Annexes to COM(2008)579 - Outcome of the review of the functioning of Regulation 717/2007 on roaming on public mobile telephone networks within the EC - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2008)579 - Outcome of the review of the functioning of Regulation 717/2007 on roaming on public mobile telephone networks within the EC. |
|---|---|
| document | COM(2008)579  |
| date | September 23, 2008 |
The Commission will continue to monitor the situation to ensure the smooth functioning of the single market.
Impact on smaller operators
The Regulation has ensured that smaller operators have access to lower wholesale roaming charges. This has had a positive effect on smaller operators, enabling some operators to introduce some of the cheapest retail offers in the market. During the public consultation, one issue that came to the fore is the difficulty for newly established operators to enter into new roaming agreements with all operators in a timely manner. This is important where subscribers are unable to exchange roaming SMS messages with subscribers of a mobile network in another Member State as a result of the absence of an agreement enabling the delivery of such messages.
NRAs are able to intervene under Article 5 of the Access Directive[8] on their own initiative in order to ensure compliance.
Traffic steering
During the course of the review of the functioning of the Regulation, the Commission has not identified or had reported to it cases of traffic steering being used to the detriment of consumers. Since operators’ Eurotariffs must comply with a maximum price limit, most operators have opted to offer the same tariff irrespective of the visited network being used, thus increasing price transparency for consumers who do not have to worry about switching manually to a cheaper network.
Outermost regions
From the Commission’s review, it has emerged that there has been no negative impact with regard to outermost regions. In this regard, it is apparent from the public consultation and the Commission’s contacts with the French authorities that the issue for France has been addressed since legislation has been enacted to ensure that citizens residing in the outermost regions will not be at a disadvantage when they call metropolitan France.
Domestic prices
The Commission has also looked into whether there has been any increase in domestic prices that could be attributed specifically to the Regulation. It emerged that it would be very difficult to pinpoint any increase in domestic tariffs directly due to the introduction of the Regulation. The ERG notes that it is unlikely that domestic mobile prices will rise, because they are the main focus of competition for consumers. The 13th Progress Report on the implementation of the regulatory framework also concluded that prices for mobile services continued their downward trend in 2007[9].
Unitisation
While the price limits in the Regulation are expressed in terms of amounts “per minute”, it has become evident that the billing practices of certain operators, whereby they charge for voice calls by reference to minimum periods of up to 60 seconds rather than on a per second basis, are diluting the effects of the Regulation and that some operators have changed their billing practices since the adoption of the Regulation to increase this diluting effect. Indeed, the ERG has estimated that per minute billing practices add around 24% to a typical retail bill for calls made and 19% for calls received using the Eurotariff.
3.3. Extension of the Regulation in time and scope
Voice
As can be seen above, the fundamental problems which existed prior to the Regulation still remain. There is some competition but these offers have made only small inroads into the market.
While voice roaming services may be an important source of revenues and profits for a mobile operator, from the point of view of consumers prices for voice roaming are only one element of a larger mobile bundle and are a less important element of the bundle than, say, domestic voice, domestic SMS or a handset subsidy. This limits the ability of operators to use attractive roaming prices as an effective tool for customer acquisition. Furthermore, the presence of switching costs and the lack of adequate substitutability for voice roaming once the customer is abroad reduce the degree of expected competition.
The unitisation issue (per minute billing), as described above, has shown that operators have exploited a perceived latitude in the drafting of the Regulation to maximise their returns to the detriment of other operators (at the wholesale level) and consumers. A common set of rules regarding unitisation of Eurotariff bills is therefore needed to further strengthen the single market and provide a common level of protection to consumers.
The proposal
1. Extension of voice wholesale and retail regulation up to 2013
The Commission is proposing to extend the Regulation by a further three years from 2010 to 2013 to ensure that consumers are not charged excessive prices while providing sufficient time for competition to develop. The maximum levels of the Eurotariff for both calls made and calls received will continue to decrease annually in a linear fashion during the extended period of validity of the Regulation[10].
To try and facilitate further competition, the Commission has sought to provide a greater margin at the retail level by reducing wholesale rates more aggressively. This should increase the scope for operators to compete on price at the retail level, thereby maximising the chances that a properly competitive market will emerge.
To tackle the unitisation issue, at the retail level operators will be required to bill their customers on a per second basis subject only to the possibility to apply an initial charging period of 30 seconds for calls made. No initial charging period is justified in the case of calls received. Similarly, operators should charge each other on a per second basis for the wholesale provision of regulated roaming calls.
SMS
Prices for roaming SMS services have shown little movement over the past years, despite political pressure.. The average price for an SMS while roaming in the EU has only decreased marginally from 29 cents in the third quarter of 2007 to 28.5 cents in the first quarter of 2008. Moreover, there seems little prospect of prices decreasing significantly in the future on the basis of industry action alone, given the responses from operators to the public consultation.
The Commission, in its review, has concluded that the levels of both wholesale and retail charges are not justified by the underlying costs and, as in the case of voice roaming services, there appears to be insufficient competitive pressure on operators to bring prices down.
The proposal
2. Extension to include regulation of SMS roaming at wholesale and retail levels up to 2013 and improved transparency
The Commission is proposing to extend the Regulation in scope by proposing a price cap at both wholesale and retail levels for SMS roaming[11].
The Commission is also proposing that customers should be automatically alerted, by means of a message service, each time they enter a Member State other than their own, to basic personalised pricing information that applies to the sending of an SMS message by that customer in the visited Member State.
Data roaming services
Prices for data roaming services were already high when the Commission proposed the Regulation in 2006. However, the situation has become more marked over the past year with the advent of high-speed internet access or mobile broadband particularly for laptop users. This has led to the problem of bill shock for users who are accustomed to flat-rate tariffs at home but can be charged on a per-MB basis while roaming. Concerns over the level of charges for such services indicate that action is necessary in particular to improve transparency and eliminate bill shock, in the interests not only of consumers but also of the mobile operators.
Moreover, the persistence of particularly high wholesale charges for such services on non-preferred networks is caused by traffic steering difficulties leaving operators with no incentive to decrease wholesale prices unilaterally since traffic would be received irrespective of the price charged. This constrains the ability of home operators to predict their wholesale costs and to provide their customers with transparent and competitive pricing packages. A wholesale safeguard price limit should therefore be set that will decrease exorbitant wholesale prices but still be high enough not to distort competition or prevent its development.
The proposal
3. Increasing transparency and introducing a wholesale safeguard mechanism up to 2013 to combat bill shock for data roaming
The Commission is proposing measures to ensure that roaming customers are kept adequately informed of the charges that apply for data roaming services by means of an automatic message.
By 1 July 2010 at the latest, operators must also provide customers with a facility to set a financial limit in advance for their data roaming.
The Commission is also proposing that in order for operators to be able to adopt transparent pricing arrangements with the assurance that they can anticipate with more certainty their wholesale costs, a safeguard wholesale price limit on data roaming services should be set at a level which does not exceed €1 per MB on average between any two operators.
4. CONCLUSION
Despite the results achieved by the Regulation, the dynamics of the roaming market have not changed sufficiently since the introduction of the Regulation to enable the Commission to recommend that the Regulation be allowed to expire in 2010.
To improve the smooth functioning of the single market, it is proposed to extend the Regulation to include SMS and data roaming services. Prices for roaming SMS services have shown little movement over the past years and there seems little prospect of prices decreasing significantly in the future on the basis of industry action alone. Concerns over the level of charges for data roaming indicate that action is necessary in particular to improve transparency and eliminate bill shock.
The Commission is proposing wholesale and retail regulation for voice and SMS roaming. The proposal aims to maximise the chances that a competitive market may finally emerge by increasing the maximum margins between wholesale and retail charges. It is also proposing to further protect consumers who are overcharged through per-minute billing. However, it is proposing a different approach for data roaming services given the specific nature of the problems encountered. In particular, it has considered that bill shocks are unacceptable and urgent action is necessary both to improve transparency and to remove exorbitant wholesale prices which lead to appreciable distortions of competition.
Roaming markets exhibit unique characteristics which justify exceptional measures. Given its exceptional nature, this intervention should therefore be time-limited so as to expire on 30 June 2013. The Commission will continue to monitor the development of the intra-Community roaming market and proposes a further review with a report to the European Parliament and the Council in 2011.
It is the Commission’s intention to do its utmost to assist the European Parliament and the Council in reaching an agreement on the abovementioned elements in the shortest possible timeframe to ensure that European users of mobile communications services can benefit from these proposals by the summer of 2009. This is important to meet citizens’ expectations of the EU and ensure that Europe delivers results for its citizens.
[1] OJ L 171, 29.6.2007, p. 32.
[2] Article 11 of the Regulation.
[3] Proposal for a Regulation of the European Parliament and of the Council on roaming on public mobile networks within the Community and amending Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services - COM(2006) 382, 12.7.2006.
[4] This figure is derived from a detailed data-collection exercise undertaken by the national regulatory authorities and the European Commission. Data was collected from 27 NRAs on an individual operator basis and were then aggregated by means of a bottom-up approach.
[5] http://www.erg.eu.int/documents/docs/index_en.htm.
[6] http://ec.europa.eu/information_society/activities/roaming/docs/study_data_roaming.pdf.
[7] Website: http://ec.europa.eu/information_society/activities/roaming/regulation/consult08/contributions/index_en.htm.
[8] OJ L 108, 24.4.2002, p. 7.
[9] COM(2008) 153, 19.3.2008.
[10] The wholesale charge for making a call will decrease from 26 cents prevailing on 1 July 2010 to 23 cents, 20 cents and 17 cents respectively. The price cap for the Eurotariff for making calls will decrease from 43 cents to 40 cents, 37 cents and 34 cents respectively while the price cap for receiving calls will decrease from 19 cents to 16 cents, 13 cents and 10 cents respectively.
[11] The wholesale charge that should apply for roaming SMS from 1 July 2009 should not exceed 4 cents per message on average between any two operators which reflects wholesale costs actually incurred. From the same date, the retail charge for a roaming SMS should not exceed 11 cents, ensuring both a fair return for operators as well as consumer protection.