international mobile roaming in the eu

8/6/2019 International Mobile Roaming in the EU

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International mobile roaming:regulatory policies in the EU

Hans Bakker Director, Regulaid

NATP-II Project leader



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W hat is international mobile roaming?

Service by a mobile network operator

enabling access to its network for subscribers to a foreign mobile network for

making and receiving calls



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C alling home: how does it work



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C alling home: what does it cost

1. W holesale fee of Host operator includingprofit mark-up

2 . International transit charge including profit

mark-up3 . Destination network termination fee including

profit mark-up4 . Your home operator profit mark-up

__________________________+5. Your invoice



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Receiving calls: how does it work

.



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Receiving calls: what does it cost

1. ( C aller pays own call to your home operator)2 . International transit charge incl.profit mark-up3

. Host network wholesale termination fee incl. profitmark-up4 . Your home operator profit mark-up

____________________________+

5. Your invoice



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W hy are the rates so high?C osts not significantly different from non-roamingcalls

� No competitive pressures in wholesale market� Low consumer awareness: Many travellers

± not aware of high rates and of ³called party pays´ ± not aware of choice options ± no easy access to alternativesC ompare: hotel room telephone tariffs.



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No competitive pressures in wholesaleroaming market

� Random selection of roaming network:wholesale buyers can not exert buying power and induce competitive behaviour

� However, emerging traffic direction technologiesenable operators to lead calls to specificroaming suppliers, thereby enabling themselvesto take a negotiating position

� But do they want to? International standardagreements between operators in GSM

Association



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European Union efforts to addressinternational roaming price problem

1. Use of antitrust powers (EU Treaty) for ex postsanctions against ³abuse of dominance´ with cross

border effects

2 . Promotion of transparency

3 . Ex ante regulation



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Use of antitrust powers

1 999 start of µSector Inquiry¶ 1 997 -2 0002 000 Initial findings2 001/ 2 00 2 on-site inspections

2 00 4 statement of objections against two UKmobile operators: abuse of 100 % dominance onown network by charging excessive prices2 005 statement of objections against twoGerman operators

� Ongoing. Very slow, difficult legal issues: ± Delineation of relevant market ± Prove excessive prices.



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Ex ante regulation: the old framework

- C ross border problem by definition- Regulation on behalf of foreign stakeholders

calls for reciprocal and concerted action, which

was not taken- Regulators inactive under old regulatory

framework:- not all were empowered- not all were inclined to take action



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« .so for a while nobody moved

- Ex post measures too slow and uncertain- Ex ante regulation deadlocked

- Only transparency initiatives (website E C )- Some initiatives by operators to introduce

wholesale discounts (up to 50 % - from whatmargins?) but these were not passed on toconsumers



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ERG common approach (1):- Although terminating incoming calls to foreign roaming

end users is part of the wholesale market, this isgenerally done against usual terminating tariffs (same asother calls coming from international transit). High enduser prices for ³receiving calls abroad´ therefor comefrom home network mark-up

- Handling originating calls from foreign end users (³callinghome´) is charged heavily by Host network to Home

network through Inter-operator Tariffs (IOT). End user prices for ³calling home´ are combination of IOT andHome network mark-up.



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ERG common approach ( 2 ):

Role of traffic direction- Growing use of traffic direction technology makes it

possible to single out preferred roaming partner network,but unclear if this is used to negotiate lower IOTs or justto enhance alliances

- W here fully operative, traffic direction technology mayenable substitution of preferred providers, enhancingcompetitive price incentives

- It is not expected that MNOs will direct 100 % of traffic to

one preferred partner network in the short to mediumterm; contracts will all MNOs.

- All MNOs in a given country therefor part of thewholesale roaming market.



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Single player SMP- Market dominance of single Significant Market Power

(SMP) players not indicated by market share: no evidenthigh and persistent market shares.

- Single player SMP less likely if widespread use of trafficdirections technology for price negotiations andcountervailing buying power

- Single player SMP may however result from ability touse membership of alliance to behave independently

from buyers



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Joint dominance- Joint dominance/Tacit collusion: ³Even in the absence of

structural links between operators, market structure canbe conducive to co-ordinated outcome´. Likely if:- Mature product: yes

- Homogeneous product; yes- Stagnant growth on demand side: yes- Similar cost structure of operators: yes- Low elasticity of demand: yes- High entry barriers: yes- Lack of potential market entry: yes- Likely collective interest stronger than likely gains of individual

competitive behaviour: yes



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Market analyses ongoing

1. Market analysis in each member state: ³market 1 7 ´often is last in line, possibly to enable concertedapproach

2 . C onsultation procedures3 . Notification to European C ommission, which can veto

market definition4 . C hoice of remedies

5. And then « ..appeal procedures.



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Recent consultation document AR C EP (Fr.)

1. No single SMP player in wholesale internationalroaming market

2 . Situation qualifies as joint dominance3 . European C ommission should assess legitimacy of

GSM Association agreements4 . If necessary, regulation by new law



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Options for remedies (1): Transparency

ERG report lists transparency options, e.g.:- W ebsites by regulator or independent third party

- SMS initiated by home operator or end user - SMS by host operator (expanded welcome message)- Paper info in airplanes



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Options for remedies ( 2 ):enhance competition

1. Bypass option: local prepaid SIM cards2

.C

ompetition on the networks: mandatorynetworks access for MVNO¶s targetingroaming prices

3 . ³C arrier selection´ for mobile roaming

4 . Voice over broadband bypasses will grow inuse



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Options for remedies ( 3 ): price regulation

1. In retail price control (not EU): Linking upwith non-roaming retail tariffs for identicalfunctionalities

2 . In wholesale: Retail-minus wholesale rates

Remedies must be internationally co-ordinatedto prevent market distortions.



2 3

NATP-II Project

1. W orkshops with in-depth transfer of information

2. Bilateral direct assistance (³leverage´)

3 . High level meetings EU and MEDAcountry regulators

4. Help prepare common approach



2 4

Thank you

[email protected]@regulaid.com

international mobile roaming in the eu

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