Frequently Asked Questions - Tariffs
Tariffs
- Why
are mobile tariffs higher than fixed tariffs?
- Why
are tariffs for fixed-to-mobile higher than for mobile-to-fixed
or mobile-to-mobile?
- Why
is roaming more expensive than national calls' Is this going
to change?
Access
and interconnection
- Why
is GSM Europe against mandated obligations on access to
mobile networks (i.e. carrier selection, MVNO's, SMP)?
- Why
is GSM Europe against cost-orientation obligations for dominant
mobile operators?
- Why
should such obligations apply only to dominant players who
abuse their market power?
Tariffs
Why are mobile tariffs higher than
fixed tariffs?
Mobile tariffs are not higher, when you consider what you
get for your money. Mobility is an invaluable success factor
in Europe's digital economy and a vital ingredient of the
modern lifestyle. The fact that we can all communicate any
time, any place, anywhere, demands a premium.
The concept of 'cost' is far more complex in the mobile industry
than it is in fixed. Mobile comprises a whole range of services
- handset, subscription, outbound calls, inbound calls, messages,
data, etc. - which does not break down easily into individual
costs. If you take into account, for example, that in some
countries mobile handsets are free, how expensive then is
the product'
Europe's mobile industry invests in a way that is fundamentally
different to fixed. Mobile operators, locked in intense competition,
must constantly innovate to improve infrastructure, provide
new services and deliver higher quality. Europe now expects
great things from its mobile operators; we must do justice
to these expectations and ensure that Europe is at the forefront
of the wireless Information Society.
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Why are tariffs for fixed-to-mobile
higher than for mobile-to-fixed or mobile-to-mobile?
First, there is a technical reality that deserves explanation:
costs are generally higher in mobile networks than they are
in fixed. This reflects the technological sophistication that
brings mobility to life. As you can imagine, the technology
that allows networks to locate a user at any one time is demands
costly infrastructure and software investments. For the same
technical reasons, it is more expensive to complete a mobile
call than it is to originate one.
Crucially, we should return to the question of 'cost' in the
mobile industry. Because mobile communications embraces an
entire range of different services, you cannot simply say
that one minute of voice telephony equals one Euro. Instead,
competition has entered all the different elements of the
mobile product, including the market for mobile call termination.
Competition will bring the same benefits for consumers as
it has done in all those other areas: greater choice, better
quality and more value for money.
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Why is roaming more expensive than
national calls' Is this going to change?
There is little understanding of how mobile costs and prices
are reached as part of day-to-day commercial practice between
operators. How many people know, for example, that 'roamers'
do not pay a monthly charge for their freedom, but only for
the services they use'
The key question we should all be asking is whether the benefits
of commercial agreements are being passed on to the consumer
in the form of lower retail prices. All the evidence from
the market suggests that this is the case. Europe's operators
are signing as many roaming agreements as possible with their
counterparts in other countries. As the number of mobile users
continues to rise, so the downward pressure on prices will
increase.
Competition in roaming charges will increase with the emergence
of pan-European mobile operators and will put further downward
pressure on prices. Vodafone, for instance, has already announced
a flat roaming fee for their customers for the second half
of this year. Other operators will have to react in order
to compete.
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Access and interconnection
Why is GSM Europe against mandated
obligations on access to mobile networks (i.e. carrier selection,
MVNO's, SMP)?
There is a dangerous misunderstanding at the heart of the
debate on access to mobile networks. That misunderstanding
sees radio spectrum as a scare resource, which limits the
number of operators in the market. Regulators, in their desire
to improve the levels of competition, are tempted to open
up the existing networks and introduce new players. This train
of thought, deceptive in its simplicity, could seriously harm
Europe's place in the Information Society.
Once again, the natural process of competition between rival
operators is doing far more to bring consumer benefits than
any form of regulation ever could. For example, commercial
agreements between operators and retailers are already widening
consumer choice, e.g. One-2-One and Virgin in the UK. Also,
technological progress will lead to a much more efficient
use of available spectrum.
Europe's spectacular success in mobile, which has put us ahead
of all our global competitors, has been driven by high-risk
investment by competing operators. The very notion of consumer
choice in mobile depends on the willingness of operators to
invest and innovate. If these operators' networks are simply
opened up to new players that piggyback on the work of others,
then what is the incentive for new investment' In the end,
mandated access leads to less choice and lower quality.
Such a dangerous approach to access is deeply rooted in the
old world of national, incumbent, fixed-line monopolies. The
regulatory tool kit that worked well in that era is now wholly
inappropriate when it comes to the dynamic, highly competitive
world of mobile.
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Why is GSM Europe against cost-orientation
obligations for dominant mobile operators' Why should such
obligations apply only to dominant players who abuse their
market power?
Regulation should de designed to detect and punish abusive
practices, not success. Once the market for a particular consumer
good is competitive, as the mobile market undoubtedly is and
always has been, then there is less and less need for sector-specific
regulation. Instead, the principles and tools of general competition
law can begin to monitor the market, ensuring above all that
no operator abuses his market power. The European Commission
has essentially taken this approach in its 1999 Review.
We should never forget that the mobile industry never had
any national, incumbent monopolies; there was competition
from day one. What is required now is a set of clear European
guidelines on what we mean by 'dominance', and how the concept
might be used. This raises questions like: 'what is the threshold
of dominance'' and 'what should trigger intervention''
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