Commission's latest proposal to regulate roaming is flawed
14 June 2006
14th June 2006 - London - A single European roaming tariff would distort and damage national markets
The European Commission's latest proposal* to regulate mobile roaming services by equalizing retail prices across the European Union would distort a very competitive market, characterized by high levels of service innovation, according to the GSM Association (GSMA). The Commission plans to impose an arbitrary retail price cap across Europe, ignoring the fundamental geographic, demographic, regulatory and commercial differences between the 25 countries of the European Union. The cost of doing business varies widely across the European Union and prices of other services, such as air travel, are not standardized throughout Europe.
The GSMA, the global trade association for mobile operators, believes the imposition of such a price cap** would reduce competition and innovation among European mobile operators, damaging a hitherto innovative and growing industry that invests about 15 billion euros in new networks, products and services each year.
"This latest proposal appears to stem from a flawed political ideology that sees the European Commission trying to force uniform prices across Europe and dictate what are acceptable returns to business through regulation," said Rob Conway, CEO of the GSM Association. "That ideal fails to recognise the huge diversity of business environments across Europe and that customers' usage of these services varies widely. One size does not fit all. Operators must remain free to offer their own innovative and distinctive pricing plans in response to customers' demands."
In recent months, European mobile operators have announced major price cuts, which will reduce the roaming tariffs paid by more than 70% of travellers by an average of over 40%. Unlike the regulatory straitjacket envisioned by the European Commission, these voluntary cuts allow mobile operators to continue to follow their own pricing strategies, tailored to their own national markets and customer needs.
Europe's mobile industry would be further damaged by the Commission's proposal that operators could not charge their customers for the convenience of being able to receive a call on their mobile phone when roaming abroad. The forced abolition of the 'receiving party pays' convention for what is effectively a call forwarding service could mean that some operators would have to restrict access to roaming altogether, as they would otherwise make a loss on the provision of this service. There is no justification for any operator to be forced by regulation to provide services below cost.
The European Commission's proposal to regulate wholesale rates is also unwarranted, as investigations by national regulators have found this market to be competitive.
"Following widespread criticism from industry, national regulators and politicians, the Commission has replaced its first flawed proposal with a different, equally ill thought out scheme," added Mr. Conway. "The Commission is following a strategy of trial and error regulation. They should carry out a full impact assessment of their new proposals, which are significantly different from its original 'home pricing principle' before they push further ahead with the process and hold another public consultation."
About the GSM Association
The GSM Association (GSMA) is the global trade association representing more than 690 GSM mobile phone operators across 213 countries of the world. In addition, more than 180 manufacturers and suppliers support the Association's initiatives as key partners.
The primary goals of the GSMA are to ensure mobile phones and wireless services work globally and are easily accessible, enhancing their value to individual customers and national economies, while creating new business opportunities for operators and their suppliers. The Association's members serve almost 2 billion customers - 82% of the world's mobile phone users.
Notes for editors
* The European Commission has replaced its original proposal, which stipulated that roaming calls should cost no more than comparable domestic calls, with a new proposal that would cap roaming prices at a single pan-European rate.
** The European Commission's proposal mandates a maximum price for individual calls, vastly reducing operators' flexibility to offer different tariff packages to different customer groups.
For further information contact:
David Pringle
GSM Association
Tel: +44 795 755 6069
Email:press@gsm.org
The GSM Association is a global trade association representing more than 680 mobile phone operators in 213 countries.
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