The European Commission’s objective is crystal clear: over the longer term, it aims to abolish roaming rates in the EU, which make cell phones more expensive to use when consumers travel outside their country of residence. But the debate over how to go about it is intense.

Although the European roaming market is already regulated, it is not very competitive because most operators have set their rates at the ceiling level progressively imposed by the EU. Given this reality, the European Consumers’ Organisation (BEUC) recommends more drastic regulations on retail prices for calls, text messages and especially data transfer (access to internet, transfers of e-mails, photos and videos), which is growing significantly. Operators, on the other hand, prefer to allow the market to evolve naturally and are not prepared to accept stiffer rules. They highlight the increasing cost of ongoing investments in R&D and infrastructure.

USERS APPRECIATE LIMITS

The ambition of the EU authorities is thus to create a competitive internal market for telecoms services for the benefit of consumers. By setting a European tariff for calls made or received in the EU, Regulation 717/2007 got the ball rolling. Adopted in June 2007, it introduced a ceiling for wholesale prices, the rates operators charge each other for transferring roaming calls, and for retail prices charged to consumers. It also imposed transparency measures related to users’ consumption and costs.

The new rules on roaming, which will remain in force until 30 June 2012, were made more ambitious after being amended in June 2009 by Regulation 544/2009. Rates for voice calls will be cut further and a ceiling is set for text message charges. The text also tackles data transfers, although it only regulates wholesale prices charged between operators for switching between networks.

The legislative framework introduces other measures that entered into force in July 2010. From that time, retail rates are set at 39 eurocents a minute for calls made and 15 eurocents for calls received. They will drop again in 2011 and 2012. To keep charges for data transfer to a reasonable limit, operators are now obliged to cut off the connection once consumption reaches more than €50. The ceiling on wholesale prices for data services is also reduced from one euro to 80 eurocents per megabyte.

WHERE TO DRAW THE LINE?

Although the BEUC welcomes this new phase, it is not “the end of the story”. “There’s still a long way to go,” notes its legal officer, Kostas Rossoglou. In its Digital Agenda communication of May 2010, the European Commission expresses its intent to align rates for calls abroad with those for national calls by 2015. Meanwhile, though, consumers are still not enjoying rates below the ceilings imposed by EU rules. Like the Commission, which reported on the subject in June 2010, Rossoglou denounces the low level of competition on the roaming market.

Another problem is whether or not to regulate retail prices for data transfer. The BEUC finds that doing so is the natural next step. Since the market is sluggish, it argues, a cut in wholesale prices alone is not likely to bring prices down for users. According to Rossoglou, only “strong legislation on lowest prices and the introduction of monitoring instruments will remedy this competition problem”. The BEUC argues that the 2009 regulation should be extended beyond 2012 to prevent a price increase.

OPERATORS OPPOSED

For the industry, regulating retail prices is not the solution. “The mobile market is very segmented, which is one of the keys to its tremendous success. Consumers have access to a range of offers that vary widely in terms of prices. This segmentation should be reproduced in a roaming situation. So we should guard against the idea of uniform prices,” commented a representative of the French operator Orange.

The industry has a weighty argument: investment. Operators are unanimous in the view that a more binding and permanent legislative framework could curb the technological investment that will bring about the transition from 2G to 3G, for example, or the deployment of optical fibre networks. Network development could also suffer. “In a context where it is essential to continue investing to support the development of uses and the EU’s digital ambitions, a decline in earnings in a given segment will only lead to a reduction in investment,” according to the same representative.

On the Commission side, the experts seem to consider that it is too early to take a stand. Everything will depend on the next report assessing the 2009 regulation and the state of competition on the market, scheduled for release in June 2011. The question is whether the new Digital Agenda Commissioner, Neelie Kroes, will be as determined as her predecessor, Viviane Reding. Views are divided. Kroes sided with consumers when she was in charge of competition, argue some observers, while others point out that the commissioner did not speak out in favour of a new regulation on roaming at her hearing before the European Parliament, in January 2010, before her appointment to her new position.