Annexes to COM(2011)407 - Outcome of the functioning of Regulation 717/2007 on roaming on public mobile communications networks within the EC, as amended by Regulation (EC) No 544/2009 - Main contents
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| dossier | COM(2011)407 - Outcome of the functioning of Regulation 717/2007 on roaming on public mobile communications networks within the EC, as ... |
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| document | COM(2011)407  |
| date | July 6, 2011 |
In conclusion, at this stage competitive market forces have not developed sufficiently and prices are still clustered at the level of the caps. This lack of competitive pressure is still felt both at wholesale and at retail levels, mostly due to the fact that structural problems such as barriers to market entry and high switching costs that prevail in the roaming market have remained unchallenged. Therefore, there is a significant risk that allowing the Regulation to expire could lead to an increase in prices. It also demonstrates the need to adopt a different regulatory approach. Indeed, the current regulatory approach of price regulation, while having delivered significant price reductions for consumers during the period concerned, has not solved the structural problems in the roaming market and does not therefore provide a lasting solution.
With regard to alternatives to roaming, none of the technologies currently available are perceived by consumers as a good substitute for roaming. This makes it very unlikely that they will have any impact on competitive pressure on roaming prices in the future.
3.2. Introduction of structural measures
As laid down in Article 11 of the Roaming Regulation, the Commission is required to assess methods other than price regulation which could be used to create a competitive internal market for international roaming. Consequently, the Commission analysed different policy options and this detailed analysis can be found in the accompanying impact assessment. With a view to increasing the effectiveness of the roaming market dynamics and based on the assessment of the advantages and disadvantages of the various options put forward, the Commission proposes introducing the following combination of structural solutions targeted at both the demand and the supply sides of the roaming market.
Measure with likely impact at consumer level (demand side)
The lack of competitive pressure on retail roaming prices can be explained by a number of factors. First of all, operators have little incentive to compete because roaming services are generally offered as part of a larger mobile bundle including domestic mobile services and thus cannot be used as a tool to attract new customers. High switching costs and the lack of adequate substitutes also hinder the development of alternative competitive offers. BEREC also considers that in the retail market, the focus on competition is on domestic services and the current features of the retail market provide little incentive to retail suppliers to compete aggressively on roaming offers. Therefore, increasing consumers’ choice and transparency of roaming prices would contribute to creating the conditions for more competition at retail level to finally emerge.
The proposal
1. Mandate the separate sale ('decoupling') of roaming services in the domestic market
The Commission proposes that consumers be allowed to opt-out of the default roaming services offered by their provider of domestic services and choose an alternative home operator for roaming services only. Each time the customer roams, the retail roaming service will automatically switch to this alternative provider.
It is expected that such a measure will have a positive impact on competition at retail level by facilitating switching and increasing demand elasticity by raising consumer awareness in roaming when taking out subscriptions. It will also make for more transparency and easily comparable alternative tariff offers.
Measure with likely impact on the structure of the market (supply side)
For the separate sale of roaming services introduced at retail level to be fully effective it needs to be combined with an access obligation which will facilitate market entry by existing or new players including cross-border roaming service providers, in order to increase the competitive dynamics at the retail level.
The proposal
2. Improve market entry by mandating wholesale roaming access
The Commission proposes introducing an obligation on network operators to meet all reasonable requests for wholesale access for the provision of roaming services.
This will facilitate the development of alternative mobile roaming offers, in particular from smaller operators and MVNOs. MVNOs will indeed be in a position to directly negotiate roaming agreements with MNOs in other Member States or to obtain regulated wholesale access to roaming services from their host MNOs in the home country.
Furthermore, this will increase competitive pressure on the wholesale market and therefore encourage operators to provide wholesale services at the lowest possible price.
In conjunction with the first structural solution on decoupling proposed above, this measure will also open up new business opportunities for smaller operators, enabling them to offer roaming services cross-border, thereby also contributing to the smooth functioning of the Digital Single Market.
3.3. Extension of the Regulation in time and scope
Extension of the Regulation until 2022
The Commission proposes that the validity of the Regulation be extended by 10 years, up to 30 June 2022. It is expected that the above-mentioned structural solutions will require time to be implemented and produce effects on the market. Hence the Regulation provides for transitional price caps to be kept in order to ensure a high level of consumer protection also in the interim period before the structural solutions become effective. Retail price caps should in principle apply until 30 June 2016. These could, however, be removed sooner if market data indicate that competition has developed sufficiently. The wholesale price caps should in principle be maintained throughout the regulatory period in order to guarantee sufficient stability for new market entrants, also with a possibility of being removed if market data indicate sufficient competitive development..
The Commission proposes to review the functioning of the Regulation in 2015, i.e. one year after the deadline for the full implementation of the structural measures and one year before the foreseen expiry of the retail caps. This review will in particular examine the impact of those measures on the level of competition in the roaming markets. If the review shows that the structural measures provided for by the Regulation are not sufficient to promote competition in the roaming markets for the benefit of European consumers, the Commission shall make appropriate proposals to the European Parliament and the Council to address this situation. The Commission shall examine, in particular, whether it is necessary to modify the structural measures or to extend the duration of any of the transitory retail caps foreseen. After 2015, an assessment of the functioning of the regulation, also in the light of technological developments, will be carried out at regular intervals by the Commission before the Regulation expires in 2022.
Safeguard price cap at retail level up to 2016 and extension to data roaming
At retail level, the combination of the structural measures should lead to a sustainable competitive solution to the problem of excessive roaming prices without the need for long-term price regulation. However, given that these solutions will take time to implement there is a need to ensure continued consumer protection against excessive roaming charges by maintaining transitional safeguard caps for all services at an appropriate level for a period of time. Such transitional caps will be set at sufficiently high levels in order not to distort the potential competitive benefits of structural solutions and could be removed completely once the structural solutions have become effective in delivering benefits for consumers through enhanced competition.
Furthermore, in its review the Commission concluded that despite the imposition of a price cap on wholesale data charges, retail prices are still very high. The reductions at the wholesale level on data prices are not passed through to the retail level and, despite all the transparency measures introduced in 2009, consumers continue to face very high costs for retail data roaming services. This conclusion is also shared by BEREC, which has observed that competitive pressure in retail data roaming services is not sufficiently strong to bring prices down to reasonable competitive levels and, consequently, recommends regulatory intervention to bring retail data prices down, as was the case for voice and SMS.
The proposal
3. Retain a transitional safety net for retail prices up to 30 June 2016, including a new retail price cap on data roaming services
The transitional retail caps will follow a glide path until the structural solutions are in place (in 2014), after which the safeguard caps would remain flat for up to a further two years, until 30 June 2016. The retail caps will be removed thereafter or before if market data indicate that competition has developed sufficiently.
In the framework of the review to be carried out in 2015, the Commission will evaluate whether the proposed structural measures are sufficient to promote competition in the roaming markets. If not, the Commission shall make appropriate proposals to address this situation. The Commission shall examine, in particular, whether it is necessary to modify the structural measures or to extend the duration of any of the transitory retail caps.
The Commission is proposing that the retail safeguard caps mechanism be extended to data roaming services. For the provision of a regulated roaming data service to which a Euro data tariff applies, the home provider will be required to charge its roaming customers on a per kilobyte basis (unless the customer opts for a price plan).
In addition, measures regarding transparency and unitised billing will continue to apply as under the current Regulation with some modifications.
Extension of price caps at wholesale level until 2022
In order to ensure a sustained level playing field, in particular for new entrants in the decoupled roaming market, wholesale caps will have to be maintained for the duration of the new Regulation. Since the structural measures will be well established, it would be possible to remove these caps before 2022 if market data indicate sufficient competitive development. In this respect, it is important to note that the wholesale market for data roaming services exhibits more dynamism than the corresponding wholesale markets for voice and SMS.
The proposal
4. Maintain price caps on wholesale charges until 2022
The price caps on wholesale charges will be retained and will follow a steep decreasing glide path on a yearly basis up to 30 June 2015, after which they will remain flat until the new Regulation expires in 2022.
The wholesale price caps could be removed before the new Regulation expires if market data indicate that competition has developed sufficiently.
4. CONCLUSION
This review has established that the measures introduced by the Roaming Regulation have enabled consumers to enjoy significant benefits, in terms of both reduced prices and improved transparency over the past years. However, despite these positive results, the dynamics of the international mobile roaming market have not changed sufficiently, which demonstrates the limits of the current model’s ability to foster competition and ensure a lasting solution to the roaming problem.
Furthermore, as confirmed by BEREC’s analysis, market forces alone are not expected to deliver significantly lower roaming prices in the years ahead. Hence there is a clear need for further regulatory intervention beyond 2012.
The Commission is proposing that the Regulation be revised by introducing pro-competitive structural measures and that its validity be extended until 30 June 2022. The proposed structural measures aim to tackle the root of the problem, i.e. the lack of competition and consumer choice that lie at the heart of the issue of high roaming prices. This will be done by, on the one hand, ensuring that the market is open to different types of providers (thereby increasing roaming offers), while on the other hand raising consumers’ awareness of roaming prices and increasing consumers’ choice by allowing them to purchase roaming also as a stand-alone service.
These measures are expected to lead to a sustainable competitive solution to the roaming market problem, since it is considered that the competitive pressure that they promote will be sufficient in the future to guarantee low retail prices without the need for long-term regulation. However, these structural solutions will take time to be implemented and deliver results, which is why the Commission is proposing that wholesale caps be retained until the market exhibits sufficient competition and that safeguard retail caps be kept for a limited period of time in order to ensure stability and predictability for operators and continued consumer protection. In addition, it is proposing that the transitional retail price caps be extended to the provision of retail data roaming services.
Roaming markets display unique characteristics which justify exceptional measures. Therefore, this intervention should be limited in time so as to expire on 30 June 2022. The Commission will regularly report to Council and Parliament, taking into account the opinion of BEREC, on the functioning of the Regulation and, if necessary, will consider possible amendments (including the possibility to extend the duration of any of the transitory retail caps foreseen).
It is the Commission’s intention to do its utmost to assist the European Parliament and the Council in reaching an agreement on the above-mentioned points in the shortest possible timeframe to ensure that European users of mobile communications services can benefit from these proposals by 1 July 2012. This is important to meet citizens’ legitimate expectations and ensure that the EU continues to deliver concrete results for them.
[1] See Communication from the Commission: Europe 2020 — A strategy for smart, sustainable and inclusive growth, COM(2010) 2020, 3.3.2010.
[2] See Communication from the Commission: A Digital Agenda for Europe, COM(2010) 245 final/2, 26.8.2010.
[3] See Digital Agenda, Annex 2.
[4] Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the interim report on the state of development of roaming services within the Community, COM(2010) 356 final, 29.6.2010.
[5] See COM(2010) 356 final, 29.6.2010.
[6] Bor (10) 58 BEREC Report on International Mobile Roaming Regulation.
[7] http://ec.europa.eu/information_society/activities/roaming/docs/cons11/wik_report_final.pdf.
[8] See COM(2010) 356 final, 29.6.2010.
[9] For more details on the calculation, see impact assessment.
[10] For more details, see impact assessment.