Data-roaming prices are going to fall within Europe, and they may fall quite dramatically. But a serious debate remains over how this is going to happen.
As EU digital agenda commissioner Neelie Kroes told ZDNet UK in March, the European Commission will in June propose new legislation to make it cheaper for citizens to use the mobile internet while travelling within the continent. At the Regulating Mobile Roaming Charges policy forum on Tuesday, there were two main theories about the form of the legislation, with no agreement as to which would prevail.
The simple option is to cap prices at the retail level, which has already happened with voice and text roaming. The alternative is to force structural change by prising apart roaming tariffs from domestic tariffs.
Because people almost always choose their mobile operator on the basis of the deal they can get at home and are then locked in to that operator when it comes to roaming, the structural option would introduce competition where there is currently none. If adopted, it would mean those travelling abroad would actively get to choose which network they use on the basis of price, not just coverage.
There are strong hints that this decoupling of roaming and domestic contracts may be the Commission's choice — for voice and text as well as data. As the Commission recently pointed out, the regulation of wholesale and retail voice and text roaming prices has not led to a huge uptake of such services. This may be because these prices still hover just under the mandated cap, and no big operator has taken the initiative to drive them down further.
"Competition is not yet effective and the structural problems still remain," Vesa Terava, the head of the European Commission unit that is formulating the new policies, said at the Brussels policy forum on Tuesday. He later added: "We have seen the results of simple price capping regulation; we don't see market dynamics really evolving."
Terava also pointed to some interesting statistics about the aftermath of the Commission's wholesale data-roaming caps. "Average prices are now well below the regulated caps — in fact, the wholesale prices have declined by 70 percent," he said. "However, when we look at retail data-roaming services, the declines have been much more modest — 15 percent or something like that. The margins between retail and wholesale have risen significantly."
Despite Terava's understandable reluctance to preempt the Commission's official report in May, it is clear that data-roaming charges will either be capped at the retail level or decoupled from domestic tariffs — the entire roaming issue is too totemic for the Commission and its quest for the single European market to be left as it stands. The Commission's experience with voice-roaming caps suggests the structural route.
Chris Fonteijn, chair of European regulator group Berec, would prefer retail caps. He cited problems with the structural approach, including "lack of consumer engagement, low commercial incentives, technical complexity and high implementation cost".
"It would generate some competition, but we don't expect that would be enough to justify what may be considerable implementation costs," he said, suggesting that caps may be necessary either way. "It could lead to the worst of both worlds. We believe that price regulation, for which we are no natural enthusiasts, remains the most practical course for many years."
Data-roaming prices will fall in Europe, but there is a debate as to how it will happen.
As for the operators themselves, most want no regulation whatsoever, but almost all were particularly opposed to structural change. Francois Comet, France Telecom's deputy regulatory chief, said the decoupling of roaming and domestic tariffs was not "right for the customer".
"Roaming is very easy to use," Comet said. "The alternative solution where you need to enter a PIN code or credit-card numbers, then get some kind of advertisement, is not a very interesting alternative."
Telefonica regulatory chief Robert Mourik agreed, saying it was unlikely that a consumer visiting Spain once a year on holiday would bother signing up with a small mobile virtual network operator (MVNO) just to get a "little bit of a cheaper price" for that short time.
"The impact would be fairly minimal and there would be renewed calls for price regulation," he said.
Indeed, the greatest fear appears to be that of both the structural and capping routes being taken at once. Even Alexander Zuser of Telekom Austria, who favours the structural route, said this would be disastrous.
Half of the problem is that customers buy a mobile phone or service bundle based on domestic rates, not roaming. If the bundling is the problem then you have to unbundle, but please don't do any price caps.– Alexander Zuser, Telekom Austria
"With voice and SMS, half of the problem is that customers buy a mobile phone or service bundle based on domestic rates, not roaming. If the bundling is the problem then you have to unbundle, but please don't do any price caps," Zuser told ZDNet UK.
Telekom Austria is particularly keen on the decoupling of roaming and domestic tariffs because, as a relatively small regional player, this would give it a chance to offer services all around Europe. According to Zuser, the imposition of price caps as well would spoil the telco's plans for expansion, as it would not be able to make a decent profit.
Zuser's employer is an oddity in an industry where most operators want to avoid any regulation, whether it involves capping or structural change. Indeed, Mourik told ZDNet UK that the industry would see data-roaming prices reach parity with domestic charges by 2015 — Neelie Kroes's stated ambition — without regulatory intervention.
Judging by the mood at the Brussels conference, it is probably too late for such promises. In just over a year's time, there is a good chance travellers within the EU will get to choose from a menu of roaming deals for data, voice and text.
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