New EU Mobile Roaming Rules Rued by Operator

Commenting on the EU decision to re-shape the European roaming market, Paul Lambert, Senior Analyst at Informa Telecoms & Media, says that European mobile users will benefit from radical shake-up of roaming market, but operators will suffer

“The European roaming market moved a step closer to radical upheaval today as the European Council approved measures agreed by the European Parliament and the Danish Presidency late yesterday to create a new market for roaming services. The move paves the way for hitherto unseen competition in the market for mobile access while travelling in the European Union, from July 2014 onwards, resulting in lower prices for consumers but new threats to European operators’ revenues.

Under the proposals, which will be voted on in the European Parliament in May, European mobile users will be able to buy roaming services from companies other than their home service provider while keeping the same number.

Today’s agreement forms the basis of what looks likely to become the most profound change in the roaming market operators have to deal with since European roaming regulation first came into effect in 2007. They not only cover the separation of roaming services from home mobile services, they also agree to prolonging the ceiling on the price operators can charge for voice and SMS roaming rates, as well as introducing a new cap on data pricing.

Although the willingness of European consumers to buy mobile services from operators other than their home service provider is hard to gauge, what is certain is that the proposals, if voted into effect 10 May, will significantly increase the pressure on mobile operators to offer more competitive roaming rates to their customers. This will in turn reduce roaming revenues at a faster rate of decline than has been seen in recent years, potentially leading to more expensive mobile services for consumers in their home market – the “waterbed effect” operators often speak about when discussing the effects of roaming regulation.

At the same time, the cap on data roaming rates could be the push operators need to accelerate the rate at which they bring the price of using data services while abroad in line with home rates, something that will prove extremely popular with consumers, and which could also partially offset the reduction in voice roaming revenues. The agreement today calls for voice roaming prices to be lowered to €0.29/min and €0.70/MB for internet access in July 2012 and for further reduction to €0.19ct/min for voice calls and €0.20/MB for internet access by 2014. The new proposals aim to bring roaming tariffs into line with domestic prices by 2015.

Politicians at the European Parliament and Council have largely been unimpressed by the way in which and the speed with which operators in the region have reduced roaming rates. They perceive that European operators have done just enough to reduce rates in line with the different price ceilings that have been put in place since 2007 and that fundamental structural changes are needed to bring rates more in line with the rates consumers pay while at home.

On the other side of the debate, operators have long been entrenched in the mindset that roaming is a premium service and should be charged accordingly – at a premium to home rates. While they have long enjoyed significant revenues from this position, persistent noises from the European Parliament and Council, along with a willingness to act on them, should have made it clear to them that they could only enjoy this position for so long.”