual vs. billed minutes.
The public consultation was made accessible via the 'Your voice in Europe' website.
The consultation exercise demonstrated widespread support from Member States, NRAs, the ERG and consumer groups for prolonging the Regulation and extending it to SMS and data roaming services. Some smaller operators also favoured extending the Regulation to wholesale SMS and data roaming services. While most operators opposed the extension of the Regulation and hence also rejected regulation of SMS and data roaming services, many acknowledged the need to tackle bill shock for data roaming services.
An open consultation was conducted over the internet from 7 May 2008 to 2 July 2008. The Commission received 44 response(s). The results are available at:ec.europa.eu/information_society/activities
- Collection and use of expertise
Scientific/expertise domains concerned
The Commission commissioned a study on data roaming services which was published in June 2008.
The study looked into the functioning of data roaming services and assessed what technological requirements are necessary to offer such services.
Connect2Roam
Summary of advice received and used
The study compared prices between domestic and roaming services and looked at the cost components specific to the provision of data roaming services.
The study was published atec.europa.eu/information_society/activities
- Impact assessment
The impact assessment for this proposal examined the following range of options: no policy change, self-regulation, co-regulation, soft law and targeted regulation in four specific areas: voice roaming, per second billing, SMS roaming and data roaming.
Given the underlying remaining structural limitations on competition in the roaming markets, leaving the problems to be addressed by means of self-regulation or co-regulation would not be a viable solution. Given the relative lack of response from the industry to calls for lower SMS roaming charges, the potential for widely differing approaches at national level (to what is a cross-border problem) and the fact that no single NRA has the necessary regulatory tools to address the problem at both wholesale and retail levels, it was also considered unlikely that a soft law approach would suffice to address the enduring underlying problems. Consequently the options of self-regulation, co-regulation and soft law were discarded.
Targeted regulation was therefore considered.
With regard to voice and SMS roaming it was considered that recourse to wholesale regulation or retail regulation alone would not ensure that the objectives would be met. A combination of wholesale and retail regulation was therefore examined.
For per second billing, intervention was considered necessary to ensure consistency across the single market. At retail level the preferred option was to allow operators to charge a maximum set-up fee equivalent to the initial 30 seconds of a roaming call made, followed by per second billing. At the wholesale level it was deemed that per second billing should apply.
For data roaming services, a number of options were also examined. The introduction of strong transparency measures with an accompanying safeguard tariff mechanism at wholesale level to facilitate predictability for operators in the costs to be incurred was considered the best solution.
The Commission carried out an impact assessment as listed in the Work Programme, the report on which is available at:ec.europa.eu/information_society/activities
Contents
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- 2. CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT
- Summary of responses and how they have been taken into account
- Methodology used
- Main organisations/experts consulted
- Means used to make the expert advice publicly available
- 5. ADDITIONAL INFORMATION
- Summary of the proposed action
The proposal provides for the extension in time and scope of Regulation (EC) No 717/2007. As regards voice roaming, the proposal extends the existing Regulation for three more years and sets new maximum limits during the extended period for the charges that mobile network operators may levy for the wholesale provision of regulated roaming calls. In order to ensure that the benefits of these reductions are passed on to end-users the proposal also establishes new maximum limits during the extended period for charges subject to a Eurotariff. In addition, the proposal stipulates that per second billing requirements should apply at wholesale as well as retail level subject to a minimum charging period at retail level of up to 30 seconds for roaming calls made.
The proposal also extends Regulation (EC) No 717/2007 to cover intra-Community roaming SMS services, by establishing a maximum limit for the charges that mobile network operators may levy for the wholesale provision of roaming SMS messages sent within the Community and by requiring mobile operators to offer their roaming customers a 'Euro-SMS tariff' which must not exceed a maximum price limit per SMS.
The proposal promotes price transparency by extending the obligation on mobile providers to give their roaming customers personalised price information when entering another Member State, to include information on the cost of sending a regulated roaming SMS message.
The date provided for the decrease in the price limits for regulated roaming calls at wholesale and retail levels in 2009 is brought forward from 30 August to 1 July, in order to ensure consistency with the obligations regarding the pricing of regulated SMS messages. In this way, users of both voice and SMS roaming services will be able to benefit from the new tariffs during the period when there is the greatest demand for those services.
In addition, the proposal introduces price transparency and safeguard mechanisms for data roaming services, to enable customers better to understand and control their expenditure on these services and avoid bill shocks. In particular, when roaming customers first initiate a data roaming session on entering another Member State, their operator will have to inform them that they are roaming and provide personalised information on the applicable tariffs for that service. Operators will also be required, within approximately one year of entry into force of the amendments contained in the proposal, to offer all roaming customers free of charge an opportunity to specify in advance a maximum financial limit for data roaming.
Also, as a safeguard mechanism to give roaming providers a level of assurance as to the wholesale costs to be incurred and to avoid appreciable distortion of competition, given the persistence of high wholesale charges (in particular on non-preferred networks) and traffic steering limitations, the proposal sets a limit on the average wholesale charge which the operator of a visited network may levy from the operator of a roaming customer's home network for the provision of regulated data roaming services.
Finally, the proposal amends the term 'public mobile telephone networks' to read 'public mobile communications networks' where it appears in Regulation (EC) No 717/2007 and in Article 1(5) of the Framework Directive, to ensure continued consistency with the terminology used elsewhere in the regulatory framework for electronic communications, in the light of the revisions to the framework proposed by the Commission and currently under discussion in the European Parliament and Council.
- Legal basis
Article 95 EC
- Subsidiarity principle
The subsidiarity principle applies insofar as the proposal does not fall under the exclusive competence of the Community.
The objectives of the proposal cannot be sufficiently achieved by the Member States for the following reason(s).
The same special characteristics that apply to the voice roaming market and warranted action under Regulation (EC) No 717/2007 also apply to the provision of Community-wide SMS and data roaming services. For all these services action by the Member States would not be effective in resolving the underlying problem of lack of competitive pressure in the roaming market and the resulting high prices and low transparency, given the cross-border nature of the services concerned and the limited regulatory tools otherwise available.
Action by Member States alone to address the problems covered by this proposal would risk leading to divergent results, thereby jeopardising the smooth functioning of the single market.
Community action will better achieve the objectives of the proposal for the following reason(s).
The provision within the Community of mobile roaming services such as voice calls, SMS and data transfers affects by its very nature all Member States and touches on the interests of parties in different Member States simultaneously. A harmonised approach at Community level is therefore essential to guarantee consistency of application and to ensure that the interests of consumers and undertakings in all Member States are safeguarded.
For the benefits of the single market to be fully realised with regard to Community-wide roaming services, users of those services should be able to expect the same level of protection and the same benefits regardless of where they are located within the Union.
The establishment of further and/or additional safeguards for users of mobile voice telephony, SMS and data roaming services and for operators of such services on a non-discriminatory basis across the Community cannot be achieved by the Member States in a secure, harmonised and timely manner and can therefore be better achieved by the Community. Moreover, since the proposal requires the amendment of Regulation (EC) No 717/2007 and of Directive 2002/21/EC, this can only be achieved by action at Community level.
The proposal therefore complies with the subsidiarity principle.
- Proportionality principle
The proposal complies with the proportionality principle for the following reasons.
The regulatory action proposed involves the least interference possible in the commercial behaviour of the undertakings affected. The setting of maximum price limits for roaming voice calls and roaming SMS messages at wholesale and retail levels and price transparency measures, as well as the safeguard mechanism introduced for wholesale data roaming charges, ensures the minimum distortion of competitive conditions consistent with the objectives, since it preserves the freedom of operators to compete and differentiate their offerings within the limits provided. With regard to voice and SMS roaming services, retail regulation is necessary to ensure that the benefit of lower wholesale prices is passed through to retail customers. The proposed action continues to leave the task of monitoring and enforcement to the regulatory authority responsible for electronic communications in each Member State.
Due to the nature and simplicity of the regulatory actions chosen in the proposal and the direct application of its obligations within the Community, the administrative and financial burden on the Community, national governments and authorities will be minimised.
- Choice of instrument
Proposed instrument: regulation.
Since it is proposed to amend Regulation (EC) No 717/2007 in a manner contemplated by the Regulation itself and to further amend Directive 2002/21/EC, an amending regulation is the only appropriate instrument.
The proposal has no implication for the Community budget.
- Review/revision/sunset clause
The proposal includes a review clause.
The proposal includes a sunset clause.
- European Economic Area
The proposed act concerns an EEA matter and should therefore extend to the European Economic Area.