International roaming

1
International roaming

• Pál Belényesi
• University of Verona
• November 2006

2
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

3
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

4
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

5
The Commissions 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

6
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

7
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

8
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.

9
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)

10
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

11
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

12
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

13
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

14
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

15
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?

16
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

17
Contd

• home pricing principle
• No pay for receiving the call
• ERG favoured wholesale regulation instead of
  retail regulation

18
Possible content of the regulation

• Prices paid for international roaming will not be
  unjustifiably higher than the charges for calls
  paid within the users 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)