th semester a.c. meyers vænge 15 - aalborg universitet · 2017-01-26 · 3.1.3 monopoly ... data...
TRANSCRIPT
![Page 1: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/1.jpg)
Semester: 4th semester
Title: Telecom operators Challenges within Europe Project Period: 18/10/2016 -05/01/2017 Semester Theme: Thesis Supervisor(s): Morten Falch [email protected]
Project group no.: 1 Members and signatures: Ali El-Jechy [email protected] Copies: Pages: 81 Finished: 05.January.2017
In2007,EuropeanCommissionpresentedpricecapregulationonthetelecommarket.Itwasjustforthecallroaming.Afterfewyearslater,thenhaveintroducedpricecapsforSMSanddataroaming.AndnowEuropeanCommissionaimingtohaveasingleEuropeantelecommarket,sotheyhavementionedthattheywillimplementRoamLikeAtHomeRLAHconcept,whichwilltakeeffectinJune2017,telecomoperatorswillnotbeableanymoretochargeend-usersfortheirroaming,andsoenduserswillpaysamepricesasdomesticprices.Whiletelecomoperatorsstillhavetopayforeignoperatorsonthewholesalepricelevel.RLAHhavefewimpactsonthebusinessmodelofeachtelecomoperatorwhichishardtopredictasthedifferentnationsmarketsareheterogeneousandoperatorsfacelargediscrepanciesintermsofroamingusageduetodifferenttravelingpatternsbetweentheEuropeancountries.TheaimofthisthesisistoprovideapreviewintheeffectofRLAHfortheendusersandEuropeantelecomoperators.Thedatawillintroducehowroamingregulationshaverevisedanddevelopedfrom2007untilnowindetails.FinallythethesisrepresentssomesuggestionsandstrategiesthatcouldbeimplementedontheEuropeanmarkettotackletheissueofRLAH.ThethesiswillexplainthenegativeandpositivesideeffectsofthesesuggestionsandstrategiesthatwerepresentedbyTheBodyofEuropeanRegulatorsforElectronicCommunicationsBEREC.
Aalborg University Copenhagen A.C. Meyers Vænge 15 2450 København SV Semester Coordinator: Henning Olesen Secretary: Maiken Keller
By signing this document each group member confirms that all have participated equally in the project work and that they collectively are responsible for the content of the project report. Furthermore each group member is liable for that there is no plagiarism in the report.
![Page 2: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/2.jpg)
1
TelecomoperatorsChallengeswithinEurope
![Page 3: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/3.jpg)
2
1. TableofContents
1. Introduction................................................................................................................4Motivation....................................................................................................................................6Problemformulation................................................................................................................7Delimitation.................................................................................................................................8
2. Methodology...............................................................................................................9Diagram.........................................................................................................................................9Desktopresearch.....................................................................................................................10Primaryresearch.....................................................................................................................10Quantitativeresearch........................................................................................................10Qualitativeresearch(Interview)...................................................................................10
3. Theoreticalframework.........................................................................................113.1 MarketStructure...........................................................................................................113.1.1 PerfectCompetition.............................................................................................113.1.2 Oligopoly..................................................................................................................133.1.3 Monopoly.................................................................................................................143.1.4 RegulatedMonopolyandUnregulatedCompetition................................15
3.2 WaterbedtheorybyValetti&Genakos.................................................................174 Background&Findings..........................................................................................204.1 InternationalDataRoaming......................................................................................204.2 Europeanmarket..........................................................................................................214.2.1 Marketstructure...................................................................................................214.2.2 MVNOs......................................................................................................................234.2.3 Googleconcept.......................................................................................................264.2.4 Spanishmarket......................................................................................................27
4.3 Wholesaleroamingmarket.......................................................................................304.4 HistoryofroaminginEU............................................................................................364.5 PriceCap..........................................................................................................................414.6 Fairusepolicy................................................................................................................444.7 Transparency.................................................................................................................464.8 Economicimpactofcuttingroamingfees.............................................................474.9 ImpactsofRLAH(RoamLikeAtHome).................................................................504.10 Suggestionstoreducetheeconomicandbusinessimpactsofcuttingfees 514.10.1 Fairuselimits......................................................................................................514.10.2 Raisedomesticprices.......................................................................................514.10.3 Decreasewholesaleroamingprices............................................................52
4.11 Strategiesforthefuture...........................................................................................534.11.1 CarrierportabilityandAppleSIM................................................................534.11.2 Cross-borderandtrafficcompetition(forbigoperators)....................564.11.3 IMSI(InternationalMobileSubscriberIdentity)beyondnationalborders(forsmalloperators).........................................................................................574.11.4 RoamLikeLocalinsteadofRLAH.................................................................584.11.5 WIFIoffloading....................................................................................................59
5 Analysis.......................................................................................................................605.1 Europeanmarket......................................................................................................625.2 SpanishMarket.........................................................................................................645.3 Impactfortelecomoperators..............................................................................665.4 Suggestionsandstrategies....................................................................................71
6 DiscussionandConclusion....................................................................................77
![Page 4: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/4.jpg)
3
7 References..................................................................................................................788 Appendix.....................................................................................................................80
TableofFiguresFIGURE 1 - METHODOLOGY DIAGRAM ................................................................... 9 FIGURE 2 EQUILIBRIUM CURVE4 ......................................................................... 13 FIGURE 3 EUROPEAN MOBILE REVENUE 2007-202011 ........................................ 22 FIGURE 4 GLOBAL MVNOS13 ............................................................................. 24 FIGURE 5 MARKET SEGMENTATION14 ................................................................. 24 FIGURE 6 INCREASING NUMBER OF MVNOS IN EUROPE13 ................................... 25 FIGURE 7 EVOLUTION OF TOTAL REVENUES OF THE ROAMING SERVICE IN THE
SPANISH MARKET (MILLIONS OF EUROS)17 .................................................... 28 FIGURE 8 DATA SERVICE 17 ................................................................................ 28 FIGURE 9 AVERAGE WHOLESALE DATA PRICE PER MB IN 201419 ......................... 30 FIGURE 10 THE DIFFERENCE RATION OF TRAVELLERS BETWEEN THE EUROPEAN
COUNTRIES1 .............................................................................................. 35 FIGURE 11 THE MAXIMUM TARIFFS (EXCLUDING VAT) FOR CALLS, TEXTS AND DATA22
................................................................................................................ 41 FIGURE 12 WHOLESALE DATA COSTS INCLUDING TRANSIT COSTS (€ CENT/MB)
201624 ..................................................................................................... 43 FIGURE 13 CHATSIM PROVIDER IN ITALY34 ......................................................... 55 FIGURE 14 TELEFÓNICA STOCK VALUE40 ............................................................ 64 FIGURE 15 A SUGGESTION SOLUTION BY JAKOB WILLER (INTERVIEW) ................... 69
Acknowledgement
I would like to dedicate special thanks and my deep appreciation to my supervisor Morten Falch for his full and helpful guidance during this master thesis.
Hint:Allthedatacollectedinthisthesisareupdateduntilthe25thDecember.2016
![Page 5: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/5.jpg)
4
Chapter1Inthischapter,anIntroductionforinternationaldataroamingwillbeexplained
firstwiththechallengesthatitisfacing.
Second,aMotivationforchoosinginternationaldataroamingasatopicforthis
thesiswillbementioned.
Third,Researchquestionwillbeintroducedinordertoreformthethesisanddirect
ittoselectarelateddatatoanswerthesequestions.Answersforthesequestions
willbepresentedintheAnalysischapter.
Fourth,Delimitationpartusedtoframethethesisandgiveareaderanoverviewof
whatwillbeextendedfromthisthesis.
1. IntroductionGlobalizationhaschangedourneeds,behaviors,andlifestyleingeneral.IthasalsoincreasedtheintegrationbetweenEuropeancountriesaswellasincreasingtheprosperityoftheEUcitizens.Thishasinturnledtoanincreaseintheintra-Europeantravel.Peoplehavealwayshadaninterestinusingmobileserviceswhilebeingabroad,andsmartphonedevices’revolutionwithallofitsdiversesocialandprofessionalmediahaschangedthebehavioroftheendusersinusingtheirdevicestobealwaysconnectedwithotherswhilebeingabroad.1Whileendusersareabroadandusingtheirdevicesinthevisitedcountry,theirdomesticserviceprovidercannotrelyonitsnetworkfordataconnectivityunlessitisacross-boarderoperatorowningtheirnetworks’infrastructureinmultiplecountries.Inregardstothat,usershavenootherchoicethanusingthenetworkofthevisitedcountry.Also,whenauserusesthevisitednetworkoperator,usingaprocessreferredtoasinternationaldataroaming,thedomesticserviceproviderwillbechargedafeebythevisitedserviceproviderastheyareofferingtheirservicestoconnecttheusersonbehalfofthedomesticserviceprovider.Attheend,thedomesticserviceproviderwilladdthiscostontheretaillevelbychargingtheenduseraretailroamingcharge.EuropeanUnionhasbeenthefirstregiontointerfereintheinternationalroamingservicesmarket.In2007,thefirstregulationwasintroduced.Itincludedcallsandsmsandhassincethatyear,beingrevisedseveraltimesand
![Page 6: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/6.jpg)
5
developedtoreachitslatestversionwhichtookplaceinthesummerof2012(EuropeanCommission,Brussels2015).InternationalRoamingistheabilityofcustomerstousetheirphonesoutsidetheirgeographicalcountrycoverage,providedbytheirnationalnetworkoperator.Dataroamingreferstotheuseofmobiledataserviceswhilstabroad.Whiletravelling,itisimportantforthetravellertogetintouchwithfamilyandfriends.ThiskindofcommunicationrequiresInternetaccess,wherethetravellercanlogintoFacebook,shareimportantmomentsonSnapchat,andhaveavideocallonViber.CurrentlyitischeapenoughtogetacallwhiletravelinginEuropeancountries,ortosendanSMS,butthepricesforInternetaccessareveryhigh,whichmakesitdifficultforthetravellertouseInternetwhiletravellingintheEUcountries.Unfortunately,abroaduserswereafraidofreceivinghighbillsservices,whichresultingintravellersbeingdissentingtointernationaldataroamingservicesanymore.Thishasledtoanimpactonthetelecomoperatorsweretheadditionalrevenuehamperedduetothelimitedusageofmobileserviceswhileabroad.FurthermoreasNeelieKroes(Europeancommissionerforthedigitalagenda)indicated:”it’snotjustafightbetweenholidaymakersandtelecomoperators.Millionofbusinessesfaceextracostsbecauseofroaming,roamingmakesnosenseinaEuropeansinglemarket,itseconomicmadness”3.Inotherwords,theEuropeanroamingaffectsnotonlypeoplewhotravelforpleasurebutalsobusinesswhoseemployeetravelaroundtheEuropeancountries,whichtranslatesintosignificantroamingbills.Thenumberofintra-EUtravellershavebeenincreasedinthelastyearsandtheirinterestfocusesnowinusingtheirdomesticmobileservicesinaconvenientandtransparentwaywhilebeingabroad.3AsafactofthatEuropeanCommissioncameupwithanewmethodcalledRLAH(RoamLikeAtHome).ThismethodshalltakeplaceinJune2017,whichmeansthatenduserswillpaythesamepricesfortheircommunicationservicesusagewhilebeingabroadforthesamepriceasiftheywereintheirhomeland.ThismethodwillbringsomeeconomicandbusinesseffectstotheEuropeantelecomoperatorsbecausetheywillnotbeabletochargetheirsubscribersfortheirabroadroamingusageanymore.Inthesametime,thedomestictelecomoperatorsstillhavetopaytheforeigntelecomoperatoronthewholesalelevelforconnectingtheirsubscriberswhilebeingabroad.AlsoanotherchallengeisthedifferencesinthetravelingratiobetweenthecountriessuchasnorthcountriesandsouthcountrieswillmakeitverycomplicatedforEuropeanTelecomOperatorsandEuropeanregulators.
![Page 7: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/7.jpg)
6
Europeangoingthroughwhirlpoolinregardstohowtoimplementwholesaledataroamingregulationandhowtoletend-usersbesatisfiedwiththepricesofusingservicesabroad(Data),alsoanotherissuethatwhatEuropeancommissionpromisedcustomersthattheywillnotallowtelecomoperatorsanymoretochargethemforusingtheirdataabroadbuttheydidn’ttakeinacasewhatwillhappentothetelecomoperatorsbusinessinthecountrieswhichtheiroutgoingdataratiomuchmorehigherthantheingoingdata.ThisthesisgivesageneraloverviewoftheevolutionofinternationaldataroamingintheEUfrom2007untilnow.Additionally,abriefdetailsontheeconomicandbusinessimpactsforcustomersandtelecomoperators.Basedonboththetechnologicalpossibilitiesandeconomicimplications,numberofpossiblestrategiesandsolutionsforthefuturewillbepresentedanddiscussesindetailstogatherthemandcomeupfinallywithaconclusion.
MotivationTheauthorchoseinternationaldataroamingtopicbecauseitisahottopicinthe
Europeanmarketandstillunderdevelopment.Also,itwentthroughmany
discussionsanddevelopmentstoreachthelevelithasreachedtoday.
Onthehand,thistopiccoversthecoursesthattheauthorhaslearnedinthefieldof
ICTEAalborgUniversity.
Inadditiontothat,therearetwoincentivereasons,whichstandbehindtheauthor’sdecisionofchoosingInternationalDataRoamingastopicformymasterthesis.Thefirstreasonisthetechnologicalinnovation.Inotherwords,whatcananewtechnologydoinchangingpeople’slifeiftheyperceiveitwithattractiveness.Alsothe extendthatitcanimpactexistingalternativetechnologies,whichareadoptedbytheexistingfirms/organizationsforseveralyears.Thesecondreasonisanacademicone,sinceInternationalDataroamingisatopic,whichmatchestheauthor’sfieldofstudyandinvestigatingitwillhonetheauthor’sskillsintransformingtechnologicalcapabilitiesintobusinessvalue.Butoffcoursethosetworeasonswerenotenoughtofinalizetheprocessofselectinganappropriateandinterestingtopicforthemasterthesis,sodiscussionswereessentiallyneededinordertohaveaclearvision.
![Page 8: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/8.jpg)
7
TheauthorhasdiscussedthetopicwithhissupervisorMortenFalchseveraltimes.Theinformationhegainedthroughthosediscussionshasclearedthevisionandmotivatedhimmoretowriteaboutthistopic.
ProblemformulationInthissub-chapter,themainquestionswillbepointedandwillbeexplainedlater
inthethesis.themainquestionwillelaborateaboutthechallengesthattelecom
operatorsinEUarefacingandhowtheyhavepreparedforthenewregulationsin
awaythathaschangedtheirprices.ThisthesisfocusesonthetelecommarketoftheEuropeancountries,sincetheEUCommissionwillreleaseanewmethod,calledRLAH(RoamLikeAtHome).Thismeansthattelecomoperatorswillnotbeabletochargetheircustomersanyextrafeesanymorefortheirusageof(data,sms,call)whilebeingabroad.RLAHhasaneffectonthetelecomoperatorsbusinessthatishardtopredictintermsofroamingusageduetothedifferenttravellingrationbetweenthecountries.Thisimpliedthatinsomecasestelecomoperatorswouldnotbeabletocoverthecostoftheroamingcharges.Mainquestions:4.2.2 Howtelecomoperatorscangetafundtocoverthecostofinternational
dataroamingwholesalechargesininteractionwithRLAH?
4.2.2 Couldwholesalepriceregulationbeapartofthesolutionoftheproblemmentionedaboveinthefirstquestion?
![Page 9: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/9.jpg)
8
DelimitationInthissubchapter,delimitationusedtoframethethesiswithbordersbecausein
manyfieldsthereisalackofinformation,sotheauthorfocusedonapartswhere
thereareenoughdatatobecollectedandusedinthethesis.
Togetthepurposeofthisthesis,itisamusttosetborderstowhatintendedtobeachieved.Theselimitationsarenecessaryduetothelackofinformationinsomeareasoftheresearch,butitwillalsogivetothereaderagoodunderstandingregardingthescopeofthisthesis.Sointhisthesis,theauthorwillnotgodeeplywiththetechnicaldevelopmentbutthereaderswillgetenoughunderstandingaboutthetechnicalside.Delimitationslist:
• Thisthesiswillnotexplaindeeplythetechnicalaspectofinternationaldataroaming;mostlythefocuswillbeonthemarketside.
• Inthisthesis,thefocuswillbemostlyontheEuropeanunionmarket.
• TheobjectofthisThesisisintheEuropeanmarket,nevertheless,some
referencesmightbemadetoanothercountries,butnofurtheranalysisordeeplydetailswillbeelaborated.
• InthisthesisthecostanalysispartwillbeaboutfewScandinavians
countries.
![Page 10: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/10.jpg)
9
Chapter2
2. Methodology
Inthischapter,methodologypartwillbeintroduced,whichisaframetocreatea
flowforthethesisandawayinwhichdataarecollected.
Methodologypartalsodescribesthemethodsusedtoproducetheoutcomesforthis
thesisandansweringthequestionsoftheproblemformulation.
Therewillbeadrawingdiagramshowingthestructureofthethesis.
DiagramThemethodologydiagramseektoshowhowtheprocessdeveloped,showingdifferentpartswhichwereusedinthereport,thesepartsaretheresearchpart&thetheoreticalframeworktocomeupwithananalysisandconclusion.TheaccumulationofknowledgefromthemethodsusedwascompiledinaComprehensivemannerthroughadynamicprocess
Figure1-MethodologyDiagram
![Page 11: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/11.jpg)
10
DesktopresearchDesktopresearchwasusedinordertogetabriefknowledgeaboutthethesistopicthatincludedthestudyofalltheavailablematerialonthesubject(academicresearch,EUdataroamingregulationsandtelecomreports).ThatresearchwasneededtounderstandthemarketandtherelationwiththeEUdataroamingregulation.Also,itwasmeantthatthetechnologyusedinthisfieldtogetapurepictureofhoweachofthemcouldcreatechallengestochangethestrategyofthetelecomoperatorsbusiness.InordertogetthemostusefulandreliableinformationtheAalborgUniversityListofDatabasesandVendorswereusedtoselectresources:IEEEXploreDigitalLibrary,GoogleScholar,ElectronicsandcommunicationabstractsandDTUuniversitylibrary,BEREC.
PrimaryresearchTheprimaryresearchforaprojectisdividedinqualitativeandquantitativeresearch.However,forthecurrentprojectprimaryquantitativeresearchwillbeincludedsincetherearenumericaldatathatcouldaddvaliditytotheproject.
QuantitativeresearchForthequantitativeresearchamarketshareandotherusefuldata(ratiooftravelers,prices,etc..)wereconductedbygoingthroughsomewebsitereportssuchasBERECandothersourcestodiscoverthedifferentbetweenwholesalepricesindifferentcountriesinEurope.Thesedatawillgiveabetteroverviewtobeusedintheanalysischapterlaterinthethesis.
Qualitativeresearch(Interview)AninterviewwillbewiththeTelecomindustryassociationinDenmarkwiththedirectorJakobWiller,whichwearegoingtodiscusssomepoint’sregardthetopic.SinceJakobWillerhasadeepexperiencewiththeinternationaldataroaminginEurope,itwillbeagreatsteptohaveaninterviewandgainmuchmoreknowledgeregardsthetopic.AnotherinterviewweredonewithRikkeJohan(aPoliticalAdvisor-MEPJensRohde,EuropeanParliament),whichwehaddiscussionaboutthedifferentpricesofwholesalechargesindifferentcountriesinEuropeandtheupdateofFairUsePolicydraft(FUP).Allthedataregardstheinterviewswillbeincludedintheappendixpart.
![Page 12: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/12.jpg)
11
Chapter3Inthischapter,differenttheoriespresentedanddiscussedfromknownresource
suchasTommasoValletti&ChristosGenakostobeusedlaterintheanalysis
chapter.
3. Theoreticalframework
3.1 MarketStructureThissubchapterwillelaborateonmarketformationtheorybyKarenCollinsina
bookcalled“Exploringbusinesses”4.Thetheorywillbethebaseforunderstandingthemarketandindustryintheanalysischapter.
Therearefourtypesofcompetitioninafreemarketsystem:perfect
competition,monopolisticcompetition,oligopoly,andmonopoly.
3.1.1 PerfectCompetition
Perfectcompetitionexistswhentherearemanyconsumersbuyingastandardizedproductfromnumeroussmallbusinesses.Becausenosellerisbigenoughorinfluentialenoughtoaffectprice,sellersandbuyersacceptthegoingprice.Forexample,whenacommercialfisherbringshisfishtothelocalmarket,hehaslittlecontroloverthepricehegetsandmustacceptthegoingrate.4InthetelecomindustrymarketinEurope,itisclassifiedasacompetitivemarketbutstillhavefewbigoperatorsthattherehaveahugepoweronamarket(cross-borderoperators),butmainlyitisacompetitivemarket.Supply&demandTocheckhowperfectcompetitionworks,weneedtounderstandhowbuyersandsellersinteractinamarkettosetprices.Inamarketcharacterizedbyperfectcompetition,priceisdeterminedthroughthemechanismsofsupplyanddemand.Pricesareinfluencedbothbythesupplyofproductsfromsellersandbythedemandforproductsbybuyers.4
![Page 13: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/13.jpg)
12
Inordertoillustratethisconcept,asupplyanddemandschedulewillbecreatedforoneparticulargoodsoldatonepointintime.Thendefiningdemandandcreateademandcurve,anddefinesupplyandcreateasupplycurve.Soitshowshowsupplyanddemandinteractstocreateanequilibriumprice,thepriceatwhichbuyersarewillingtopurchasetheamountthatsellersarewillingtosell.DemandDemandisthequantityofaproductthatbuyersarewillingtopurchaseatvariousprices.Thequantityofaproductthatpeoplearewillingtobuydependsonitsprice.Customersnormallyarewillingtobuylessofaproductwhenpricesriseandmoreofaproductwhenpricesfall.KarenCollinssaid“wefindproductsmoreattractiveatlowerprices,andwebuymoreatlowerpricesbecauseourincomegoesfurther”.Thesamewiththetelecommarket,whenEuropeanCommissionreducedthepricesforinternationaldataroaming,thenthedemandondatahaveincreasedwidelyandcustomersstartedtousedatamuchmorethanbefore. SupplyIsthequantityofaproductthatsellersarewillingtosellatvariousprices.Thequantityofaproductthatabusinessiswillingtoselldependsonitsprice. Businessesaremorewillingtosellaproductwhenthepricerisesandlesswillingtosellitwhenpricesfall,alsobusinessesaresetuptomakeprofits,andtherearelargerprofitstobemadewhenpricesarehigh.EquilibriumPrice Wecannowseehowthemarketmechanismworksunderperfectcompetition.Wedothisbyplottingboththesupplycurveandthedemandcurveononegraph,thepointatwhichthetwocurvesintersectistheequilibriumprice.Atthispoint,buyers’demandforapplesandsellers’supplyofapplesisinequilibrium.
![Page 14: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/14.jpg)
13
Figure2EquilibriumCurve4
Whenthemarketischaracterizedbyperfectcompetition,manysmallcompaniessellidenticalproducts,becausenocompanyislargeenoughtocontrolprices,eachsimplyacceptsthemarketprice,sothepriceisdeterminedbysupplyanddemandmethodsasdescribedabove.Inthisfigureabove,iswhatexactlyEuropeanCommissioniswillingtoachieve.Theyhavedevelopedtheregulationsofinternationaldataroamingseveraltimesandreducedthewholesalepricescap,buttheystillstudyingallthecircumstancesfromdifferentsidestopredicttheequilibriumpriceforwholesalecap.ThemainproblemisthatsouthEuropeancountriesnegotiatingtoraisewholesalepricecapstobenefitasmuchtheycan,becausetheyareclassifiedastouristcountries(whichmeanstheyhaveveryhighincomingtraffic),whilenorthcountries“suchasDenmark,Sweden”arenegotiatingtolowerwholesalecaps,becausetheirincomingtrafficisverylow.
3.1.2 OligopolyOligopolymeansfewsellers.Inanoligopolisticmarket,eachsellersuppliesalargeportionofalltheproductssoldinthemarketplace.Inaddition,becausethecostofstartingabusinessinanoligopolisticindustryisusuallyhigh,thenumberoffirmsenteringitislow.Companiesinoligopolisticindustriesincludesuchlarge-scaleenterprisesasautomobilecompaniesandairlines.Aslargefirmssupplyingasizableportionofamarket,thesecompanieshavesomecontroloverthepricestheycharge.Butthere’sacatch:becauseproductsarefairlysimilar,whenonecompanylowers
![Page 15: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/15.jpg)
14
prices,othersareoftenforcedtofollowsuittoremaincompetitive.Youseethispracticeallthetimeintheairlineindustry:WhenAmericanAirlinesannouncesafaredecrease,Continental,UnitedAirlines,andothersdolikewise.Whenoneautomakeroffersaspecialdeal,itscompetitorsusuallycomeupwithsimilarpromotions. 4 AnotherexampleisbetweenthebigmobilenetworkoperatorsMNOsinDenmark(TelenorandYouSee)bothofthemhavetheirowninfrastructureandweknowtoenterthismarketwithyourowninfrastructureitsveryhighcostly.Thosetwocompanieshavesomecontroloverthepricestheycharge,buttheirproductsaresimilar,sowhenoneofthemlowersprices,theotheroperatorforcedtofollowtoremaininthecompetitivemarket.
3.1.3 MonopolyIntermsofthenumberofsellersanddegreeofcompetition,monopolieslieattheoppositeendofthespectrumfromperfectcompetition.Inperfectcompetition,therearemanysmallcompanies,noneofwhichcancontrolprices.Theysimplyacceptthemarketpricedeterminedbysupplyanddemand.Inamonopoly,however,there’sonlyonesellerinthemarket.Themarketcouldbeageographicalarea,suchasacityoraregionalarea,anddoesn’tnecessarilyhavetobeanentirecountry.Atthebeginningoftelecommunicationsector,therewerefewoperatorsinEuropewiththeirowninfrastructureandtheyhadapowerofcontrollingpricesbecauseitwashardtoentertothismarketduetothehighcostlyinfrastructure,sothemarketwereclassifiedasmonopolisticmarket.Sothesetelecomoperatorshadapowertocontrolthepricesandchargehighprices.Naturalmonopoliesincludepublicutilities,suchaselectricityandgassuppliers.Suchenterprisesrequirehugeinvestments,anditwouldbeinefficienttoduplicatetheproductsthattheyprovide.Theyinhibitcompetition,butthey’relegalbecausethey’reimportanttosociety.Inexchangefortherighttoconductbusinesswithoutcompetition,they’reregulated.Forinstance,theycan’tchargewhateverpricestheywant,buttheymustadheretogovernment-controlledprices.Asarule,they’rerequiredtoserveallcustomers,evenifdoingsoisn’tcostefficient.Alegalmonopolyariseswhenacompanyreceivesapatentgivingitexclusiveuseofaninventedproductorprocess.Patentsareissuedforalimitedtimegenerallytwentyyears.Duringthisperiodothercompaniescannotusetheinventedproductorprocesswithoutpermissionfromthepatentholder.Patentsallow
![Page 16: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/16.jpg)
15
companiesacertainperiodtorecovertheheavycostsofresearchinganddevelopingproductsandtechnologies. 4
3.1.4 RegulatedMonopolyandUnregulatedCompetitionMarkArmstronghasdefinedandexplainedwellhowthedifferencebetweentheoryandarealworldmarket“Inaneconomicparadise,wherearegulatorisomniscient,benevolent,andabletofulfillanypromisehemakes,competitioncannotimproveuponregulatedmonopoly.Theregulatorwillensurethefirmproducestheidealrangeofservicesatthelowestpossiblecostandwillsetwelfaremaximizingpricesfortheseservices”.5While,therealworldmarketdiffersfromthetheoreticalside.Regulatorsinvariablylackimportantinformationaboutthemarketstheyoverseesuchasregulatorscannothavefullaccesstothewholedataofthecostandrevenuesfromthetelecomoperatorsandintheotherhand,Regulatorscannotfullytrustthedatareceivingfromthetelecomoperatorssincetheywillalwaysplayacharactertoincreasetheirrevenue,andsowillnotbeabletodirectandcontrolperfectlytheactivitiesofamonopolyproducer.Becauseofitsdailyoperationintheindustryanditsdirectcontactwithconsumers,theregulatedfirmwillbebetterinformedthantheregulatoraboutthedemandfortheregulatedservicesitsupplies,theminimumpossiblecurrentcostofdeliveringtheservices,andthepotentialforlesscostlyfutureprovision.Thisinformationasymmetrygenerallygivesrisetoanunavoidabletrade-offbetweenrentandefficiency:thefirmcanbemotivatedtooperateefficiently,butonlyifitisawardedsubstantialrentfordoingso.Inparticular,thefirmwilloperateatminimumcostandattempttosatisfytheneedsanddesiresofcustomersonlyifitisawardedthefullsurplusthatitsactivitiesgenerate.However,suchagenerousawardtotheregulatedfirmtypicallywillprovideitwithsignificantrent,andtherebyreducethenetbenefitsenjoyedbyconsumers.Tolimittherentthataccruestotheregulatedfirm,someinefficiencytypicallyistolerated. IntheEuropeantelecommarket,EuropeanCommissionwouldregulatethemonopolisticmarketinregardsnottoallowtelecomoperatorstoofferhighpricesandcontrolthemarket.Inaregulatedmonopolymarket,regulatorsimplementfewstrategiestocontroltelecomoperatorssuchasPricecaps,qualityofservice.AlsoRegulatorsinthetelecommarketraisedarulethatforcedMNOstoletnewcomers(MVNOs)inthemarkettorentMNOsinfrastructure.
![Page 17: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/17.jpg)
16
Inunregulatedcompetitionmarket,telecomoperatorswillbeforcedbythemarkettolowertheirpricesandinnovateonthetechnologicalandmarketsidetoreducetheircostsandattractmuchmorecustomers.Sotoreflectunregulatedcompetitionontheinternationaldataroaming,telecomoperatorswillcomeupwithnewstrategiesandstartingtooffer“RoamLikeAtHome“servicewithcompetitivepackagespricesintheearlyedgetostayinfrontonthemarketandcompeteotheroperatorstoattractmuchmoresubscribers.Inthiscasetherewillbenoneedforregulationstobeimplemented,becauseinacompetitivemarket,themarketisforcingtelecomoperatortolowertheirpricesasmuchastheycanfortheend-users.
![Page 18: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/18.jpg)
17
3.2 WaterbedtheorybyValetti&GenakosStatementinJanuary2010byTommasoValletti,ChristosGenakos“Governmentshavecometoregulatethefeesmobilenetworkschargeothersfor
callingtheircustomers.Thiscolumnwarnsaboutthe“waterbedeffect”–pressing
downthese“calltermination”feescouldcauseanothersetofpricestorise.Any
welfareanalysisofregulationcannotignorethepresenceofthiseffect.”6
Theeffectwherebyregulationofoneofthepricesofamultiproductfirmcausesoneormoreofitsotherunregulatedpricestochangeasaresultofthefirm’sprofit-maximizingbehavior.Themagnitudeofthechangedependsonanumberoffactorssuchasintensityofcompetition,marketdynamics,marketposition,elasticityofdemand7.Anexampleofthat:imagineyouplungeintoapooloryousitinthemiddleofawaterbed,thewaterlevelsimplyrisesattheedges.
TheoverallideabehindWaterbedEffectthatwereexplainedby“TommasoValletti,ProfessorofEconomicsatImperialCollegeBusinessSchool”6,thatmobileoperatorscanbeseenasaplatformthatsuppliesservicessuchas"voice,sms,data"totheendusersandtheycansetdifferentpricesfortheusersofthatplatform.Mobileoperatorisabottleneckforreceivedservicesandmoneycanbemadeovertheirterminationandtheycantaketheseterminationrevenuesintothecompanyaccount.Thehighertheserevenues,thelowerpriceanoperatorwouldchargeitscustomers,manyoperatorspassthroughsomeofitsrevenuetotheirconsumerstoattractmuchmorecustomerssubscriberandbeinfrontonthecompetitionwithothers,whichwillincreasestheterminationrevenuesearned.Whileifregulationreducesterminationchargesandhencerevenues,mobileoperatorswillnotbeabletoofferlowpricesubscriptionsfortheircustomers,theywillhavetoraisetheirprices.Theideapresentedabovecalled"WaterbedEffect"whichyoupressingdownpricesinonesidecausesanothersidetorisetheprices.Inatelecommarket,mobileoperatorswillcompetebyofferingattractivepricesforend-users.Indoingso,theywillconsideralltherevenuesthatwillaccruefromacquiringacustomerandallthecostsofservicingthatcustomer.Whentherevenuestreamofthetelecomoperatorsincreases,thentheywillofferlowerpricesfortheirend-users,it’sageneralstrategyforthetelecomoperatorstopass-throughsomeoftheirrevenuetotheend-userstocompeteinamarket,becausebyloweringtheirpricestheywillincreasethenumberofsubscriberswhichitresultsanincreaseintheterminationrevenuesearned.Andtheoppositewayit’strue,whentherevenueoftelecomoperatordecreases,then
![Page 19: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/19.jpg)
18
theywillraisetheirpricestocoverthecost,these2situationsaredefinedunderamethodcalled“waterbedeffect”.Indifferentmarketstructure,waterbedeffectcouldbestrongorweak:ifthetelecommarketisunderaperfectcompetitionmarket,thentelecomoperatorswouldexpecttomakezeroexcesseconomicprofits,consideringthatthetelecomoperatorsrevenuereduced,operatorswillnotraisethepricesbecausethereareunderaperfectcompetitionmarket,sotheystillofferlowerpricestocompeteinthemarketbutnotunderthecost,andinthissituation,“waterbedeffect”willbeveryweak.8 Waterbed effect tested in mobile telephony by Christos Genakos and Tommaso Valletti Theyhavetestedwaterbedover20countriesforfixed-to-mobilemarketandtheirempiricalanalysisresultsrevealsthatbothcompetitionandmarketsaturation,butmostimportantlytheirinteractionaffecttheoverallimpactofthewaterbedeffectonprices(thewaterbedeffectisstrongerthemoreintensecompetitionisinmarketswithhighlevelsofmarketpenetrationandhighterminationrates).Inthetesttheyhavemade,theyprovidedthatthefirsteconometricevidencethattheintroductionofregulationthatcut10%ofthetelecomindustryrevenueresultedtoa10%waterbedeffectonaverage,althoughthewaterbedeffectishighalsoprovidesevidencethatitisnotfull:accountingmeasuresofprofitsarepositivelyrelatedtomobileterminationrate"MTR",thusmobilefirmssufferfromcutsinterminationrates.Anywelfareanalysisofregulationofterminationratescannotignorethepresencesideofthewaterbedeffecttheory.Inacaseifthedemandformobilesubscriptionwereveryinelastic,thesociallyoptimalMTRwouldbethecostoftermination(thoughtheregulationofMTRwouldimpactonthedistributionofconsumersurplusamongfixedandmobilesubscribers).Ifinstead,themobilemarketwasnotsaturatedandstillgrowingtherewouldbeagreatneedtocalibratecarefullytheoptimalMTR.Intheiranalysisontheexistenceandmagnitudeofthewaterbedeffectisalsorelevantinthecurrentdebateofregulationofinternationalroamingcharges.TheEuropeanCommissionhasvotedin2007tocaproamingchargesofmakingandreceivingphonecallswithintheEU.8Theiraimistoreducethecostofmakingamobilephonecallswhileabroadforendusers.Hence,areductioninroamingchargesmaycauseasimilarwaterbedphenomenon,wherebypricesofdomesticcallsmayincreaseasoperatorsseek
![Page 20: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/20.jpg)
19
tocompensatefortheirlostrevenueelsewhere.Whilethemagnitudeofthewaterbedeffectcausedbythisnewlegislationisdebatable,theirresultsdemonstratethatregulatorshavetoacknowledgeitsexistenceandcarefullyaccountforitintheirwelfarecalculations.Theyhavementionedthathavingpricedataonalargernumberofmobileoperatorswithincountries,wouldallowforjointcountry-timefixedeffectstobeproperlycontrolledforintheempiricalspecification.Furthermore,toinvestigatethemarginalconsumer’sbehaviorbeforeandaftertheintroductionofregulationandtheirelasticityregardingthewaterbedeffect,moredetailedconsumerlevelinformationisrequired.Ontheotherhand,giventhenon-linearretailpriceschedulesandthecomplexincentivesschemes(handsets,personalvs.businessbuyers’contracts)providedbymobileoperators,moredetailedcustomerinformationatacountrylevelwouldallowthemtomodelmoresatisfactorilytheeffectofcompetitionandmarketpenetrationonthewaterbedeffect.Suchastructuralmodelwouldalsoenablethemtoquantifytheeffectsofvariousregulatoryinterventionsandtheirwelfareimplications.
![Page 21: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/21.jpg)
20
Chapter4
4 Background&Findings
Inthischapter,Allthedatawerecollectedinregardstohaveabriefoverviewon
internationaldataroaminginEuropetobeusedlaterintheanalysischapter,and
theEuropeanregulationsprocesswillbeintroducedfrom2007untilnow,toshow
thedevelopmentofregulations.
4.1 InternationalDataRoaming
DefinitionTheinternationalroamingregulationisdifferentfromotherkindsoftelecomregulation,astheregulationcoverstheentireEUmarket,withoutanyconsiderationstonationaldifferencesinlevelsofpricingandcompetitionstructures.Roamingistheabilityofsubscribertoaparticularnetworktousethemobilephoneonanotheroperator'snetworkwhileabroad,thisrequirearoamingagreementbetweenthenetworksandanexchangeofinformationbetweenthesenetworksforauthenticationandbillingpurposes. Network operators exchange billing information for roaming customers: ThevisitednetworkcapturesthedetailsofeverysessionofdataservicesandvoicecallsinaCallDetailRecord(CDR)andthisrecordinformationonthe(location,sendingparty,receivingparty,timeofconnection,sessiondurationandsizemeasuredinMBorKB).Afterthatthevisitednetworkoperatorthenusesthesedetailstocalculatethewholesaleroamingchargepayablebyyourhomenetwork.Thedatarecords,includingtheapplicablewholesalecharges,willbesavedinaTAPfile(TransferredAccountProcedure).9ServicessuchasDataclearinghouseareusedtosendTAPfilesfromthevisitednetworktoyourhomenetwork.DataclearinghouseactsasahubforthedistributionofTAPfilesandprovidesthehomenetworkwithservicessuchasreportingtoassistthehomenetworkinrunningitsroamingbusiness.Yourhomenetworkthenpaysthevisitednetworktheappropriatewholesalecharges.9
![Page 22: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/22.jpg)
21
4.2 Europeanmarket
4.2.1 MarketstructureInternationalserviceroamingisbasedofwholesaleroamingservicesforaccessandcapacityofferedbymobilenetworkoperatortoforeignmobilenetworkoperatorsinanothercountry,sothenationalnetworkoperatorpaystoconnecttheircustomerwiththevisitednetworkoperatorintheothercountry.Roamingservicescostsconsistofmobileorigination,internationaltransit,billingandaccountingcosts.Thesecostsimplythatthecostforinternationalroamingishigherthanthecostsofprovidingtheservicewithinonesnetwork,roamingchargeshavealwaysbeencharacterizedasunreasonablyhighcomparedtotheactualcostsforprovidingthem.10BeforetheEUregulationwasimplementedin2007,theroamingmarketpresentedverylowcompetitionlevelduetoinelasticdemandfortheservices,veryfewornon-existentalternativesthatsubstitutedfortheservice,lackoftransparencyregardingchargesandnaturaloligopolieswithlowcompetition.Additionally,anotherreasonforthehighinternationalroamingpricescanbethelowcustomerawarenessregardingroamingtariffsasthisisinprinciple,notacriterionbasedonwhichcustomerspicktheirmobileoperator,whichremainsanissuetoday.ThesituationistoacertainextentreversedduetotheproliferationofmobilenetworkoperatorsandMVNOs,technologicaladvancements,roamingsubstitutessuchasVoIPservices,globalSIMcards,Wi-Fiaccess,hardernegotiationsandalliancesatthewholesalelevel,increasedtransparencyduetoEUregulation.10Pricecapmethodhasbeenimplementedwiththefirstregulationon2007,thatreducesthepricesinbothretailandwholesaleroamingannuallyandtheaimofthisprocessistolowerthepricesforend-usersandreachthegoalofhavingsinglemarketoftelecommunicationinEurope.InternationalroaminginEuropepresentsdifferencesbetweencountries,suchasthetourismscale,therevenuestreamthatroamingfeesproduceisrelativelysignificantinSpain.InSpain,themarkethasseenchangesintherevenuestreaminthemobiletelecommunicationsectorfrom2007untilthesedays,roamingrevenuehasdecreasedduetothepricecapsregulation.10
![Page 23: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/23.jpg)
22
IntheTouristicEuropeancountries,roamingrevenuesfortelecomshasanimportantvalueinregardsfortherevenuesthatcanbeachieved.Andwiththecountrieswithmuchlowertourismratio(ingoingtrafficaremuchlowerthentheoutgoingtraffic)suchasDenmarkwillnotgeneratethatmuchrevenueastouristcountries.Providedthatthewholesaleandretailpricesareaalsokeptbalanced.DifferentconditionsandparametersoftheroamingmarketineachcountryinEuropemakeitimpossibleforEuropeanregulatorstoeliminateofroamingchargestobeimplemented.10
Figure3EuropeanMobileRevenue2007-202011
Inthatfigureabove,itshowshowmobiledatausagehasbeengrowinganditsexpectedtoincreaseingrowingasmuchaspeoplearemoreattractedtousesmartdevices.Alsohighlightthatthebehaviorofcustomerswasmovedfromusingcallsandsmstousingdataservices.TheestimateofAT.Kearnay,isthatmobilerevenueswilldeclinefrom€164billionin2011toaround€137billionin2020,ifnothinginthemarketchanges,thedeclineinrevenuesassociatedwithvoicecallscouldbeashighas57percent,droppingfrom€108billionin2011to€46billionin2020,asbothrevenuesandunitpricesfall.Thisreflectsmobileterminationratereductions,butalsomoregenerousbundlesandincreasinglyunlimitedvoicetariffs.Revenuesfromtextmessagingarealreadydeclining,andifSMSsarestillinuseatallin2020andcontinuetobechargedonapermessagebasis,therevenueattributedtothemislikelytobelow.Theestimateof€14billionisbasedonthecurrentattributionofrevenues.11
![Page 24: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/24.jpg)
23
Thiscase,itssimilartotheSpanishmarketwerewillbeexplainedlater,thattheSpanishthatshuffleoffaround15%ontheannualbasis.AlsoanothercasefromtheSpanishstudythough,canbethatdespitetheincreaseinusageofroamingservices,therewasadecreaseintotalrevenue,meaningthatthedeclineduetothepricecapswashigherthantheinfluxofrevenuesfromtheincreaseinusage. Fromthatperspective,Europeanunionstressesretailandwholesaleregulationprices,asregulatingonlyretailpriceswouldnotbeenoughtocontrolthemarketandcreateacompetitivemarkettoachieveasingletelecommunicationmarket,plusitwouldleavethinmarginforprofittothewholesalebuyers(MVNO)thatdon’towninfrastructuretoconnecttheircustomers.Meanwhile,reducingwholesalepricesitwasnotpassedontotheretaillevelwherechargesremainedclosetothepricecaps.Intheotherhand,forthosetelecomoperatorsthataredefinedascross-borderoperatorstoprovideroamingservicesindifferentcountriesusingtheirowninfrastructurehavenotveryinterestinginbringingdownwholesaleandretailprices.(M.FalchandTadayoni2014)
4.2.2 MVNOsThereareMobileNetworkOperatorsthathost943MobileVirtualNetworkOperators(MVNOs)with255ofthembeingMNOsub-brands,asofMay2014.Thisrepresentsatotalofalmost1,200mobileserviceprovidersworldwidehostedbyMNOs,anumberthatwasdownto1,036in2012,accordingtoGSMAIntelligence.ThestrategyofMobileVirtualNetworkOperatorswaswellknown,butuntiltheEUimplementedthewholesaleregulation,thesevirtualnetworkswouldhavetonegotiateandgetwholesaledealsdirectlyfromtelecomoperators.ThisregulationwasverysuccessfulinhelpingtheproliferationoftheseoperationsespeciallyinEurope.GSMAIntelligencereporthasidentified8separatecategoriesofMVNOs,namelydiscount,telecom,media/entertainment,migrant,retail,business,roamingandM2M.Asin2012,‘discount’and‘telecom’MVNOsarethemostprominenttypesofoperation,accountingfor46%oftheglobalMVNOmarket,while19%areownedbycompaniesthatcomefromadjacentindustries(forexampleretailers,banks,TVormediaorganizations),leaving34%ofthemarkettospecializedprovidersfocusedonsegmentssuchasbusiness,migrant,M2Mandroamers.13Allthevaluesareavailableinthefiguresdown:
![Page 25: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/25.jpg)
24
Figure4globalMVNOs13
Figure5MarketSegmentation14
![Page 26: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/26.jpg)
25
ManyMVNOswentoutofthemarketduetothehighcompetitionintheEuropeanmarketandlowmarginsontopofthecappedwholesaleprices,duetothefactthatmobilevirtualnetworkoperatorsoperatewithlowmarginshasbroughtthepricesandprofitmargindownfornetworkoperatorsalso.
WhyMVNOsareimportant:
IntheEuropeanmarket,regulatorshavebeenparticularlyactive,whichishometo2/3ofdomesticMVNOs.TheyhaveencouragedMVNOstoenterthemarketbecauseitisawaystoincreasecompetitionandreduceprices.Soaswecanseeinthefiguredown,thenumberofMVNOsincreasedwidelysinceEChaveintroducedthefirstregulationsonthetelecommarketon2007.
Figure6IncreasingnumberofMVNOSinEurope13
EuropeanCommissionhaveusedMVNOsdirectlyasaregulatoryinstrument,EChaveappliedconditionsrelatedtoMVNOaccessbeforeapprovingmergersbetweenMNOstopreservecompetitionintheEuropeantelecommarket.Forexample,beforemergers3withTelefónicainIreland,3wasrequiredtocommittoseeingupto30%ofthemergedcompany’snetworkcapacitytotwoMVNOs.Theconventionalwisdomamongmanyregulators,politicians,andpolicymakersisthatthemoreoperatorsorMVNOsinagivenmarket,thebetterthecompetitionwillwork.IfEuropeanCommissionraiseRLAHconceptwithouttakingincasethatretailandwholesalepricesmeasuresareconnected,thenitwillforcesMVNOsthatarenotabletonegotiatewholesaleroamingaccessat
![Page 27: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/27.jpg)
26
lowerpricestoofferroamingservicestotheirsubscriberswithnegativemargins.AndsuchthesesituationswillleadtheseMVNOstorunoutofthemarketbecausetheywillnotbeabletocoverthecostsofroaming.Additionallytothat,ithastobementionedthat,MVNOsdonothaveanyincomeofthedataroamingsincetheydonotownanyinfrastructure,sotheirbusinessmodelsinthiswaywillbeunbalancedtosurviveandcompeteinthemarket.IfMVNOsrunsoutofthemarket,thenthelevelofcompetitionwillbereducedandagainwewillhavefewbigoperators(MNOs)controllingthepricesovertheEuropeanmarketwhichmeansmonopolymarketwillappearagaininEurope.13
4.2.3 GoogleconceptGoogleaimstocreateaglobalnetworkthatwillcostthesametouseforcalls,textsanddatanomatterwhereacustomerislocated.GoogleisintalkstowardsadealwithHutchisonWhampoa,theownerofthemobileoperator3,thatwillallowAmericanstousetheirphonesabroadatnoextracost,industrysourceshavedisclosed.15Thereplanstolinkwith“3”telecomoperatortogetanaccesstothewholesalemobileserviceindifferentcountriessuchasUK,Italyandanothercountries.ThisisanevenmoreambitiousplanthanthatoftheEuropeanDigitalSingleMarketandlookingatthetrackrecordofEuropeandGoogle,GooglewillpossiblymakethisarealitysoonerthantheEU,althoughtheregulatorybarriersallovertheworldtoovercomewillcreatemanyobstaclesforthem.15
ThewayGoogleplanstoachievethisisnottobuildanentirenewnetworkbutinsteadrelyonthewholesalemarket.TheideafortheanalystsisthatGooglewill“useitsnetworktoputpressureonthepricingofAmerica’sbiggestmobileoperators,AT&TandVerizon,whoenjoyhigherprofitmarginsthantheirEuropeancounterparts“.15
![Page 28: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/28.jpg)
27
4.2.4 Spanishmarket
ThereasonofchoosingSpanishmarket,becausetheirtourismmarketincomeis
veryhigh.
In2011theEuropeanCommissionVicePresidentNeelieKroes,“pleadedforanendtomobileroamingfeeswithintheEuropeanUnion.“Theex-commissionerNeelieKroeshadaverynobleprincipletoreducethe“mobileroamingfeeswithinEuropewhichwouldbegreatnewsforthemillionsofSpanishresidentswhoregularlytravelforworkandpleasure.In2011,Spain'smobilephonecompaniesnotcheduproamingrevenueofover€700million,accordingtothenationalTelecommunicationsagencytheCMT.”16Additionally,Inherpointofview,thetelecomsectorisanexceptiontotheEuropeanstandardofacommonmarketandassuchduringherspeechshementions"ThereisnoothersectorofourincompleteEuropeansinglemarketwherethebarriersaresounneeded,andyetsohigh".Kroesalsosaid"pan-Europeanoperatorshelpingconsumerstakeadvantageofaborderlessmarket"aswellas"increasedinvestmentinqualitynetworksandcontent".16TheEUCouncilrealizingthemarketmightnotbereadyfortheregulationsofendingroamingfessbecausetherevenueofthetelecomshasbeendecreasesinthelastyears,inthatcase,itwillbeasensitivemeasurementenvironmenttostudytheSpanishmarkettopreformtheanalysissinceSpainisaleadingcountryintermoftourism"theingoingtrafficlevelisveryhigh"andithasoneofthelargesttelecomoperatorsinEurope"Telefónica".TheSpanishmarkethasbeenhitintherecentyears,arecessionspreadingalloverthewesternworld,andtheEuropeancountriesthatreliesonservicessuchastourism,anditresultedthatin2012therevenueoftheSpanishtelecommarketdeclinedby15.19%.17Inthisfiguredown,itshowstheEvolutionoftotalrevenuesoftheroamingserviceinthemarketSpanish(millionsofeuros)Note:Redcolormeans=Wholesaleservicerevenue&Bluecolormean=Final
servicerevenue
![Page 29: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/29.jpg)
28
Figure7EvolutionoftotalrevenuesoftheroamingserviceintheSpanishmarket(millionsofeuros)17
Thefigurerevealsthedecliningtrendinincomelinkedtotheseservicesinrecentyears.ThisdecreasehasbeenproducedmainlybythereductionofthepriceinthecommunicationsbetweenmembercountriesoftheEuropeanUnion.Finally,thefigureshowshowtherelativeweightofthewholesalesegmenthasremainedconstantinrecentyears,representingonaveragecloseto40%ofthetotalrevenuesofthefinalinternationalroamingservices.17
Figure8Dataservice17
![Page 30: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/30.jpg)
29
Fordataservices,thedeclineinpriceshasbroughtaboutaconsiderableincreaseoftheconsumptionofdataservicebytheend-users.Ascanbeseenintheabovegraph,whilethatthepriceperMBofferedbySpanishoperatorstotheirusershasdecreasedfrom€4.91in2008to€0.48in2013,dataserviceconsumptionhasgrownexponentially,havingincreasedbyabouttentimessince2008andalmostdoubledinjustthelastyear.WhataretheimpactsofroamingregulationsandRLAHontheSpanishmarket:Afterintroducingtheregulationsonthetelecommarketon2007,theyimplementingpricecapsonCallsandSMSs,sotelecomoperatorshadtodecreasethepricestonotbeoverthepricecaps.Afterthaton2012theregulationsincludedDatapricecapsthatagainreducedthepricesfordatausage.Asaresultofthat,therevenueoftheSpanishtelecomoperatorswerereducedasshowninfigure7,therevenuedecreasedslightlyfrom2008until2013.FewimpactscouldRoamLikeAtHomeRLAHbringtotheSpanishmarket,firstitwillcutofrevenueofthetelecomoperatorssinceregulatorswillreducepricecapsthatSpanishtelecomoperatorswillchargeotheroperatorsonthewholesalelevel.Andthat’swilleffectonreductiononinnovationanddevelopmentoftheSpanishmarket,becausetheywillnothaveenoughrevenuetoinnovateanddeveloptheirinfrastructure.Second,duetoSpanishitisatouristiccountry,sotheingoingtrafficisveryhigh,whichmeanstheyneedtohaveaverypowerfulinfrastructuretoofferagoodqualityofservicecoverage.AndinacaseofimplementingRLAH,thevolumeofincomingdatatrafficwillbehighwhichwillhaveapressureonthetelecomoperatorsinfrastructuretoconnectallofthesetraffics.IfSpanishtelecomoperatorswillhaveapressureontheirinfrastructureandgettechnicalissuestonotbeabletoconnectorofferQualityofService,thenitwillendupthatcustomerswillnotenjoytheirroamingwhileabroadinSpain,whichwillbringarealimpactontheSpanishtelecommarket.ThatiswhySpanishoperatorsandothertouristiccountriesarenegotiatingwiththeEuropeancommissiontoraisethelevelofwholesalepricecaps,tobeabletoofferagoodqualityofserviceandhaveapowertoconnectalltheingoingtrafficswithoutanydoubt.Otherwise,theywillbeunabletoconnectalltheingoingtraffics,whichthegoaloftheRLAHtohaveasingledigitalmarketandtheirmaingoalistoletusersbeconnectedinanycountryinEuropewithsamepricesashomeandwiththesamequalityofservice.
![Page 31: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/31.jpg)
30
4.3 WholesaleroamingmarketWholesalepricesarethecoststhatoperatorschargeeachotherwhiletheircustomersuseanotheroperator’sinfrastructuretoconnectandusetheirmobileservicessuchasCalls,SMSandDatawhileabroad.
Wholesalepricesforoperators:
ThepriceforwholesaledatatakenfromJakobwiller(Danishtelecomindustry)
TheCommissionproposedwholesaledataroamingcapof€8.5/GB(around63Danishkroner),appearstobecarefullycalibratedtoprotecttheveryhighdomesticretailpriceschargedbyoperatorsintightoligopolymarkets(Germany,Spain)whilepenalizingoperatorswithcompetitivemuchlowerdomesticretailprices(Finland,Denmark,Poland).(Moniter2016,Wholesaleprice)
Figure9AverageWholesaledatapriceperMBin201419
InthistableitshowshowwholesalepricesperMbdroppeddownduringthetimefrom2012untiltheendof2014.ButuntilnowEuropeanCommissiondidn’t
![Page 32: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/32.jpg)
31
finalizedthelastversionofregulationregardswholesalepricesbecauseit’sacomplexprocessduetothedifferenceratiooftravelersforeachcountryandtheamountofingoingdatatrafficinthenorthcountriesaremuchlowerthantheamountofingoingdatatrafficinthesouthcountriessuchasSpainandPortugal.Howwholesaleagreementsworkingbetweentelecomoperators:Operatorssign2typesofwholesaleagreements:Firstagreementcalled“InternationalRoamingAgreementsorStandardInternationalroaming”,whichspecifytheoperationalandtechnicalaspectsoftheroamingrelationship,standardroamingarevaliduntilfurthernoticewiththepossibilitytoterminatethemafteraperiodofnoticeof6months.Whilethesecondare“RoamingDiscountAgreements”annexestotheinternationalroamingagreementsandspecifythecommercialaspectsoftheagreementincludingthepricesthathavetobepaid,thediscountagreementstypicallyhavedurationof12months.(BEREC2016,wholesalemarket)Thereasongivenbyoperatorsfortheannualrenegotiationofdiscountsistheunpredictablenatureofthemarketwithahighdegreeofregulatoryuncertainly,unpredictabletrafficratio,frequentmergesandotherchangesofownership.Theseneedtobebalancedbythetransactioncostofnegotiatingagreements,inadditionsomediscountsagreementsareautomaticallyrenewedeveryyearunlessonepartyobjects.ThestrategythatoperatorsapplytohaveabettercoverageisthattheymakemorethanoneagreementwithanotheroperatorsineachEuropeancountry,andalsointhiswaytheygetmoreinboundroamingrevenueandloweroutboundcost.Mostoperatorshaveonepreferrednetworkineachcountrytowhichtheytrytosteertheirtraffic.Whenmobilenetworkoperatorsnegotiatenationalandinternationalroamingagreementstheyareforthemostpartbilateraleachoperatorgetsroamingaccesstotheotheroperator’snetwork.Someofadvantagesofbilateralagreements:operatorsbuildpartnershipsagreementstoaddavalueofservicesforendusers,enlargeroamingcoveragetothebenefitofcustomersandsecureinboundroamingtrafficandrevenuethatcanpartlyoffsettheoutboundroamingcost.Eachoperatorappliesanumberofdiscountpricemodelsandthesedifferentmodelsarecombinedinmanycasessuchas(balanced/unbalancedagreement
![Page 33: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/33.jpg)
32
mightincludeamin.volume/revenuecommitment).Alsotherecanbealsodifferentmodelsfordifferentservicesinthesamediscountagreement(oneforvoiceandtheotherfordataservices).Themostcommonpricemodelswillbeintroducedshortly“FixedrateandBalanced/unbalanced:(BEREC2016,Wholesalemarket)FixedrateitmeansadiscountrateperunitperserviceorpercentageoftheregulationcapandBalanced/unbalancedit’sapricingmethodinbilateraldiscountagreements,eachpartyexchangestrafficandthenetsenderoftrafficgetsanadditionaldiscountontheamountoftrafficthatexceedstheamountoftrafficreceivedfromtheroamingpartner.Inthiswaywhenoperatorssendmoretrafficitresultsareductioninthenetsendersaveragecost.Butinmanycasesthismodelnotusedwhenthesituationoftrafficishighlyimbalanced.Whileoperatorscomeintochoosingapricingmodeltheygothroughsomespecificelementstoeachindividualnegotiationandthediscountslevelnegotiated.Thesespecificelementsaretrafficvolumesandtheratioofimbalancesininboundandoutboundvolumes.Higheroutboundvolumesgiveanoperatormorebargainingpower,buthighlyimbalancedtrafficflowscomplicatenegotiations.Therearealsosomeotherimportantelementsthathavetobementionedarenationalmarketshare,mobileterminationratiocostandnetworkquality,soanoperatorwithahighnationalmarketshareandgreatnetworkqualityofservicewillsecurebetterdiscountagreementsregardstheirnationalpowerinthemarket.Someoperatorsreportthatahighlevelofoutboundtrafficgivesoperatorsbargainingpowerthatcanresultinhigherdiscountsforthenetbuyerofroamingservicesthantheyhavetogivetothenetreceivingparty.Otheroperatorsreportthatthenetsellerofroamingserviceshastheadvantagesinceitisusuallythesellerwhohasthegeographicaladvantage,thebestnetworkinapopularroamingcountry(BEREC2016,wholesalemarket).Inaddition,someoperatorsalsohighlightthatoperatorswithapan-Europeanpresenceorassociatedwithlargermarketshaveastrongerbargainingpowercomparedwithoperatorswithsmallerfootprints,namelytheonesthatonlyoperateinoneEEAcountry.Manyoperatorssaythattheyareagnosticaboutthepricemodelandthatthechoicedependsonthewishesoftheotherpartyandwhatmodelwillbenefittheirnetpositioninaparticularcase.Someoperatorsreportthatiftheycompeteinthedomesticmarketwithanoperatorthatispartofapan-Europeangroup,theyarenotabletonegotiatereasonableroamingdiscountswithothermembersofthisgroupinvisited
![Page 34: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/34.jpg)
33
marketsandthushavetorelyonagreementswithsmalleroperatorsinthosecountries.(BEREC2016,wholesalemarket)Intheotherhand,mostgroupoperatorstheyareapplyinginternaltransferpricingthatisbasedonanarm’slengthprinciple,theinternalrateisbasedonthemarketratesofferedtoexternalpartners.Onegroupreportsthatthismarketrateiscalculatedastheaverageratechargedtothemaintradingpartners.Onegroupappliesbillandkeepwhileanothergroupuseszeropricingbetweensubsidiaries.(BEREC2016,wholesalemarket)PermanentroamingandM2Mcommunication:MobileoperatorsdescribedpermanentroamingasanarbitrageserviceandasanimplementationforM2Mservices.Permanentroamingcausedbyanarbitrageservicecouldresultifwholesalecapsaresettoolowandtherearenosufficientmeasuresintheregulation.But,currentlytheRoamingRegulationallowsoperatorstoincludeconditionsintheirreferenceofferforwholesaleroamingaccesstopreventpermanentroamingorabusiveuseofwholesaleroamingaccess.DifferentpointofviewswereexplainedaboutM2M,someoperatorsarguethatnationalnetworksaredimensionedandbuilttohostdomesticSIMcards.TheyseetheriskthatifahighlyincreasedvolumeofforeignSIMsusedforM2Mcommunicationgetslocatedonapermanentbasis,thiscancreateproblemsofcapacitymanagementandpossiblenetworkcongestioninthevisitednetworks.Intheonehand,alsothiscouldbeaconsequenceifRLAH"RoamLikeAtHome"getsintroducedwithoutproperstrategysafeguardsandforeignusersstayforalongtimeinavisitednetworkwithextendedusage.Additionallyforthatcase,BEREChasrequestedinformationonwhethertheMNOsapplyanymechanismstocontrolthelevelofpermanentroamingintheirnetworks.MNOswerealsoaskediftheyhadseparateM2Mroamingagreementscontainingspecialconditionsforsimilarkindsoftraffic.(BEREC2016,wholesalemarket)MostoftheMNOshaverespondedthatinthepresenttime,notimplementedanymeasurestodiscouragepermanentroaming.Someofthemexplainedthatitisnotnecessarysinceallusageischargedandothersevenhighlightthattheyencourageusagebyusingmechanismslikevolumecommitments,revenuecommitmentsintheirwholesaleroamingagreements.
![Page 35: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/35.jpg)
34
Somementionedthattheymightintroducemechanismsinthefuturetopreventpermanentroaming,ifwholesaleroamingcapsfallbelowtherelevantcosts.VeryfewMNOsansweredthatthereareexplicitconsumptionlimitsintheirwholesaleroamingagreements.JustonemobilenetworkoperatorhighlightedthattheyhaveastrategysuchasfairuselimitthatisbasedonamaximumnumberofdaysperSIMperyeartopreventpermanentroamingbyretailconsumers.Andonlyaround20%ofrespondingMNOshavesomekindofmechanismintheirwholesaleroamingagreementtodiscouragepermanentroaming.Suchmechanismsseemtobeintheshapeofpricedifferentiation.Permanentroamingcanforexamplebeexcludedfromanydiscounts,andtheratiodifferencebetweendiscountedandnon-discountedratesseemstobeacrucialelementforMNOstocontrolpermanentroaming.(BEREC2016,Wholesalemarket)
![Page 36: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/36.jpg)
35
RatiooftravellersbetweentheEuropeancountries:
Figure10thedifferencerationoftravellersbetweentheEuropeancountries1
Thelightturquoiseshadedisshowingtherangeofthehighesttolowerregionforeachcountrywhilethebluebarshowsthenationalaverage.Thebluecircleshowsthecapitalcityregion.ThisfigurehasbeenusedheretoshowthedifferenceratiooftravellersbetweenthenorthandsouthEuropeancountries,whichmeansthatthereisavastgapbetweentheoutgoingandingoingdatatrafficaswecanseeinthefigureabove(DenmarkismuchlowerthanSpainregardsthenumberoftravellersthatcomestothecountry)
![Page 37: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/37.jpg)
36
4.4 HistoryofroaminginEUAnoverviewofthedevelopmentofinternationalroaminginEuropewillbe
presentedfrom2007until2012.Theinformationcombinedwiththetheorywillbe
usefulintheanalysischapter.
2007regulation:ThefirstRegulationoninternationalroamingserviceswaspublishedon29June2007,theprimaryprovisionscappedwholesaleandretailchargesvoicecallsfortheEurotariffandsetanumberoftransparencyprovisionstohelptoensurethatconsumerswerewellinformed.TheprovisionsoftheRegulationenteredintoforceatdifferenttimes,withretailandtransparencyprovisionstakingfulleffectbytheendofSeptember2007andwholesaleprovisionscalculatedannuallyfromtheendofAugust2007.21RoamingIintroducedcapsforvoicewholesaleandretailprices,forcingtheoperatorstouseEurotariffbydefault.Telecomoperatorsstillallowedtochargeotherpricingtariffsbutonlytothosecustomerswhowouldchooseforsuchalternativesubscriptionsvoluntarily.2009regulation:On7May2008,theCommissionlaunchedapublicconsultationonthefunctioningofthe2007Regulation.TheEuropeancommissiondecidedtocontinueonitspricescapsstrategyforvoiceandloweringtheminordertoreducethegapbetweenwholesaleandretailprices.Billshockcasewasintroducedtoprotectcustomers,soifacertainbillingamountofdataservicesreached50€excl.VAT,thentheoperatorhastonotifytheuser,thenusersarefreelyallowedtodecidetospendmoremoneyonthedataservicesortostopit.TheyviewsexpressedinresponsetotheconsultationweresubstantiallyreflectedintheCommission’slegislativeproposals,publishedon23September2008,toextendthe2007Regulationindurationandscope.On22April2009,theEuropeanParliamentadoptedRegulation(EC)No544/2009atfirstreading,withaviewtoamendingRegulation(EC)No717/2007.21Subsequently,on8June2009theCouncilofEUTelecomsMinistersformallyadoptedthenewEUroamingrulesapprovedbytheEuropeanParliament.ThedefinitivetextofRegulation(EC)No544/2009waspublishedintheOfficialJournaloftheEuropeanUnionon29June2009.Inparticular,theRegulationintroducedthefollowingmeasuresrelatedtopricecontrol,applicablefrom1July2009to30June2012:
![Page 38: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/38.jpg)
37
•Anextensionofwholesaleandretailpriceregulationforvoice,withayearlydecreaseinthelevelofthecaps.•PriceregulationofSMSroamingservicesatboththewholesaleandretaillevels.•Priceregulationofdataroamingservicesatthewholesalelevel.AndfromJuly2010toJune2012:•Retailtransparencymeasurestoprotectconsumersfrom“billshock”whendataroaming.
2012regulation:On29June2010,theCommissionpublishedaninterimReportonthefunctioningofthe2009Regulation.TheCommission’sDigitalAgendaforEurope8alsoincludedatargetforroaming,where‘thedifferencebetweenroamingandnationaltariffsshouldapproachzeroby2015.21Inaccordancewiththe2009Regulation,BEREC(BodyofEuropeanRegulatorsforElectronicCommunications)providedadvicetotheCommissiononthefunctioningoftheRegulationandfutureregulatoryoptionsinitsDecember2010Report,supplementedbyitsFebruary2011responsetotheCommission’spublicconsultation,theCommissionthenpublishedafull reviewofthefunctioningoftheRegulationandlegislativeproposalsforanewRegulationinJuly2011.On30May2012theCounciloftheEuropeanUnionapprovedtheInternationalRoamingRegulationIII,whichenteredintoforceon1July2012.TheRegulationintroducedthefollowingmeasuresapplicablefrom1July2012:•Anextensionofwholesaleandretailpriceregulationforvoice,SMSwithayearlydecreaseinthelevelofthecapstobeinforceuntilJuly2022forwholesaleservicesanduntilJuly2017fortheeurotariffs.•PriceregulationofdataroamingservicesattheretailleveltobeinforceuntilJuly2017.•TheobligationforMNOstomeetallreasonablerequestsforwholesaleroamingaccess,whichcomprisesdirectwholesaleroamingaccessandwholesaleroamingresaleaccessundertherulessetoutintheRoamingRegulation.
![Page 39: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/39.jpg)
38
Theregulationdoesalsoincludeprovisionsontheseparatesaleofroamingservicesthatwillenterintoforceon1July2014.In2013,EuropeancommissionintroducedRLAHstrategy,beingthemostambitiousplanin26yearsoftelecomsmarketreformations.WithRLAHstrategyitallowsenduserstousetheirmobiledeviceabroadintheEEAcountrieswithoutanysurcharges.Thispointoutthatalltheunderlyingcosts,transitcostsandfixedcoststhatarerelatedtoroamingwouldbecomecompletelyinvisibletotheenduser.In2014,EuropeanParliamentvotedtofinallyabolishretailroamingsurchargesinordertoallowcustomerstobeabletoroamlikeathome,andfromthatpointonwards,legislatorswerechargedwithworkingoutdetailsofhowthiscouldbemadepossible,reachinganagreementacrossalltheEUmemberstates.TheImpactonthebusinesscaseforthedifferentoperatorsisnotcomparable,ontheonehandduetothedifferencesbetweenMNO&MVNO,butontheotherhandduetothesignificantdifferencesbetweenthememberstatessuchasthelevelofretailtariffs,costsandtheratiooftravellingandconsumptionofservices.WithRLAH,thenumberofconsumersusingroamingserviceswillincreasewhichwillmeanlessrevenueandbiggerwholesalebillsfortheoperatorsandinadditiontheywillhavetofacetheincreasingdemandontheirnetworks.In2015:EuropeancommissionstatedthatthereductiontozerostrategyisplannedtobefinishedbyJune2017,thismeansthataftermorethan10yearsofregulationsandpricecapswillbeabolishedentirelyandEuropeanswillbeabletotravelandusetheirmobiledeviceservicesjustlikeathomewithnoextracost.Inordertocompletelybuilduptothepointwherenoadditionalroamingfessareallowed,anintermediateRLAHregulationhasbeenintroducedwhichisreferredtoastheRLAH+phase,asoperatorscannowonlychargethedomesticpriceperunitplusasmallsurchargewhichequalstotheirmaximumwholesalecost.On26November2015,2yearsafterthefirstdrafttextwasintroducedbytheEuropeanCommission,theRegulation(EU)No.2015/2120oftheEuropeanParliamentandoftheCouncillayingdownmeasuresconcerningopeninternetaccessandamendingDirective2002/22/EConuniversalserviceandusersrightsrelatingtoelectroniccommunicationsnetworksandservicesandRegulation(EU)No531/2012onroamingonpublicmobilecommunications
![Page 40: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/40.jpg)
39
networkswithintheUnionwaspublished.ThisamendmenttotheRegulation(EU)No531/2012setsouttheprincipleof(RLAH)where,from15June2017,telecomoperatorswerenotbeableanymoretosurchargesforregulatedretailroamingservicesuntilayettobedefinedminimumfairuselimit(FUP)hasbeenreachedprovidedthattheissuesidentifiedatwholesalelevelhavebeenaddressedandtheproposedsolutionsareapplicablebythen.SpecificallyregardingtotheBenchmarkReport“BEREC”,theapplicableprovisionsontheRoamingRegulation(EU)No531/2012werekeptunchangedandthereforethebasisforthisdatacollectionismaintained.19RLAH(RoamLikeAtHome)TheconceptbehindRLAHimpliesthatmobilesubscriberswhenvisitinganothercountrycanusetheirmobilephoneasiftheywereintheirhomecountrywithoutincurringanyextrachargesonthebill.So,theycanmakealocalcallinthevisitedcountry,callbackhome,callathirdcountry,accessmobiledataastheirhomemobilesubscriptionincurringnoextracharges,ifanychargeswereinvolvedtheywouldoccurifusagewhenroamingwentbeyondtheirallocationofminutesand/ordataoftheirmonthlysubscriptionandthesechargeswouldbeatthesamelevelasifthesubscriberswereintheirhomecountry.RLAHhavefewimpactsregardsthetelecommunicationmarketandcompetitionsincemanyoperatorswithhighoutgoingtrafficwillnotbeabletocoverthecostsiftheirusersusetheirdataservicesabroadforalongterm,sointermtoimplementRLAHthereshouldbefairusepolicyattheretaillevelapproachtobeimplementedinordertopreventanyanomaloususage.Inthesedays,someoperatorsstartedtoofferdifferentpackages,thataresimilarprocesstotheRLAH,thesepackagescouldbejustforvoiceandsomeotherpackagescouldbejustforusingdata,whilesomeofthemwererestrictedtoaspecificgeographicalareas,forexample:customersfromDenmarkgetoffersfromthereoperatorstoroaminSwedenandNorwegianforfree,withoutanyextrachargebutiftheyusetheirdatainanothercountrytheywillhavetopayextra.ManyoperatorsareofferingRLAHwithfairusepolicy,forexampleusageof3GBpermothor6GBperyearor90daysabroad.FranceandPolandwereoneofthe
![Page 41: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/41.jpg)
40
firstcountriesthatappliedFUP,operatorsinthesecountriesofferingroamingwithinarangeof10to60daysperyearregardstothevolumeofFUP.20Manyoperatorswerenotabletopredicttheexactvolumeofusageofservices(voice,sms,data)beforeandafterofferingRLAHpackages,whilefewoperatorsmanagedtoanalyzeitandtheyreportedthattheaverageincreaseofdatausageisaround90%-200%afterofferingRLAH,intheresultofthatoperatorswillfaceahugeincreaseindemandofroamingservicesfromtheend-usersandthoseuserslaterafterimplementingtheregulationtheywillnotpayanymorehighpricesforroaming.20
![Page 42: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/42.jpg)
41
4.5 PriceCapHereinthispoint,itshowstheimprovementoftheregulationshowreducedprice
capsfortheinternationalroaming(Voicecalls,SMS,Data).Thisinformationwill
beusefultocollaborateintheanalysischapter.
Inthistable,themaximumtariffspricesareexplainedandshownhowthepricesdecreasedfrom2014until2016.AndwiththenewregulationstherewillbenomoreextraroamingfeewhicharegivenbytheEuropeancommission:
Figure11Themaximumtariffs(excludingVAT)forcalls,textsanddata22
Thesepricecapsarethemaximumpermissibleprices.Operatorsarefreetooffercheaperrates,sotobeonthelookoutforbetterdeals.Customerswereworryingaboutthedomesticpricesifitisgoingtoincreasesinceuserswillbeabletousetheirphoneabroadwithsamepriceashome,butsinceEUregulationshavebeenintroducedtoreduceinternationalroamingcharges,domesticmobilepriceshavebeendecreasingaswellbythetimeandatransitionperiodhasbeenagreedtomaketheabolitionofroamingchargessustainablethroughoutEuropewithoutanincreaseindomesticprices.23 ThistransitionperiodwillensurethatwhentheenddatecomesonJune2017,thewholesalecostsofoperatorswhentheyoffermobilecommunicationsservicesoutsideoftheircountrywillsufficientlyhavedecreasedbymarket
![Page 43: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/43.jpg)
42
forcesorthroughanotherregulatoryinterventionforroamingwithoutchargestobesustainable.Inadditionforwhatmentionedabove,regulationincludessafeguardsrulestrategy,whichthatcanbeusedbymobileoperatorstopreventa necessaryabusiveuseofroamingservices,suchaspermanentroamingwhichotherwisecouldbethesourceofdistortionsondomesticmarkets.Insomespecificandexceptionalcircumstanceswheretheprovisionofroamingservicesatdomesticpricesisprovedtomakethedomesticchargingmodelofanoperatorunsustainable,theRegulationforesees,asanexception,thepossibilityforthatoperatortostillapplyasurchargetoitsroamingcustomers,onlyifthenationalregulatoryauthorityagreesinordertoavoidanincreaseinthedomesticpricesofthatoperator.2TheEuropeanCommissionestablishesthepricecapofwholesaleroamingchargesthatoperatorswillchargeeachotherforusingtheirnetworkfrom15June2017,forcalls,SMSanddata.IneffecttheCommissionproposestoreducecurrentwholesaleroamingchargescapsto€0.04/minuteofcallmade,€0.01/SMSand€0.0085perMBofdatatransmitted.Comparingthesepriceswiththepreviouscaps,thereductionofcapsare-20%,-50%,-83%respectively.TheCommissionproposesthepricecapsvaluesremainunchangedfrom15June2017until30June2022(withareviewin2019).24Italsomentionedthepossibilityfortelecomoperatorstoconcludeawholesaleagreementtooptoutofapplyingthesewholesalecapsandnegotiatebetterdeals.TheEuropeanParliamentcommitteeresponsible,theCommitteeonIndustry,ResearchandEnergy(ITRE),publishedthedraftreporton16September2016.Thecommitteeadoptedthison29November2016.ThereportcallsforareductionintheCommission'sproposedwholesaleroamingcapsforcallsfrom€0.04perminuteto€0.03andfordata,themainpointofdiscrepancy.WhereastheCommissionproposedasinglewholesalepricecapfordata(€8.5/GB)for5yearsperiod,theindustrycommitteeisproposingadepartingwholesaledatacapthatislower(€4/GB,€1lowerthantherapporteur'spristineproposal).Thispricewoulddroponayearlysubstructure,totakeaccountofthefallingunitpriceofdata.Thereportarguesthattoremaininlinewithconsumerutilizationinthelongrun,datacapsshoulddecrementovertheyearsandthattheCommission'sproposedwholesaledataroamingcapof€8.5/GBismuchhigherthanbothdomesticretaildatapricesandwholesaleauthenticcostsacrossallEU
![Page 44: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/44.jpg)
43
MemberStates,asillustratedinthefigurebelow:
Figure12Wholesaledatacostsincludingtransitcosts(€cent/MB)201624
ThesituationhasbeendiscussedattheCouncil,whereageneralapproachwasconcurredon2December2016:theCouncilisproposingtodepartfromhigherdatacapsthanthoseproposedbytheCommissionandITRE:startingat€0.01/MBinmid-June2017butdecrementinggraduallyto€0.005/MBinmid-2021.Thegeneralapproachincludesanincipientmechanismatwholesaleleveltoascertainsustainabilityinexceptionalcircumstances.Operatorsunabletorecuperatetheircostscouldasktheirnationalregulatorforsanctiontoapplyasurcharge.However,evenwhenexceptionallyapplyingasurcharge,thetotalwholesalechargefordatawouldnotbesanctionedtoexceed€0.0085/MB.Inthefigure,itshowshowthewholesalepricesaredifferentineachcountryandthereisahugegapbetweennorthandsouthcountriessuchasDenmark(0.29€)andSpain(0.41€)
![Page 45: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/45.jpg)
44
4.6 FairusepolicyTheconceptbehindthispolicyistolimittheamountofconsumer’sdatausageabroadtonotriskthetelecomoperatorsofreceivingahighwholesalebill.Firstdraftofafairuselimitpolicyhasbeenpublishedon05.09.2016.Itwouldhavelimitedtheamountoffreeroamingtoninetydaysinayearandamaximumofthirtyconsecutivedays,afterwhichregulatedroamingchargeswouldapply.Theproposalalsostatedthat"thecustomershouldneverthelessbeabletoconsumevolumesofsuchservicesequivalenttoatleasttheaveragevolumeconsumeddomesticallybythecustomersofthetariffplaninquestion",preventingoperatorsfromsettinglowdatalimits.(GSMA2016,Fairusepolicy)However,theproposalwashastilywithdrawnjustafewdaysafterbeingpublishedbecauseconsumerswereunhappywiththispolicy.OnlyanoteontheCommission'swebsiteremained:"Aninitialdraftwaspublishedon5.9.2016.TheCommissionserviceshave,ontheinstructionofPresidentJuncker,withdrawnthedraftandareworkingonanewversion".Thetelecomoperatorsslammedthepolicyalso,theywereclaimingthatitwouldbetoocomplextoimplementandit’sunclearforconsumers.Furthermore,30consecutivedaysgrantedtoeachconsumerwouldhavealreadycovered100%oftheneedsoftheEuropeancitizens,alsoalegalconcernsinDenmark,themaximumlengthofcontractis6monthssocustomerswouldhavebeenabletoresettheirroamingsubscriptiontwiceayear.(GSMA2016,Fairusepolicy)On15/12/2016,EuropeanCommissionreleasedalatestdraftofFairUsePolicy“FUP”,and2mainpointsfromthelastdraftwerenotchangedbecausetheyexplainedifFairUsePolicyrulesareentirelylefttothechoiceoftheoperator:ThenusersdonotfullyenjoythebenefitsofRLAHandcontinuetopayaroamingsurchargeinadditiontothedomesticpriceduringatleastpartoftheirtravellingtimeabroadintheEU.Ontheotherhand,ifFUPrulesareinadequatelydefinedatEUlevel:Thepermanentuseofdomestictariffswhileroamingmayleadtowholesalelevelconsequencesforthehomeoperatorandultimatelymayaffectitsabilitytoserveitsdomesticcustomerswithcompetitiveroamingserviceswhentheyperiodicallytravel.26The2mainpointsthatwereunchangedfromthepreviousdraftare:26
v AFUPmaybeappliedinordertopreventabusiveoranomaloususageofregulatedroamingservicessuchastheuseofsuchservicesbyroaming
![Page 46: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/46.jpg)
45
customersinaMemberStateotherthanthatoftheirdomesticproviderforpurposesotherthanperiodictravel.
v AnyFUPshallenabletheroamingprovider'scustomerstoconsumevolumesofregulatedretailroamingservicesattheapplicabledomesticretailpricethatareconsistentwiththeirrespectivetariffplans.
Additionallytotherulesmentionedabove,telecomoperatorsshouldnotimposealimitonthevolumesofmobileservicesavailabletotheroamingcustomerotherthanthedomesticlevel,whilethecustomerabroadintheEuropeancountries,alsothesedomesticlimitsshouldincludeanyapplicableFUPasregardsdomesticusageofthetariffplan.AfewrulesofthelastversionofFUPregulationwillbepresented:27
v Inaspecificsituation,telecomoperatorsmayapplytoitsnationalregulatoryforanauthorizationtoapplyasurchargeonitsroamingcustomers.Anyoftheseapplications,requiredallthenecessaryinformationtodemonstratethat,intheabsenceofanyretailroamingsurcharges,theproviderisunabletorecoveritscostsofprovidingroamingservices.
v Inordertoenablecustomerstoconsumevolumesofregulatedretailroamingservicesattheapplicabledomesticretailpricethatareconsistentwiththeirrespectivedomestictariffplans,theroamingprovidershouldasageneralrulenotimposealimitonthevolumesofmobileservicesavailabletotheroamingcustomerotherthanthedomesticlimit,whenthatcustomerisperiodicallytravellingintheUnion.Suchdomesticlimitsshouldincludeanyapplicablefairusepolicyasregardsdomesticusageofthetariffplan.
v Inordertoaddresstheriskthatpre-paidsubscriptions,whichdonotentailalong-termcommitment,areusedforpermanentroamingpurposesonly,theroamingprovidershouldbeentitled,inthealternativetorequiringtheprovisionofevidenceofresidenceorofstablelinksentailingfrequentandsubstantialpresenceontheterritoryoftheMemberStateofthatroamingprovidertolimittheusageofregulatedretailroamingdataservicesattheapplicabledomesticretailpricewithapre-paidsubscriptiontothevolumesthatcanbeboughtatthewholesaleroamingdatacapbytheremainingmonetaryamount,excludingVAT,availableonthatpre-paidsubscriptionatthetimeoftheroamingconsumption.
![Page 47: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/47.jpg)
46
4.7 TransparencyWhenaroamingserviceproviderappliesafairusepolicy,itshallincludeincontractswithroamingcustomersallthetermsandconditionsassociatedwiththatpolicy,includinganycontrolmechanismapplied.Aspartofthefairusepolicy,theprovidershallputinplacetransparent,simpleandefficientprocedurestoaddresscomplaintsofcustomersrelatingtotheapplicationofafairusepolicy.Thisiswithoutprejudicetotherightsoftheroamingcustomer,toavailof(transparent,simple,fair)andpromptout-of-courtdisputeresolutionproceduresestablishedintheMemberStateoftheroamingprovider.(ECn.d.,regulatoryframework)WherethereisobjectiveandsubstantiatedevidenceindicatingariskofabusiveoranomaloususeofaspecificregulatedroamingretailservicewithintheUnionatthedomesticretailpricebyagivencustomertheroamingprovidermayapplyasurchargefortheprovisionofthatspecificservice,afteralertingthecustomeraboutthedetectedbehaviorpatternindicatingsuchariskandaboutthepossibilityofsuchasurchargeforanyfurtheruseofregulatedretailroamingservicesbythatcustomer.Furthermore,theroamingprovidershallceasetoapplythesurchargeassoonasthecustomer'susagenolongerindicatesariskofabusiveoranomaloususeoftheregulatedretailroamingserviceinquestion.WherearoamingproviderestablishesthatSIMcardshavebeentheobjectsorganizedresaletopersonswhoneithernormallyresidesinnorhavestablelinksentailingfrequentandsubstantialpresenceintheMemberStateoftheretailroamingprovidertoenableconsumptionofregulatedretailroamingservicesotherthanforthepurposeofperiodictraveloutsidethatMemberStateinaccordancewithanarticlefromtheEuropeancommissionregulatoryframework("Wheretheroamingproviderestablishes,withobjectiveandsubstantiatedevidence,thatanumberofSIMcardshavebeentheobjectof
organizedresaletopersonsnoteffectivelyresidinginorhavingstablelinks
entailingfrequentandsubstantialpresenceintheMemberStateofthatretail
roamingproviderinordertoenableconsumptionofregulatedretailroaming
servicesprovidedattheapplicabledomesticretailpriceotherthanforthepurpose
ofperiodictravel,theroamingprovidermaytakeimmediateproportionate
measuresinordertoensurecompliancewithallconditionsoftheunderlying
contract"(ECn.d.,regulatoryframework)),theoperatorshallnotifytothenationalregulatoryauthoritytheevidencecharacterizingthesystematicabuseinquestionandthemeasuretakentoensurecompliancewithallconditionsoftheunderlyingcontractatthelatestatthesametimeassuchmeasureistaken.
![Page 48: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/48.jpg)
47
4.8 EconomicimpactofcuttingroamingfeesThestrategyofcuttingroamingfeeshasabeneficialphasefortheendcustomerswhichtheywillnotpayanymoreextramoneyforusingtheirdeviceswhileabroad,buttheimpactwillbeontheoperatorsboth(MNOandMVNO),operatorswillnotbeableanymoretochargeroamingfeestocustomersontheretaillevel,meaningtheywillbeonlybecompensatedwiththesamepricetheychargetheircustomersfordomesticprices,whiletheirroamingexpensesremain.Theimpactwilldependonthetypeofoperatoranditsgeographicalcoverageandlocation.ImpactfortelecomoperatorsGeographicallocationTheimpactofdataroamingregulationon2017issignificallydifferentdependingonthecountrytheoperatorsisactivein,mainlybecauseofthedifferenttravelingratioofendusers,makingoperatorsfaceeitherincomingroamingtrafficoroutgoingroamingtraffic.AnexampleofthatDenmarkhasmuchmoreoutgoingroamingtrafficbecausepeopleinDenmarktravelalottothesouthofEurope.Soasadirectresult,wholesalecostsfortheseoperatorswillbeveryhighandbyabolishingtheretailroamingfees,theywillsuffersignificantrevenuelosses.Asaresultoftheselosses,mobileoperatorswillincreasedomesticpricesinordertocompensateforthesewholesalelossesthatiscalled“waterbedeffect”,WaterbedeffectwillbeintroducedandusedinthethesisthathasbeentestedbyTommasoValletti.Ontheotherhand,GuntherH.Oettinger(Europeancommissionerfordigitaleconomyandsociety)said:“Thecommissiondoesnotbelievethatthereisariskofariseinmobileservicepricesasaresultoftheprogressiveeliminationofroaming.Theeliminationofroamingsurchargeisalong-standinggoalforwhichtheagreementwasreachedbytheEuropeanParliamentandtheCouncilontheCommissionsproposal.Theagreementforeseesacleartimelinewithallnecessarystepstobeundertaken.Toabolishroamingchargesaseriesoftechnicalconditionshavetobefulfilled.Inparticular,thewholesaleroamingmarketneedstoevolve,eitherthroughmarketforcesoranotherregulatoryintervention,toalevelthatmakestheendofretailroamingsurchargessustainablethroughouttheEUasof15June2017.Meanwhile,alreadyfrom30April2016,roamingpriceswillfurtherdecreasesubstantially.Roamingproviderswillonlybeabletochargeasmall
![Page 49: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/49.jpg)
48
amountinadditiontodomesticprices.Thatadditionalamountwillbeatmost25%ofcurrentretailroamingcapsforcallsmadeanddataand33%ofcurrentretailroamingcapsfortextmessages.NowtheagreedtextwillhavetobetranslatedandlegallycheckedtobeformallyapprovesbytheCouncil.ItwillthenbetransmittedtotheEuropeanParliamentforitssecondreadingvoteandadoption,afterwhichitwillbepublishedintheOfficialJournalandwillofficially,enterintoforce.”29Inordertomitigateanwaterbedeffectcausedbyroamers,theEuropeancommissionwillproposeaFairUselimitthatoperatorscanapplyonceRLAHisintoeffect(Fairuselimitsetamaximumamountofroamingusagepercustomerpertimeperiod).Also,inthespecificcasewhenanoperatorisnotabletorecoveritsoverallcostsofprovidingroamingservices,theseoperatorscanbeexemptedfromtheobligationtoprovideRLAHandwillbeabletoapplyasurchargeforroamingservices,inordertoensureitsbusinesscase.TheseexemptionscaseswillbedeterminedindetailsbytheEuropeanCommissionandpublishedattheendofDecember2016.23ImpactofgeographicalCoverageOnespecificcategoryoftelecomoperatorsinEuropeisthosecoverageregionextendsbeyondnationalborders,called“cross-country”operators.Operatorswhoarepartofacross-countrygroupwillbeabletogetcheapwholesaleroamingpricesbyusingtheirownnetworkinfrastructure,theycansteertheirroamingtrafficandinternalizetheircosts.
![Page 50: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/50.jpg)
49
ImpactsforMVNOsMVNOs,thosewhodon’townaphysicalnetworkinfrastructure,theyresellcapacitytheyrentfromanMNOandhencechallengetheincumbentoperators,thoughoftentakeuponlyasmallpartofthedomesticmarket.Inasituationasroaming,MVNOsincurincostswhentheircustomersaretravellingbuttheydon’thavewholesaleincomesastheycannothostanyroamersontheirnetworkssincetheydon’towntheinfrastructure.Theyexperienceabsolutetrafficimbalancesandtheydon’thavethebargainingpowertonegotiatewholesaleroamingfeesthatarelowerthantheceilingcapsimposedbytheEuropeanCommission.ForthemtheriskofwaterbedeffectisevenmorepertinentthanforMNOswithhighoutgoingroamingtraffic.Ifthisissueinnottackledaccordingly,theimplementationofRLAHstrategymighthaveanegativesideeffectonthelevelofcompetitionwithinthenationalmarket.(MVNOEurope2015)InJune2016theEuropeanCommissionhasproposedasignificantreductionofthewholesalecapsfordata,voiceandSMS.MVNOsarelookingforwardforlowercapswhilefromtheothersidesoutherncountriesareadvocatesofhighercapes.Thedebateiscomplex,asnobodycanexactlypredictthespotinordertoofferRLAHonasustainablewaytofitwiththesituation.AsBEREChaspointedout,thesituationiscomplexbecauseofthedifferencesbetweenoperatorsandthestrongvariationsintravelpatternsofconsumersfromindividualmemberstates.Inthenextmonths,legislatorsattheEU-levelarechargedwiththedifficulttasktomaketrade-offsbetweenthepolicyobjectivesofpromotinggreateruseofroamingservices,protectingthebusinesscaseofmobileoperatorsandprotectingEuropeanconsumers.31
![Page 51: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/51.jpg)
50
4.9 ImpactsofRLAH(RoamLikeAtHome)Europeissufferingtheworstidentitycrisissincetheunionwascreated,becausepoliticiansandbureaucratsaredesperatetodemonstratedoingsomethinggoodfortheEuropeancitizen.Theythoughtcheaproamingwasasurethingtowinsatisfaction,butnoitwillnotbringapositiveimpactforthecustomers.AswhatJohnStrandfromtheStrandconsultantcompanyinDenmarksaid“unfortunately,theypolicymakerswhomakethesesimplecalculationsdonotseewhatwillhappeninrelationtochangingconsumptionbehavior,thedevelopmentofnationalprices,theavailabilityofservices,thesupplyofmobileplans,pricinginthenationalwholesalemarket,thechangedthedistributionterms,andhowto"roamlikehome"willaffectmanyMVNOsinEurope”32.RLAHhavemanyimpactsontheeconomicandmarketofthetelecomindustries,sincethisprocesswillreducethepricesandresultsincuttingtelecomindustriesrevenuesointhiscasetheywillnothavebusinesscasestobuildnewnetworksorinfrastructure,sotheinnovationprocesswillbedroppeddown.Someoftheimpactswillbeintroduceddown:IntheScandinaviacountrieslikeDenmarkwithalowingoingtraffic,thattheyareofferinglowpriceswillbeforcedtoraisepricestoeliminatethegapbetweennationalpricesandthedifferentroamingfeesoutsideDenmark.WhilecountrieswithhighpricessuchasGermanywillhavetoreducetheirpricestocounterthearbitragethatthismodelcreatesspeciallyforthesmalloperatorsandMVNOstheywilllookatthearbitrageopportunitiesbymovingtrafficfromawholesalemodelagreementtoaroamingmodel.Forexample:somenetworkoperatorswithMVNOsclientsandwithcorporateclientsacrossanumberofcountrieswiththeyservebyusingacombinationoftheirownnetworksandMVNOagreements,inthiscasetheycansavetechnicalcosts,timeandpaperworkassociatedwithbeingindialoguewithregulatoryauthorities.Numberofsubscriptionswillbereducedwithanarrowerrange,andforthemobileoperatorswithmobilebroadbandproductswillbetryingtocompeteinthemarketwithfixedbroadbandprovidersmaywithdrawfromtheInternetserviceprovidermarketwhichwillresultinahugeeconomicconsequencesiftheircustomerstaketheproductabroadandconsumelargeamountsofdataservice.
![Page 52: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/52.jpg)
51
4.10 SuggestionstoreducetheeconomicandbusinessimpactsofcuttingfeesInthispart,thesuggestionshavebeenmadebythe“TheBodyofEuropeanRegulatorsforElectronicCommunications”BEREC.
4.10.1 FairuselimitsWhencustomersdonotneedtopayroamingsurcharges,theymightbetemptedtopurchaseaSIMcardofaforeignoperatorthatofferslowerpricingthananydomesticoperator,henceenjoycheaperpricinganduseroamingalsowhenbeingathome.Thisscenario,knownaspermanentroaming,willleadtohigherwholesaleroamingchargesfortheforeignoperator,leadingagaintothewaterbedeffect.Onalargescale,permanentroamingwillalsodetrimentthetelecomsectorinthosecountrieswithonaveragemoreexpensivemobileprices.Fairuselimitareawaytocounterthisproblem,theysetamaximumamountofroamingpercustomerpertimeperiod.Whenthecustomerexceedsthislimit,hewillneedtopayasurcharge.FULcanbeimplementedindifferentways,thelimitcanbesettoaspecificamountofroamingperday,perweek,permonthorevenperyear.WhentheFULisexceeded,afairsurchargeperusageordaily/weeklyflatfeecouldbelevied.TherewillbeaneedofsomecapsfortheFairuselimit.
4.10.2 RaisedomesticpricesWhenretail-roamingpricesdecreaseononeside,thedomesticpriceswillincreaseontheotherside,thismethodcalledwaterbedeffectthathasbeenmentionaboveearlier.Thissituationisunfavorableaseveryone,alsothecustomerswhoneverroam,willneedtopayhigherdomesticpricestocoverthelossesmadebythecustomerswhodoroamandthat’sunfair.Thismeansthatonlythepeoplewhoroamfrequentlywillbenefitfromthissituation.TheaverageamountofcitizensintheEEAwhotravelatleastonceayearis35%andtheaveragedaysabroadwithinEEAis5.7dayshasbeenprovenbyaresearchofBEREC31.Lookingatthesenumbers,wecansaythatalargegroupofcustomerswillneedtopaymoresothatasmallgroupofcustomerswhofrequentlyroamwillpayless(businesspeople).Thisisanundesiredoutcome,howmuchdomesticpricesshouldincreasetocoverthelosseswillstronglydependonthecountryinwhichthemobileoperatorisactive.Additionallyoperatorsincompetitivemarketmightbe
![Page 53: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/53.jpg)
52
reluctanttoincreasetheirdomesticprices,protectingtheirmarketshare.Hence,thedegreeofpossibilitytoraisedomesticpricesalsodependsonthecompetitiveenvironmentwithinacountry.
4.10.3 DecreasewholesaleroamingpricesInthispart,thefocusisonthecostside,thebestsolutionforoperatorsmightbetoreducewholesalecharges(speciallyforthecountriesweretheiroutgoingtrafficaremuchhigherthantheingoingtraffic).Inthepast,thesewholesalepriceswerehigh,allowingtheForeignServiceprovidertotakesignificantmarginsonhisowncost.Thoughnationalcompetitionhasdecreaseddomestictariffs,thelackofcompetitionontheinternationalroamingmarkethasleftthewholesaleroamingpricesunchanged.Asuntilrecently,thesehighwholesalepricescouldbechargeddirectlytotheendcustomersasapartoftheirroamingfess,therewasnopressingneedforsharpreductionofthesewholesalecharges.Aspartoftheirpolicy,theEuropeancommissionhassetwholesalecapsforroaming.Findingacorrectlevelofthesecapsisnoteasy.Settingthecapstoolowbelowthecostwillputpressureontheforeignserviceproviderprovidingroamingtocustomersofforeignproviders(riskingaraiseindomesticpricesofthisforeignserviceprovider).31Iftheysetcapstoohigh,theywillnotbeveryeffective,ifitstoohighthentherewillbeapressureonthedomesticserviceproviderswhichtheywillhavetopaythewholesalechargesfortheforeignprovidersandiftheoutgoingtrafficaremuchmorehighertheingoingtraffic,thentheywillendinasituationloosingrevenue(insteadofearningmoneyfromtheendusers,theywillpayextraortheywillagainincreasethedomesticpricestocoverthecost).Hence,thebestoptionistosetthewholesalecapsjustabovethecostoftheFSP,sothereissmallmarginthatcanbeusedtoimprovethequalityofthevisitednetworkandthecostforthedomesticserviceproviderarenottoohigh.
![Page 54: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/54.jpg)
53
4.11 Strategiesforthefuture
4.11.1 CarrierportabilityandAppleSIM
ThissolutionisanalternativesolutionforRLAH.Ifthissolutionwasimplemented
thentherewillbenoreasontoimplementRLAH,becausecustomerswillapplythe
othersolution.
TechnicalregulationintheformofnumberportabilityenablinguserstoswitchdomesticnetworkprovidersislegallyguaranteedintheEuropeanregulatoryframeworkforfixednetworksaswellasformobilenetworks.Aproperextensionofnumberportabilitytotheconceptofcarrierportabilitycanprovideasolutionforstimulatingcompetitiononthemarketsforinternationalroamingfromthecustomer’sperspective.Inordertoimplementcarrierportability,customersshouldhavetherighttoswitchmobilecommunicationsprovidersatanytime.Theswitchshouldbecarriedoutwithoutunduedelaywithintheshortestpossibleperiodoftime.33Thefollowingrequirementsforcarrierportabilityaremade33:
• UsersmusthavetheoptiontobuyaSIM-unlockedhandsetenablingtheuseofalternativeSIMcardsofdifferentproviders.Thisisapreconditionforchangingcarriersforoutgoingtrafficininternationalroaming.ThechosenFSPwouldprovidethevisitingcustomerwithanidentityinitsnetworkbymeansofanewSIMcard.
• Temporarynumberportabilityisanessentialpreconditionfor
competitionintheinternationalmobilecommunicationsmarket.Itallowsmobileservicecustomerstoreceiveincomingdataroamingserviceonavisitednetworkundertheirhomemobilenumberwhenswitchingtoadifferentprovideronlyforalimitedperiodoftimeoronlyforroamingservice.Currently,thisisratherdifficultsincetheDSPhasfillcontrolovertheE.164numbers(E.164setsthegeneralformatforinternationaltelephonenumbersandisapartoftheinternationalpublictelecommunicationnumberingplan)ofitscustomersbothfordomesticandroamingservices.
• TheDSPshouldnotberegulatoryenforcedtocarryouttheincasso
functionforinternationalroamingservicesbecausetheFSPalsohasthepossibilitytohandlethebillingforhisroamingservice.TheDSPhowevershouldberegulatoryobligedtoprovidetherelevantsourcedataontheidentityandcreditworthinessofitshomecustomersiftheDSPisnothandingthebilling.
Additionally,KniepsandZenhausernfromthe”InstituteofTransportScienceandRegionalPolicy”33suggestthatthecurrentpriceaswellasdecoupling
![Page 55: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/55.jpg)
54
regulationsshouldbeabandonedandthattheEuropeanregulatorsshouldinsteadimplementtheconceptofcarrierportability.Inaddition,measuresofconsumerprotectionsuchasinformationpoliciestoavoidbillshocksshouldbeobligatoryforallmobileoperators.Thisapproachtacklesthediscriminationbetweenhomeandvisitingcustomers.Assoonasconsumersarefreetochooseanycontractformobilecommunicationsoriginatingorreceivedinthevisitedcountry,theyarenolongerforcedintocontractualrelationswiththehomecarrieroralternative-roamingproviders.AvariationonthiscarrierportabilityisthenewSIMtechnologyreleasedbyApplewhichwillallowcustomerstotakeoutshort-termdataplanswithdifferentmobilephoneproviderswhenneededanditalsoallowstravelertousealocalnetworkfordataconnectionswithouttheneedtoobtainanewSIMcardfromalocalprovider.ThisapplicationofcarrierportabilityisonestepclosertoanentirelysoftwarebasedSIMforanycountry,whichwouldgivecustomershugefreedominchoosingtheirmobilesuppliers.ChatSimService(ItsanalternativesolutionbeforeRLAH)ItsasolutionforuserstobuySims-cardsanduseitinsteadofroaming,becauseroamingpricesareexpensiveanduserswereafraidtouseitbecauseofthe“BillShock”,SoChatSimserviceallowinguserstousefewappstoconnectandcommunicatewhileabroadforastandardpriceasitsshowninthefigure(36€/year)andthenausercanusethisserviceunlimitedduringayeartocommunicateover(Facebookmessenger,Whatsappandsomeotherapplications.ButtheideanowhowthesebusinessescouldsurviveafterimplementingRLAH,whichwillsettheroamingfeesonzeroandnotallowoperatorstochargetheirsubscribers.
![Page 56: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/56.jpg)
55
Figure13ChatSimProviderinItaly34
WhatwillhappentoserviceslikethisafterimplementingRLAH?AfterimplementingRoamLikeAtHomeonJune2017,oneoptionfortheChatSimbusinessandothersimilarbusinessesinEuropecouldbepossibletosurviveafterimplementingRLAHconceptisthatifthetheoryofVallettihappenedonatelecommarket“whentheregulatorsdecreasethepricesonthewholesalelevelandnotallowoperatorstochargetheircustomersthenontheothersidethepricesofdomesticpricewillraise“,sowhendomesticpricesraisesandbecomesexpensiveandthencustomerswillsearchforanothersolutionsandservicesthatletthemsavethecostofroaming,sotheymovetosubscribewithChatSimserviceorsimilarserviceslikethattosavethecostofroamingandcontinueconnectedwhileabroadtocommunicateovertheapps.
![Page 57: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/57.jpg)
56
4.11.2 Cross-borderandtrafficcompetition(forbigoperators)Cross-borderoperatorshavehugeadvantagesovernationaloperatorswhenitcomestoroamingcostandfees.Inordertokeepwholesalecostsundercontrol,itisessentialtodirectroamerstopreferrednetworks.Byusingthisprocessoftrafficsteering,theDSPcanmakesurethecustomer’strafficissteeredovertheforeignnetworkoftheDSPschoosing.Before2003,trafficsteeringwasnotpossible:whenabroad,thecustomeritselfwasgivenalistofFSPstoconnectto,leadingtoanincontrollablewholesalemarket.Theintroductionoftrafficsteeringmadeitpossibletodirectcustomer’straffic,whichisespeciallyadvantageousforlargeroperatorswithhighnegotiatingpower.Furthermore,cross-bordercountryoperatorscaninternalizeroamingcostsbysteeringofthecustomer’straffictooneofitssubsidiariesthatisoperatinginthetraveldestination.Thistypeofcross-bordercompetitionresultsinmoreaffordableaccessandpan-Europeannetworksimplyingcostreductionsforbothnetworkdeploymentandoperatingexpenditureseffectivelybenefitingfromeconomicsofscale,thoughthiswouldnotnecessarilyimplythatauniformtariffforallEUusersshouldemergeinsuchamarket,orthatCommissionshouldimposesuchaprice.Thereisasignificantincreaseintheamountofoperator’smergersinthemobiletelecommarketsuchasGermany(Telefónica&E-plus).Duetotheboundariessetbyspectrumauctionsandthecountry–specificIMSI(InternationalMobileSubscriberIdentity)codes,theEuropeantelecomsectorremainsheavilyfragmented:accessavailability,qualityandpricesvarysignificantlyacrossthecontinentwithtelecommarketsdefinedbynationalborders.Tostimulatecross-bordercompetition,theCommission,theEuropeanParliamentandtheCounciloftheEUcouldusetheirregulatorypowerstomakeitrelativelymoreattractivetooperatecross-bordernetworksinsteadoffocusingondomesticprices.(PhilippeAghion,NickBloom,RichardBlundell,CompetitionandInnovation2014)Apossiblepolicyisintroducingsupra-nationalallocationofradiospectrum,nowtheallocationintheEUisdonebymemberstatewithinaframeworkofinternationalcoordinationandharmonization,designedtocountercross-borderinterference.Auctionsindifferentcountriesarerunatdifferenttimes,eachassignmentprocedurehasitsownparticipationcost,biddersthatwanttooperateinmultiplecountriesarelikelytocalculatetheirbidsforindividuallotsandfacetheriskofpayingtoomuchinearlyauctionsiftheyfailtosecurecomplementinglicensesinlaterauctions.ThisnotonlyhindersthecreationofoperatorswithalargeEuropeanfootprint,butalsohasanegativeeffecton
![Page 58: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/58.jpg)
57
networkcoverageandpenetration.ToreducecostsforoperatorsandincentivizethedeploymentofnetworkswithalargerEuropeanfootprint,thereshouldbeamovetowardsEU-levelassignmentsofspectrum.36Attheend,itsimportanttobementioned,stimulatingthisstrategygiveslargeMNOsanadvantageoversmalleronesorMVNOsandmayresultinonlylargecross-countryoperatorsremaining,henceleadingtolesscompetitionandhigherpricesforcustomers.Thistrade-offbetweenlargemergingoperatorshavingmorewholesalenegotiatingpowerandprotectingsmallercompaniescurrentlywillremainadifficultbalancingprocess.
4.11.3 IMSI(InternationalMobileSubscriberIdentity)beyondnationalborders(forsmalloperators)IMSIhavebedonebytheBelgianandLuxemburgtelecomregulatorsandtheymadeitpossibletocombineaLuxemburgIMSItoaBelgianmobilenumberandtheotherwayaround.ThisisaninterestingstrategysinceIMSIs,arenormallyboundbynationalborders.Theagreementmakesitpossibleforoperatorsoffertheirservicestocustomersinboththeirowncountryofoperationandtheothercountryandusingeitheralocation-basedorauniformpricing.Bysigningbilateralagreementswithoperatorsfromothercountriesforakindof“usage-basednetworklease”,domesticoperatorscanprovidetheirusersatransparentexperienceandthemselvesbereducedofhighwholesalefees.Forsmalleroperators,thispresentsamoreattractiveoptionthanapurewholesalenegotiationprocess,aslargeoperatorspreferareciprocalagreementwithotherlargeoperatorsbasedon“exchangingtraffic”andbecausetheyoftenrenouncestartingthecostlyadtimeconsumingnegotiationprocessforlowvolumesoftraffic.Hence,theoptionofsigningbilateralagreementsbasedonpan-nationalIMSImaybetheonlyoptionforsmalleroperatorstosecuretheirbusinesscaseagainsthighroamingfees.TheEuropeanCommissioncouldstimulatethisbysettingaunifiedmobilecountrycodeforthewholeofEurope.Traditionaloperatorshoweverrenouncethisevolution,astheyfeartheincreaseincompetitionandthelossofroamingrevenues.
![Page 59: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/59.jpg)
58
4.11.4 RoamLikeLocalinsteadofRLAHWhenuserswillnolongerpayroamingfees,theymightbetemptedtobuyaSIM-cardfromacheaperforeignoperatorandthusconstantlyroam,alsointheirdomesticcountry.Asacountermeasure,theECislookingintofairuselimitstocounterthisso-calledpermanentroaming.Alternatively,insteadof“roaminglikeathome”,onecouldsuggest“roamlikealocal”whichhasbeenintroducedin2011byBEREC(BERECResponsetotheEuropeanCommissionPublicConsultation,2011)TheideabehindRoamLikeaLocal“RLAL”issimpleenoughprocess.PricingstructurescanbeimplementedsothatroaminguserscanbechargedbytheirDSP,approximatelythesamepricesasthecurrentaveragepricesofthecountryinwhichtheyarevisiting.Thiswouldclearlytackletheissueofpermanent,aschoosingaforeignoperatorwillnolongerresultincheaperpricescomparedtowhenchoosingforalocaloperator.However,thisapproachlacksconsumertransparencyandsimplicityasretailroamingchargesarenolongeruniformandmayeitherbehigherorlowerthaninthedomesticcountry,whichisexactlythestrongsuitofRLAH.Additionally,thisapproachrequiresECtoprovideregularupdatesoftheaveragepricesforeachcountryandrequiresmobileoperatorstoadjusttheirpricingaccordingly,whichwillnodoubtleadtoadditionaloverheadandmoredifficultbilling.
![Page 60: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/60.jpg)
59
4.11.5 WIFIoffloadingWi-FihasmorethanoncebeenproposedasaviablesolutionforoffloadingmobiledataasitofferscheapaccesstotheInternet.InEuropeanumberofexamplescanbefoundofmobileoperatorsofferingsocalleddualwirelessaccessnetwork.Ifsufficientaccesspointsareinstalled,Wi-Fiaccessisavailableinallpublicplaces,allowinguserstoeffectivelyswitchbetweenmobiledataandWi-Fiservice.(AijazandAmani,surveyonmobiledataoffloading2013)Whenabroad,userstypicallyuseWi-Fionlywhenstationarysuchascoffeeshop,restaurants,andhotelsastheseoffersfreeWi-Fiaccess,asaresult,Wi-Fiseemsanunlikelysolutionforoffloadingdatawhenroaming.However,mobileoperatorshavestartedtoteamup,sharingtheirWi-Finetworkswithotheroperators,resultinginusersalsohavingaccesstoWi-Fiservicewhenroaming.ThebestexampleforthisinEuropestheFON-netowrk.FONjoinsasetofnationalandinternationalWi-Finetworksintoonesinglenetwork.OperatorschoosetoopenuptheirWi-FinetworkviaFON,inreturnthisallowsthemandtheiruserstoaccessotherFONnetworks.39UsingWi-Fioffloadingseemsagoodsolutionintheory,butmayresultinunbalancedrelationshipsiftheexchangedtrafficinbetweendifferentparticipatingoperatorsisnotcomparable.
![Page 61: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/61.jpg)
60
Chapter5
5 AnalysisInthischapter,allthetheories,datacollectedthatarerelatedtointernational
dataroamingwillbereflectedinthischapterforanalyzingandcomingoutwitha
conclusion.
InternationaldataroamingisoneofthepopulartopicsinEurope.Regulatorshavepromisedthaton15,June2017willimplementRLAH,whichmeansthatoperatorswillnotbeableanymoretochargetheirsubscribersfortheirroamingusageabroad,buttheystillhavetopayeachotheronthewholesalelevel,thatmakeitverycomplicatedfortheregulatorssincemanyoperatorshavementionedthattheregulationswillcuttheirrevenueandinmanycasestheywillnotbeabletocoverthecostofroaming,speciallyoperatorsthatarenotcross-borders.InternationaldataroaminghaveseveralimpactsonthetelecomoperatorsinEuropeashasbeenmentionedearlierinthethesis,fewstrategiesandsolutionshavebeenhighlightedandexplained.InthischapterbothsideswillbeexplainedfromdifferentpointofviewswithrespecttotheEuropeanCommission,Telecomoperatorsandtheinterviews.Internationaldataroamingwentthroughalongnegotiationandstillnotcompletelydone,becauseofthecomplexityofcollectingrelatedinformationfromtheTelecomoperatorsabouttheirrealrevenueandcostofdataroaming.Manyoperatorswillnotgivetheirrealdatatotheregulators,sincetheywouldgenerateasmuchastheycanrevenueandtheywouldnotliketohaveacutintheirrevenue.Also,thenewregulatorymethodRLAHwillpreventtelecomoperatorstochargecustomers,butinthesametimetheywillhavetopayforotherforeigntelecomoperatorsforconnectingtheircustomerswhileabroad.Anothercomplexityofregulatingdataroaming,it’sthedifferentpricesandcostsofdataroamingbetweentheEuropeancountriesasitshowninFigure9,therearedifferencesbetweenthecountriessuchasinDenmarkthewholesaledataroamingpriceis0.032€/MBwhileinSwitzerlandis0.083€/MB,andthedifferencesbetweenpricesonthewholesalelevelmakeitdifficultfortheregulatorstofindawaytoregulatethesepricesandreachSingleDigitalEuropeanMarket,sincemanytelecomoperatorsspeciallyintheScandinaviacountries(Denmark,Sweden)explainedthat,iftheregulatorswillregulateInternationaldataroamingwithimplementingRLAH,thentheywillnotbeable
![Page 62: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/62.jpg)
61
tochargetheircustomersanymoreandtheiringoingandoutgoingtrafficarenotbalanced,itwillresultedthatthesetelecomoperatorswillhaveaveryweakpositiononthemarketandspeciallythoseMVNOs(thosethathavenoinfrastructure),becauseitwillcometoapointthattheywillnotbeabletocoverthecostofdataroamingservices.AnotherchallengeisthetourismratiodifferencesbetweentheEuropeancountries,thatmeansthatinmanycountriestheirhaveahugegapbetweentheingoingandoutgoingtraffic.AshavebeenshowninFigure8,thereisahugedifferenceinthetravellersrationbetweenthenorthandsouthcountries(likeDenmarkhavemuchlowerratiothantheSpain)whichmeansthatSpainwillbenefitfromtheingoingtraffictotheircountryandwillchargeDanishtelecomoperatorstoconnecttheircustomerswhileabroadinSpain.That’swillputtheDanishtelecomoperatorsinariskiftheirusersstayforalongtimeinSpainandconsumehighdataroamingservicestonotbeabletocoverthecostofthewholesalechargesandinthissituationDanishoperatorswillhavejustanoptionistoraisetheirdomesticpricestocoverthecostandthiscalled“waterbedeffect”thathavebeenintroducedbyValletti.
![Page 63: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/63.jpg)
62
5.1 EuropeanmarketCustomersbehaviorinEuropehavechangedinlastfewyears.TheconsumptionofdatahaveincreasedwidelywhichmeanstherevenuefortelecomoperatorsonthedatahaveincreasedwhiletheconsumptionforvoiceandSMSshavedecreasedashavebeenshowninfigure3.ThecostofprovidingdataroamingservicesvariessignificallyacrossEurope,differencesinthespectrumcost,labourandpropertycost,andspeciallytheingoingandoutgoingtrafficisunbalancedinmanycountries.Thesedifferencesincosthavebeenshowninfigure12(inDenmarkitis0.29€cent/MBwhileinRomania0.59€cent/MB).Alsoinsomecountries(touristic)roamingservicesmightbethemaindriverofdemandfornetworkcapacity.InEurope,EuropeanCommissionaimingtoachieveasingledigitalEuropeanmarket,butitshardtobeachieved,becausetherearemanydifferencesinthecostsofofferingroaming,differenttaxesanddifferentlabour,spectrumcostandsoon.Roamingmarketwereclassifiedonaverylowcompetitionlevelduetoinelasticdemandfortheservicesandveryfewoperatorswereinthemarketbecauseofthehighcostlypricestoenterthemarketbeforeimplementingregulationson2007.Afterimplementingaregulationson2007,pricecapwereimplementedwhichleadstoreducethepricesandlimitit,sooperatorscantchargecustomersoverthelevelofpricecap.Animpactofthepricecapscouldbeshowninfigure3(Europeanmobilerevenue)whichshowshowtherevenuedeclinedfrom174billion€theraiseofregulationsin2007andhowitwillcontinuedecreasingtoreach140billion€in2016,becausetheseregulationsforcedtelecomoperatorstodecreasetheprices.Intheanotherhand,Regulatorsaimsofimplementingsuchregulationsistoprotectthemarketandkeepitcompetitive,sincetheyhave579MVNOs(figure4)intheEuropeanmarket,andwithouttheseregulations,MVNOSwillbesetinarisksituationthatwillnotbeabletocompeteinthemarketbecausethepricesofroamingareveryhighandtheywillnotbeabletocoverthecosts.ButregulatorshavetotakeinfocusthatMVNOswillhavethebiggestimpactsofimplementingRLAHregulationbecausetheywillnotbenefitfromingoingtraffic,sincetheydonotownaninfrastructuretoconnectingoingtraffics,butintheonehand,theyhavetopaywholesalechargesforotherforeignoperatorsbecausetheywillconnecttheirsubscribers.ThatiswhyMVNOsarenegotiatingwithEuropeanCommissiontodecreasewholesalepricetothelowestleveltobeabletocoverthecostsandstayinthemarket.
![Page 64: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/64.jpg)
63
TheroleofMVNOsisveryimportantintheEuropeantelecommarket,becausetheyarethewaytoincreasecompetitioninthemarketandledbigoperatorstodecreasetheprices.SoEuropeanregulatorshaveencouragedMVNOsandimplementedsomeregulationstoincreasethenumberofMVNOs,andwecanseethatinfigure6,whichthenumbersofMVNOshaveincreasedrapidlybetween2007and2001.EuropeanCommissionhaveusedMVNOsdirectlyasaregulatoryinstrument,EuropeanCommissionhaveappliedconditionsrelatedtoMVNOaccessbeforeapprovingmergersbetweenMNOstopreservecompetitionintheEuropeantelecommarket.Forexample,beforemergers3telecomoperatorwithTelefónicainIreland,3wasrequiredtocommittoseeingupto30%ofthemergedcompany’snetworkcapacitytotwoMVNOs.Theconventionalwisdomamongmanyregulators,politicians,andpolicymakersisthatthemoreoperatorsorMVNOsinagivenmarket,thebetterthecompetitionwillwork.
![Page 65: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/65.jpg)
64
5.2 SpanishMarketRoamingshareintheSpanishtelecommarketwerebetween9%and6%from2007to2011ofthetotalmarketshare,itshardtogetdatafromtheirrevenuestream,becausemostofthesetelecomoperatorsarelistedinthestockmarketandassuchtheymightinterestedinshowingthatsuchsubstantialpartoftheirrevenueunderthreat.ToforceRegulatorsnottoimplementanyregulationsthatcanharmorcuttheirrevenuestream.AnexamplecanbepresentedisTelefónicastock,whichhasbeenitshighestrevenueon2007,thistelecomoperatordefinedascross-borderoperatorbecausehaveinfrastructureindifferentEuropeancountries.
Figure14TelefónicaStockValue40
Theusageofroaminghasincreasedaftertheimplementationofregulationon2007,butitwasn’tenoughtocompensateforthereductionsinprices.EChaveshowedontheirsurveystudythat72%ofEuropeansstilllimitedtheirusageofdeviceswhileabroad.ThismightreducethenumberofEuropeanusersthatlimitedtheirusageandachieveevenbiggergrowthinusage.
![Page 66: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/66.jpg)
65
Spanishroamingmarketshareandconsumption:datawerecollectedfrompreviousfiguresinthereport(figuresnumber:7and8)Year Wholesale
Revenue(Millions)
TotalRevenue(Millions)
%OfWholesaleRevenue
PricesforMB(€)
ConsumptionofMB(Million)
2008 380 1200 31.6% 4.91 14
2009 220 900 24.4% 3.23 27
2010 200 800 25% 2.38 33
2011 190 730 27.3% 1.30 50
2012 180 590 30.5% 0.89 702013 160 500 32% 0.48 106
Table1–RoamingmarketshareinSpainandconsumptionfrom2008-2013Basedonthecalculationsintheabovetable,wecanconcludethattherevenuedroppedrapidlyfrom2008until2010,butafter2010itshowsthereductionsonrevenuewasslightlyslowbutonthesametimetheconsumptionofdataincreasedveryhighuntilitreached106MB(million).Thatmeanstheregulationofpricecapsofreducingpriceswashigherthanusageofdataservicesthatleadstolooseinthewholesalerevenueandtotalrevenueandalsoamarketcompetitioncouldhaveanimpactonoperatorstocompeteonthemarketbyloweringtheirprices.Butthetablealsoshowsthatthepercentageofwholesalerevenuehadabigchartfromthetotalrevenue.WhatwecanunderstandfromtheSpanishmarketthatthereductionofpricecapshadanimpactontherevenuefortelecomoperatorsasshowninthetableabove,soEuropeanCommissionhavetotakeincasethatSpainhasahighincomingtrafficwithhighconsumptionbutstilltherevenuedecreasingyearbyyear,sothat’swhytheyarenegotiatingwiththeEuropeancommissiontoincreasethewholesalecapprices,sotheycanchargeoperatorsmorehighertoraisetheirrevenue,whileinsomecountrieslikeDenmarktheywillhavereallyabigimpactontheirmarketssincetheyarenotspecifiedasarealtouristcountryasSpain,sotheywillnotbenefitifthewholesalepricecapraisedup,butincontrarytheywillbeforcedtopaytheothertelecomoperatorswholesalechargesandbeingabletochargetheircustomerswhichwillleadthattheywillcovertheircosts,andattheend,whoisresponsibletocoverthegapofthesecosts.Ofcourseitwillbetheend-users,sointheDanishmarket,operatorswillhavejustanoptiontoraisethedomesticpricestocoverthecostandherewe
![Page 67: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/67.jpg)
66
comebacktothetheorythatVallettiexplainedandtestedonthetelephonemarket,whichcalled"Waterbedeffect".
5.3 ImpactfortelecomoperatorsGeographicallocationThedifferenttravellingrationofendusersbetweentheEuropeancountries,makingoperatorstofaceeitherincomingoroutgoingroamingtraffic,andthat’sinsuchcaseslikeDenmarktheyarefacingalowrationoftravellerswhichmeansverylowingoingtrafficbutinthesametimeveryhighoutgoingtrafficwhichasbeenshowninfigure(8)andthatmeansthatoperatorsinDenmarkwillhaveaveryhighwholesalechargestopaytheforeignoperatorstoconnecttheircustomersandtheriskisiftheirmarginalrevenuewillbedecreasedtobeunderthemarginalcostsooperatorswillhavetofindawaytocovertheirlooses,inthiscasetheywillnotbeabletocoverthecostsandthentheywillbeforcedtoraisetheirdomesticpricesandthesephenomenacalled“waterbedeffect”orimplementFUPtolimittheirsubscribersforroamingusagewhileabroad.Additionallytothataswhat"JakobWiller"mentionedintheinterview,thestrategyofoperatorscouldbechangedandtheywilloffernewsubscriptionpackagessuchasanexpensivepackageifuserswouldchosetoroamwhileabroadandotherpackagesjusttouseitinDenmark.Intheotherhand,thecommissiondoesnotbelievethatthereisariskofariseinmobiledomesticpricesasaresultoftheprogressiveeliminationofroaming.Theeliminationofroamingsurchargeisalong-standinggoalforwhichtheagreementwasreachedbytheEuropeanParliamentandtheCouncilontheCommissionsproposal.Additionallytothat,inordertomitigatewaterbedeffect,theyhaveproposedFUP,sointhiswayoperatorscanlimitthedatausageabroadtonotrisktheirbusinessestolooseandtheyhavementionedthatifanoperatorcouldcomewithevidencereportsthattheycannotcoverthecostsofroaming,thentheywillhaveapermissiontoaddsurchargestotheirsubscribersinordertocoverthecostsadsafetheirbusiness.
![Page 68: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/68.jpg)
67
2ndimpactonthetelecomoperatorsisgeographicalCoverageItsaboutthosestrongpowertelecomoperatorswhichtheyhavebranchesindifferentcountriesthosecoverageregionextendsbeyondnationalborders.Thoseoperatorswhoareparofacross-countrygroupwillbeabletogetcheapwholesaleroamingpricesbyusingtheirownnetworkinfrastructure,theycanbalancetheircostsbytheoutgoingandingoingtraffic,alsotheircustomerswillnotdropofftoanothernetworkswhiletheyabroad,theywillstillbeconnectedwiththesameoperatorandinthiswayoperatorswillsavethecostofwholesalechargestopaytoanothertelecomoperators.Nationaloperators,smalloperatorsthatdon’thavetheirowninfrastructure,andoperatorsinNordiccountries(Denmark,Norway,Sweden)wantlowerwholesaledatacapsbecausetheiroutgoingtrafficisverymuchhigherthantheingoingtraffic,additionallysomelargeoperators,wanttoascertainthatthecapsarehighenoughtorecuperateallwholesalecosts.TheassociationofMNVOsEuropeworriedaboutalacksituationofcoherencebetweentheregulatoryobligationsatretaillevel(aFUPwithoutdurationperiodorvolumeconstraint)andtheunderlyingeconomicsforoperatorsatthewholesalelevel(theCommissionproposedwholesaleroamingdatacaps).Itwantstobulwarkalternativeoperatorsofferingthemostcompetitivedealsfrom'marginsqueeze'situationsandasksforthewholesalemarketdatacapstobefurtherreduced.24Whileotheroperators,includinglargeoperatorswhichcalledcross-borderoperatorsthathavecoverageinmorethanoneEuropeancountry,wanttoascertainthatthecapsarehighenoughtorecuperateallcostsandwithalsanctionforinvestmentintheirnetworks.Countrieswithaplethoraofincomingtrafficfromtouristsarguethattheyrequireinvestingincapacitytosanctionforthesupplementalroamingtrafficontheirnetworks.Additionally,theEuropeanTelecommunicationsNetworkOperators'Association(ETNO)andGSMA,havepublishedajointstatement,settingouttheirconcerns"thatfairuselimitsintermsofvolumearerequiredtofightagainstabusesoranomaloususe.Simplevolume-basedfairuselimitswouldhelpaddressproblemsofabuseandanomalousbehavior,whilealsoimprovingsustainabilityforsomeoperatorsandclarityforcustomers”.41
![Page 69: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/69.jpg)
68
ImpactsforMVNOsMVNOsincurincostswhentheirsubscribersareabroadinEuropeancountries,becausetheydon’thavetheirowninfrastructuresotheywillnothaveanybusinessmodelabouttheingoingtraffic,sotheyjusthaveonewaytrafficthatistheoutgoingtrafficandinthiswaytheywillendinariskysituationthattheywillnotbeabletocovertheircostsandtheydon’thavethepowertonegotiatewiththeregulators.Furthermore,aspresentedinfigure(4),thenumberofMVNOshasdecreasedinEuropeto579MVNOssincethestartofregulationin2007,becausetheycantcompetewiththebigtelecomoperatorsandtheyareworriedwhatwillhappentotheirbusinessiftheEuropeanCommissionapplyRLAHregulation,becauseinthisscenariotheywillbeunabletochargetheirsubscribersfortheroamingservicesabroad,buttheystillhavetopayotheroperatorsinthewholesalelevel.SotheyarearguingwiththeregulatorstolowerthewholesalecapsasmuchastheycanandapplyFairUsePolicyFUPtoprotecttheirbusinessfromanypermanenttravellersabroadusage.SoRegulatorshavetotakeincasewhilestudyingthemarketoftelecomoperatorsthatthereisabigimpactontheMVNOsmarketandhavetoprotecttheminawaytostillbeabletocompeteinamarketandnotrunoutofthemarket.ImpactsofRLAH(RoamLikeAtHome)TheconceptbehindRLAHit’storeducethepricesfortheend-usersbynotallowingoperatorstochargethemforthedataroamingwhileabroad,butthisconceptwillhavefewimpactsorconsequencesonthetelecomsidewhichwillcutapartoftheirrevenueandmanytelecomoperatorsmentionedthattheywillnotbeabletoinnovateordeveloptheirinfrastructureanymore.TelecomoperatorsfromdifferentEuropeancountrieshavedifferentpointofview,countriessuchasSpainandGreecewouldliketoincreasethewholesalecapsotheywillbeabletodeveloptheirinfrastructureandbeablecoverthehighingoingdatatrafficwhileotheroperatorssuchasinDenmarkwouldliketolowerthewholesalecapasmuchtheycanbecausetheiroutgoingtrafficisveryhighandtheyareofferingacheapdomesticprices.
![Page 70: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/70.jpg)
69
Additionallytothat,JakobWiller“adirectorattheTelecomassociationindustryinCopenhagen,Denmark”suggestedthatregulatorscouldimplementFUPwithavolumeconceptnotaperiodlimits,asshowninthefiguredown:
Figure15AsuggestionsolutionbyJakobWiller(interview)
Inthisfigure,hepresentedthatregulatorscancreateaprocessonatimetable,forexampleinthefirstyearwholesalepricesare0.085€/GBandthedataallowanceabroadare2GBperuserandafterawhile(1or2years)theycanlowerthepricesforwholesaletobeapproximately0.076andtoincreasethedataallowance1GBmoretobe3GBatallandsoonkeepingdoingthatprocesstoendwithasuitablewholesalepricesanddatavolume.TheEChashadadreamofcreatingaDigitalSingleMarketbuttheauthenticityisthatthereare27differentcountriesinEuropeeachwiththeirowncurrencyandgovernment.Importantly,coststodelivermobiletrafficdiffersignificantlyacrossthestates.BuildinganetworkinLuxembourgisconsiderablylessexpensivethanSweden,acountry36timesaslarge.Notonlydoeseachstatehasauniquesetofincumbentsandchallengers,butalsotherearedifferentmobileregulations,spectrumrules,VATandcontractrequirements.It’sunderstandablethattheEUwantsmobilepricestobethesameacross27countries,butthenitshouldallowpricestoevolvewiththemarketforcesofconsolidationandefficiency.32
![Page 71: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/71.jpg)
70
SomeofthemostimportantimpactsofRLAHarethesewillaffectthenationalpricesinsomecountrieslikeDenmark(asshowninfigure8,thepercentageofincomingtravelersareverylow),becausetheyhavelowpricestheywillbeforcedtoraisethedomesticpricestocoverthegapbetweenthenationalpricesandcostsofroamingfeesfromotheroperators(speciallybecausetheiringoingtrafficismuchlowerthantheoutgoingtraffic)sotheywillnotreallybenefitfromthewholesalechargesenoughtobalancetheirprices,WhileanothercountrieslikeSpainthathavehighdomesticpriceswillhavetoreducetheirpricestocounterthearbitragethatthismodelcreates,speciallywithMVNOstheywillmovetheirtrafficfromawholesalemodelagreementtoaroamingmodel.
![Page 72: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/72.jpg)
71
5.4 SuggestionsandstrategiesSuggestionbyBEREC:FairuselimitsInthepresenttime,FUPit’saperfectsolutiontoprotecttelecomoperatorsfromanyabuseusagefromtheirsubscribersandtoreducethebusiness&economicimpactsofcuttingfess.EuropeanCommissionhasreleasedafirstdraftofFUP,whichimpliesalimitationfortravelerstobemax.90daysayearbutcustomerswereunhappyandtheyregrettedthisregulation,soECcancelledthisdraftandreleasedanewfinaldrafton15/DEC/2016.Thefinaldraftincludes2typesofcontracts:thepre-paid&competitivecontractandbothwillbeexplaineddownwithexamples.Withthepre-paidcontract,whilecustomersareabroadtheycanbenefitfromRLAHuptheamountoftheircreditremainingforthatmonththeyare,andfordatatheycanuseavolumeequivalenttothevalueoftheirremainingmonthlycreditatthewholesaleroamingdatapricecap.AnexampleofthatletssaySarahhasa25europay/monthandshehas15euroremainingonheraccount,thenshecanusethevalueofherremainingcreditforthetimesheisabroadwithavolumeofdataequivalenttothevalueofhercredit,bycalculatingthatwiththewholesaleroamingdatapricecap(wholesaledatapricecapis0.85/MB)soshegetsinroamingthevolumeofshepaidforintermsofwholesaledatacap.Withthecompetitivecontractsthatofferdataatverylowdomesticpricesbelowthewholesalecap,customerswillbeabletobenefitafullallowanceofcallsandtextswhilefordata,theywillhavetwicethevolumeofdataequivalenttothevalueoftheirmonthlycontractsinwholesaleroamingdatapricecaps.Anexampleofthat:Sarahpays70€monthlycontract,andthesubscriptionpackageincludesunlimitedusageofdata,callsandtexts,thenwhensheisabroadshewillhaveunlimitedcalls&textsbutforthedata,shewillgettwicetheequivalentof70€worthofdataatthewholesaleroamingdatapricecap,forexample0.85cent/MBmeansmorethan16GB.TheplanthatEuropeanCommissionaimedtoprotectconsumersandthetelecomEuropeanmarket:OperatorswillbeabletoasktheconsumerstoprovethattheyliveorhaveastablelinktoaspecificcountrybeforebenefitingfromRLAHinthecontractandoperatorscanonlyusetheinformationtheygatherforbillingpurposetochecktowhatextentcustomersaresuingdataservicesabroadcomparedotheirconsumptionathome.Andiftheusageextentmorethan4months,billingdatasuggeststhataconsumerhasbeenabroadmorethanhome,thentheycansenda
![Page 73: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/73.jpg)
72
warningmessage.Thismessagewillwarntheconsumersthattheyhave2weekstoinformtheirtelecomoperatorabouttheirroamingcharge.RaisedomesticpricesThissolutionisunfavorablebecausethepriceswillriseforallsubscribersalsoforthosewhoneverroamwhileabroad,becausethosecustomerswillhavetopayhighdomesticpricestocoverthelossesmadebythecustomerswhodoroamandthissituationisunfair.BylookingontheaverageamountofcitizensinEuropewhotravelwecanseethatasmallgroupofpeoplejust35%whofrequentlyroam,soalargegroupofpeoplewillbeforcedtopayhighdomesticpricestoletthesmallgroupofpeoplebenefitfromroaming.Furthermore,itshardtopredicthowmuchshouldregulatorsincreasepricestocoverthelossesbecauseitwilldependsonthecountryinwhichthemobileoperatorisactive,andmanyoperatorswillafraidofraisingthepricesbecausetheywouldprefertostillbecompetitiveinthemarketandprotecttheirmarketshare.Decreasewholesaleroamingprices Beforeimplementingwholesalepricecaps,telecomoperatorswerecharginghighpricesandtheseextrachargeswereaddedtotheend-usersbill.Butafterimplementingpricecaps,telecomoperatorshavereducedthelevelofprices,butregulatorsstillcannotfindthecorrectlevelofthesecapsanditsnoteasysincewehavementionedthatbefore,therearemanydifferencesinthecostsofofferingwholesaleroamingintheEuropeancountriesandtheratiooftravellersisnotthesamebetweentheEuropeancountries.Regulatorshavediscussediftheysetwholesalecapstoobelowthecost,thentheywillputpressureontheforeignserviceprovidersandtheysetittoohigh,thentherewillbeapressureonthedomesticserviceproviders,andinsomecasestheywillnotbeabletocoverthecostsofroamingsinceafterimplementingRLAH,theywillnotbeableanymoretoaddtheseextrachargestotheendusers.Thebestsolutiononthattime,istosetthewholesalecapsjustablethecostoftheFSP,sothereisasmallmarginthatcanbesuedtoimprovethequalityofserviceofthevisitedcountryandthecostforthedomesticserviceprovidersarenottoohigh.Butstillthissolutionisnotafavorablesolutionforthetelecomoperatorsbecausetheywillstillhaveacutintheirrevenue.
![Page 74: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/74.jpg)
73
Inthispart,strategiesthatcouldbeimplementedforthecross-borderoperatorsandsmalloperatorsinthefuturewillbepresented:AllthestrategieshavebeenmadebyBERECCarrierportabilityandAppleSIMThissolutionisanalternativesolutionforRLAH.IfthissolutionwasimplementedthentherewillbenoreasontoimplementRLAH,becausecustomerswillapplytheothersolution.Inordertoimplementcarrierportability,customersshouldhavetherighttoswitchmobilecommunicationsprovidersatanytime.Theswitchshouldbecarriedoutwithoutunduedelaywithintheshortestpossibleperiodoftime.Andinordertodoit,usersmusthavetheoptiontobuyunlocked-SIMhandsetenablingtheuseofalternativeSIMcardsofdifferentproviders.Thisisapreconditionforchangingcarriersforoutgoingtrafficininternationalroaming.ThechosenForeignServiceproviderwouldprovidethevisitingcustomerwithanidentityinitsnetworkbymeansofanewSIMcard.ApplycompanyhavereleasedanewSIMcardthatwouldgivecustomersahefreedominchoosingtheirmobilesuppliers,whichallowscustomerstotakeoutshort-turndataplanswithdifferentmobileproviderswhenneededanditalsoallowstravelertousealocalnetworkfordataconnectionswithouttheneedtoobtainanewSIMcardfromalocalprovider.InItaly,ChatSimProviderhavereleasedaservicewhichwillallowcustomerstosubscribearound36€/yearlywithoutanyextrachargesandbenefitfromroamingonaverycheapprices.Buttheseroamingarelimitedonfewapplicationssuchas(Facebookmessenger,Whatsapp)andifEuropeanCommissionimplementRLAHconcept,thentherewillbenomoreneedforserviceslikethis,becausealreadytelecomoperatorswillnotbeabletochargecustomersforroaming,butifthedomesticpricesincreasesinEurope,thencustomerswilltendtouseserviceslikeChatSimtosavesomemoney.IfthedomesticpriceswillbedecreasedasECpromised,thenChatSimservicewillrunoutofthemarket,becausethentherewillbenomoreneedforserviceslikethis,sincethepricesofroamingofferedfromthetelecomoperatorswillbethesameorlowerasECpromised.Alsoasdiscussedearlierinsection4.2.3(Googleconcept)Googleaimstocreateaglobalnetworkthatwillcostthesametouseforcalls,textsanddatanomatterwhereacustomerislocatedThereplanstolinkwith“3”telecomoperatortogetanaccesstothewholesalemobileserviceindifferentcountriessuchasUK,Italyandanothercountries.ThisisanevenmoreambitiousplanthanthatoftheEuropeanDigitalSingleMarket.
![Page 75: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/75.jpg)
74
TheirconceptwillbetestedinAmerica,andtheiraimistoputapressureonthepricingofthebiggesttelecomoperatorsinUSA.Steering(asolutionforbigoperators)Astrategythatcouldbebeneficialforcross-borderoperatorsissteering,whichwillallowlargeoperatorstodirecttheircustomertraffictotheiroperatorsinthevisitedcountry.Inthiswaytheseoperatorswillsavealotofroamingcosts.Furthermore,wecanseethereisanincreaseinoperator’smergersinthemobilemarketsuchasinGermany(TelefónicaandE-Plus).Sobothtelecomoperatorswillhaveaconnectiontosteertheirsubscribersbetweeneachother’s.ButthisstrategywillharmsmalloperatorsandMVNOs,andmayresultthosejustlargeoperatorstoremaininthemarket.Thatmean,monopolymarketwillappearagaininthemarket,andjustpowerfuloperatorswillstayinthemarketandcontrolpricesandoffcourseincreasethepricestogenerateextrarevenue.IMSI(asolutionforsmalloperatorstoremainintheEuropeantelecommarket)Internationalmobilesubscriberidentity,makeitpossibleforoperatorsoffertheirservicestocustomersinboththeirowncountryofoperationandtheothercountrybyusingeitheralocation-basedorauniformpricing.ThisissuehasbeenimplementedbetweenBelgianandLuxembourgtelecomregulators.Thisstrategymaybetheonlyoptionforsmalloperatorstoremaininthemarketandcompeteanotheroperators,somayEuropeancommissionstimulatethisbyapplyingaunifiedmobilecountrycodeforthewholeEurope.RoamLikeLocalIn2011,BEREChavesuggestedaconceptcalledRoamLikeaLocalRLAL,whichmeanspricingstructurescanbeimplementedsouserscanbechargedbytheirdomesticserviceprovidersthesamepricesasthecurrentaveragepricesofthecountrythattheyarevisiting.BEREChavementionedthisconceptbecausetheywereworriedafterapplyingRLAH,customerswillbuySIMcardsfromacheaperforeigncountries“permanentroaming”.SotheprocessofRLALwilltackletheissueofpermanentroaming,becauseforeignoperatorswillbenolongercheapercomparedtothelocaloperator.Butthisapproachwillbedifficulttobeimplementedsinceithasfewchallenges.
![Page 76: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/76.jpg)
75
EuropeanCommissionhavetoprovideregularupdatesoftheaveragepricesforeachcountryandrequiresmobileoperatorstoadjusttheirpricingaccordingly,whichwillbesocomplextobedone.Wi-FioffloadingWi-Fihasbeenproposedasasolution,andthereisanumberofexamplescanbefoundofmobileoperatorsofferingdualwirelessaccessnetwork.AnexampleofthatFONnetwork.FONnetworkjoinssetofnationalandinternationalWi-Finetworkintoonesinglenetwork,butthissolutionmayresultsinunbalancedrelationshipsiftheexchangetrafficinbetweendifferentparticipatingoperatorsisnotcomparable(someoperatorswillhaveapressureontheirWi-Fipoints,butothersmaybewillhaveaslightlylowtraffic).Answeringthemainquestions:HowtelecomoperatorscangetafundtocoverthecostofinternationaldataroamingwholesalechargesininteractionwithRLAH?
TelecomoperatorshavefewoptionstogetafundtocoverthecostofinternationaldataroamingwholesalechargesbyapplyingFairUsePolicy“FUP”.Thissolutionisbeneficialforalloperators(bigMNOs,smallMNOS,andMVNOs),whichmeanstheycanstoptheabuseusageofroamingbytheircustomersbysitingacapforthevolumeofdataallowanceabroadorasmentionedearlierofthelastversionofFUP,2optionswereannounced:
§ Withthepre-paidcontract,whilecustomersareabroadtheycanbenefitfromRLAHuptheamountoftheircreditremainingforthatmonththeyare,andfordatatheycanuseavolumeequivalenttothevalueoftheirremainingmonthlycreditatthewholesaleroamingdatapricecap.
§ Thecompetitivecontractsthatofferdataatverylowdomesticprices
belowthewholesalecap,customerswillbeabletobenefitafullallowanceofcallsandtextswhilefordata,theywillhavetwicethevolumeofdataequivalenttothevalueoftheirmonthlycontractsinwholesaleroamingdatapricecaps.
Fewstrategieswerementionedearlier,buteachhasadvantagesanddisadvantages(anadvantageofalargeroperatorcaneasilyprovetobeadisadvantagesforasmalleroperatororMVNOs).Forlargeoperators(cross-borders)coulduseSteeringsolutiontocovertheircosts.
![Page 77: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/77.jpg)
76
ForSmalloperatorscoulduseInternationalmobilesubscriberidentityIMSItocovertheircostsandremaininthemarket.Butattheend,itshardfortheEuropeanCommissiontopredicttheimpactsofRLAHontheearlystage,ishardtopredictastheoutcomewilldifferperoperatoranddependsonalotoffactors(geographiclocation,thenumberofcountriesinwhichtheoperatorisactive“cross-borderoperator”,andiftheoperatorisaMNOorMVNO)
Couldwholesalepriceregulationbeapartofthesolutionoftheproblemmentionedaboveinthefirstquestion?
Wholesalepriceregulationcouldbeasolutionbutin2differentsituations.First,IfEuropeancommissionraisethewholesalecap,telecomoperators(especiallyinthetouristcountrieslikeSpain,Portugal,Italy)willbenefitfromrisingthepricesandtheycouldcoverthecostsandgeneratemorerevenue,hencetheiringoingtrafficwillbemuchmorehigherthantheoutgoingtraffic).Whileintheotherhand,raisingthewholesalecapswillaffectnegativelyonthetelecomoperatorsincountriessuchasDenmark,Norway(whicharenotclassifiedastouristcountries)andtheiroutgoingtrafficismuchmorehighertheiringoingtraffic.Itwillputthesetelecomoperatorsinarisknotbeingabletocoverthecostsofroaming,ifthereisnoFairUsePolicyapplied.AlsoMVNOswillhavenopowertocompeteinthemarketandtheywillrunoutoftheEuropeanmarket,hencetheycannotgenerateanyrevenuefromtheingoingtraffic,becausetheydonnotowntheinfrastructure.Whiletheystillhavetopaywholesalechargestotheforeignoperatorsfortheoutgoingtrafficoftheirsubscribers.TheSecondsuggestion,ifEuropeanCommissiondecreasewholesalepricecaptoomuch,thentelecomoperatorsinthetouristcountrieswillnegotiatethattheirrevenuehavedecreasedandtheycouldnotbeabletoconnectallthesubscribersandinthesametimetheywillnothaveacapitalfornewinvestmentsandinnovations.WhilethissuggestionwillhelpoperatorsinthenontouristcountriesandMVNOstocoverthecostsofwholesalechargesandstillbeabletocompeteintheEuropeanmarket.Sowhatwecanunderstandfromthese2suggestions,thatwholesalecapregulationcouldbeasolutionbutEuropeanregulatorshavetofindawaytobalancethelevelofcaps.Wholesalepricecapregulationislikedouble-edgedsword.
![Page 78: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/78.jpg)
77
6 DiscussionandConclusionThisThesisaimedatgivinganoverviewofthedataroamingregulationprocessinEurope,lookingbothatthepastandthefuture.RoaminginEuropehasgonethroughmultipleprocessesofregulationsince2007,firstimposingwholesaleandretailpricesforcalls,thenforSMSandfinallyfordata.Thenextstepisloweringroamingpricestothelevelofdomesticretailprices,whichinotherwordswillpermituserstoroamlikeathome“RLAH”.However,thereareseveralaspectsthattheEuropeanCommissionstillhastoclarify,especiallyforthetelecomoperators,astherearedoubtsabouthowtheyaregoingtosustainthistransaction:whilethefeeenduserspayforroamingwillbereducedtozero,thefeedomesticmobileoperatorpaystheforeignoperatorwillnotbereducedtozero.Topreventabuseand“permanentroaming“,theECmighthavetointroduceFairUseLimitspolicy“FUP”.WhilethegoalofRLAHisforenduserstoroamlikeathomeanywhereinEurope,thegoalisnottochooseforthecheapestforeignmobileoperatorandthusconstantlyroamathome.Asoperatorswillseeadeclineinrevenue,theywillneedtolookfornewpossibilitiesorstrategiestocovertheircosts.Theimpactforthecustomersoftheseapproacheswillstronglydependonhowtheproviderscopewiththeseregulations:increasedthenationalprices“Waterbedeffect”mayprovetobetheunwantedoutcomesasthiswillhavenegativeimpactontheoperatorscustomersbase.OtherapproachesmayincludethefurtherdecreaseofwholesaleroamingpricesortheimplementationoftheFUP.TheroamingregulationsimposedbytheEUwillpushoperatorstoexplorenewopportunitiesintheSingleEuropeanMarket.Somemayhelpcustomerstoquicklyswitchbetweenoperatorsandpickaplansuitedfortheirneeds,whereasotherstrategiesmayhelpmaximizeprofitsoroptimizecostsfortheoperators.TherealimpactofthelatestroaminginitiativeoftheEC,RoamingLikeAtHome,ishardtopredictastheoutcomewilldifferperoperatoranddependsonalotoffactors:thegeographiclocation,thenumberofcountriesinwhichtheoperatorisactiveandwhethertheoperatorisaMNOorMVNO,anadvantageofalargeroperatorcaneasilyprovetobeadisadvantagesforasmalleroperator.ThereisnouniversalstrategyapplicableforeveryMNObecauseoftheirinherentdiversityandcorrelatethevariousheterogeneousmarketsinwhichtheyareactive.AslongassignificantstructuraldifferencesbetweenEUcountriestoexist,itwillbehardtocomeupwithasingleidealsolutionforuniformtariffsintheentireEU.
![Page 79: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/79.jpg)
78
7 References1. EuroStatistic.http://ec.europa.eu/eurostat/statistics-
explained/index.php/File:Share_of_nights_spent_by_residents_and_non-residents_in_tourist_accommodation_establishments,_by_NUTS_2_regions,_2014_(%C2%B9)_(%25_of_total_nights_spent)_RYB2016.png.Published2014.
2. Commission,EuropeanBrussels30June2015.EuropeanCommission-FactSheetRoamingchargesandopenInternet:questionsandanswers.
3. CommissionE.Roaming :300MillionExtraCustomersforTelecomsCompaniesWhenRoamingChargesEnd,SurveyShowsTextingBetterthan
CallingRecentPriceCuts.;2014.4. CollinsK.ExploringBusiness,v.1.0.
http://catalog.flatworldknowledge.com/bookhub/7?e=collins-ch01_s05#collins-chab.
5. ArmstrongM.Regulation,LiberalizationandCompetition.;2006.6. VallettiT.waterbedeffect.http://voxeu.org/article/mobile-regulation-
and-waterbed-effect.7. Batelcoco.TheWaterbedEffectExplainedinRelationtoRoaming.;2009.8. VallettiT.BewaretheWaterbedEffect.9. GSM.MobileSMSandDataRoamingExplained.Most.2008:1-8.10. MarcusJS,PhilbeckI.StudyontheOptionsforAddressingCompetition
ProblemsintheEURoamingMarket.;2010.11. AT.Kearney.AFuturePolicyFrameworkforGrowth.12. FalchM,TadayoniR.RegulationofInternationalRoamingDataServices
withintheEU.Vol11.;2014.doi:10.1007/s10368-013-0246-7.13. GSMA.TheglobalMVNOslandscape.
https://www.gsmaintelligence.com/research/2014/06/the-global-mvno-landscape-201214/433/.
14. Marketsegmentation.https://www.gsmaintelligence.com/research/2015/02/the-global-mvno-footprint-a-changing-environment/490/.
15. GlobalenetowrkbyGoogle.http://www.telegraph.co.uk/finance/11516189/Google-in-talks-with-mobile-operators-for-cheap-overseas-calls.html.
16. MillsG.Roamingfees.2013.http://www.thelocal.es/20130531/we-need-to-scrap-mobile-roaming-fees.
17. CMT.CMT.;2015.18. MoniterDF.Wholesaleprices.
http://www.dfmonitor.eu/insights/2016_june_premium_eu_data_roaming_wholesale_cap/.Published2016.
19. BEREC.InternationalRoamingBERECBenchmarkDataReportOctober2014–March2015.;2015.
20. BEREC.WholesaleRoamingMarket.;2016.21. BEREC.InternationalRoamingBERECBenchmarkDataReportApril2013–
September2013.;2014.22. ComissionE.roamingtariffs.https://ec.europa.eu/digital-single-
market/en/roaming-tariffs.23. EuropeanComission.Roaming.https://ec.europa.eu/digital-single-
![Page 80: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/80.jpg)
79
market/en/roaming.24. EC.BriefingEULegislationinProgressDecember2016.;2016.25. GSMAfairusepolicy.FairUsePolicy.;2016.26. EuropeanComission.AdditionalAnalysisFUP.;2016.27. RoamingImplementingAct.;2016.28. EC.ImplementationoftheRegulatoryFramework.29. OettingerH.ParliamentQuestions.
http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2015-010567&language=EN.Published2015.
30. EuropeM.MVNOEUROPEISCOMMITTEDTOTHEEFFECTIVEENDOFROAMINGCHARGES.2015.http://mvnoeurope.eu/mvnos-committed-to-effective-end-roaming-charges/.
31. BEREC.AnalysisoftheImpactsof“RoamLikeatHome”(RLAH).;2014.32. StrandJ.JohnStrandConsultant.
http://www.strandconsult.dk/sw7241.asp.33. ZenhäusernGKandP.RegulatoryFallaciesinGlobalTelecommunications:
TheCaseofInternationalMobileRoaming.;2013.34. ChatSim.35. PhilippeAghion,NickBloom,RichardBlundellRGandPH.COMPETITION
ANDINNOVATION:ANINVERTED-URELATIONSHIP.In:Oxforduniversity;2014.
36. MARIOMARINIELLOANDFRANCESCOSALEMI.ADDRESSINGFRAGMENTATIONINEUMOBILETELECOMSMARKETS.;2015.
37. BEREC.BERECResponsetotheEuropeanCommission.;2011.38. AijazA,AmaniM.ASurveyonMobileDataOffloading.;2013.39. FON.https://fon.com/.40. Telefonciastockanalysis.
http://www.nasdaq.com/symbol/tef/interactive-chart.41. GSMAE&.ETNOandGSMA:TowardsanEffectiveFair-UsePolicyfor
Roam-Like-At-Home.http://www.gsma.com/gsmaeurope/positions-and-publications/etno-gsma-towards-effective-fair-use-policy-roam-like-home/.
![Page 81: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/81.jpg)
80
8 AppendixInterviewwithJakobWillerJakobWillerisadirectorattheTelecomassociationindustryinCopenhagen,Denmark.Duringthemeetingwewentthroughmanypoints,mainlyabouttheeconomicandbusinesssideofthedataroaming.WehavediscussedthemainproblemofhavingRLAHmethodorinotherword;roamingchargesforcustomerswillbezero,sotelecomoperatorswillnotbeableanymoretochargecustomersfortheirinternationalroaminginEurope.Theproblemisthatpoliticalhaspromisedthatroamingwillbefreebutnothingisfree,historicallytheyhaveregulatedroamingin2007andimplementedsomemethoddownlevelbyreducingretailpricesandwholesaleprices,therewassomekindofsince.Butnowtheywanttheroamingtobezeroandwestillhavewholesalepricesandtheywanttoimplementiton2017andwearealreadyattheendof2016anduntilnowtheydon’tknowhowtoregulatethewholesalecharges.Europeancommissionsuggestedforroamingchargesitwillbearound65Danishkroner/GBdatawhichmeansthatatypicalDanishsubscriptionhasaround20GBandtheaveragerevenuefortheDanishcompanyis120DKK/monthly,andifyoucalculateitanddeductthecostfromtherevenueitwillbeshownthatitsreallybadforthetelecomoperatorswhichtheywillnotbeabletocoverthecostofroaming.Twothingscouldhelp:Fairusepolicy&reducewholesaleprices.Butforthefairusepolicyoption,thecommissionsuggestedis90daysforthefairusepolicybutdoesn’tmakeasenseforthecustomers.Buttheonlythingthatcanhelpistousevolumecapusageonmonthlybasis.
![Page 82: th semester A.C. Meyers Vænge 15 - Aalborg Universitet · 2017-01-26 · 3.1.3 Monopoly ... Data roaming refers to the use of mobile data services whilst abroad. ... to get in touch](https://reader034.vdocuments.site/reader034/viewer/2022050514/5f9e39716af5134b4801497a/html5/thumbnails/82.jpg)
81
InterviewwithRikkeJohan
RikkeJohanPoliticalAdvisor-MEPJensRohdeThediscussionwasaboutthewholesalecapsandfairusefromdifferentpointsofviewfromtheEuropeanParliament,Commission,BEUCandIndustries.“Theregulationdidnot,however,addressthewholesaleroamingmarket,onaccountoftheneedtoinvestigatemarketconditionsinmoredepth.Areviewfor
theEuropeanCommissionconcludedthatnationalwholesaleroamingmarketsare
notworkingwellandneedregulatoryintervention.Itthereforeproposeda
regulationestablishingthemaximumlevelofwholesaleroamingchargesthat
telecomsoperatorscanchargeeachother,totakeeffectfrom15June2017.
Stakeholderreactionsaredivided:whileconsumerswouldenjoyfreeroaming,
operatorsareworriedaboutrecoveringcostsatwholesalelevel”.
On29November,Parliament'sIndustryCommitteevotedforareductioninthecallanddatawholesalecapsproposedbytheCommission.
Theinterviewwasshort,soRikkeJohanhavesentfewarticlesthatwerewrittenbyJensRohdetouseitinthethesis.