The European single market: an utopia when it comes to roaming

A Commission proposal: from price cap to increased competition

When it comes to roaming, the current system of price caps is respected by mobile companies but we can only regret that due to the lack of competition, the prices are in fact kept just under this cap. As a result, calling and even more downloading data from another European country is so expensive that 72% of travelers, when they land, limit the use of their cellphone or simply shut it down. This is highly problematic for a free movement area and in fact limits the reality of it since people face a major inconvenience when traveling. To overcome this situation, the European Commission made a proposal that focuses on increasing competition while keeping a system of price cap for a transitory period (until 2016) in order to protect the consumer. The main objective is thus to implement structural measures to change the behavior of operators and make the roaming prices decrease through competition. To do so, the Commission wants to increase the choice of the consumer by facilitating the entry in the market of new operators, some specialized in roaming. However and since this greater choice would be of no use if the consumer isn’t informed, the proposal also wants to increase the consumer awareness in order to allow him to choose effectively the cheapest offer. Indeed, without such an education policy, the facts show that most people will just keep their contract with their current wholesale operator.

Going further: a Polish proposal to ensure the positive effect of competition on the prices

As the Commission, the Polish proposal starts from the fact that because of the lack of competition the prices stay just below the cap. However, the presidency of the European Council goes further than the Commission. According to them, several issues explain this lack of competition. We will just briefly list 3 of them very quickly. First of all, the fact that there is a close relationship between wholesale operators and roaming date services. And stating that there is a relationship is a euphemism since they are in fact very often the same company. A solution to this issue would be the decoupling, a concept that raised the question of its implementation. But we will come back to it. Moreover, and on this point the Polish proposal is in line with the European Commission, there is a domination of national services even when the user has the choice. Thus, it is important to trigger a chance in the behavior and mentality of customers and to do so, the educational objective of the Commission’s proposals appears as a good solution. And, last but not least new operators are currently very weak when entering the market and some entry facilitation should this be developed. Based on these three elements, Poland proposes 3 mechanisms to ensure that roaming costs will decrease. First and to facilitate the entry of new operators, it wants to create an access obligation to the market but also include a principle of non discrimination in access. Indeed, right now, new operators specialized in roaming have few customers when entering the market and are thus not prioritized by companies managing the networks which makes their development virtually impossible. This non discrimination principle would oblige those companies to treat the small operators in the same way than the big ones. Moreover, unlike the Commission, this proposal considers that maintaining a price cap, but a lot lower that the current one, is important to protect the consumer and is some kind of railing in the case the structural measures would not be as efficient as expected. Eventually, Poland wants to create a Euro-data tariff.

Fighting against roaming charge: a necessity for the internal market.

The various participants to the debate, MEPs, Representative from the Commission, Poland or consumer organizations and companies were unanimous on the fact that competition needs to be enhanced. Indeed, not only are such high roaming costs an aberration for consumers, they also jeopardize the very idea of the internal market. Indeed, how can one speak of a single market when it costs so much more to download data in another European country than his own? How can one speak of a real free movement area when people are obliged to limit the use of their cellphones if they don’t want to face ridiculously high bills when coming back home? If there is no more physical barrier to travel in Europe, the roaming costs most certainly constitute a virtual one.

Ideally, every European should be able to “Roam without roaming costs” to paraphrase the title of the debate. However, for some reasons, good for some less for others, this won’t happen with this new legislation that should enter into force in 2014. We can be disappointed but we can also underline that the proposal goes in the right direction to decrease roaming costs. And doing it, not only through lower price caps but through structural measures should make behavior and mentalities evolve so as to build a favorable ground for future evolutions towards an EU without roaming costs. But, in order to create such a ground, the objectives must be met by effective measures.

On the one hand, to protect the consumers the ideas of a Euro-SMS tariff and of a lower price cap for calls and data are good. However what would be this price cap? Regarding data downloading, the production of a Gigabyte costs 1 euro while the Commission proposes a cap of 100. We can feel here that the Commission doesn’t want to have the operators opposing the proposal but this discrepancy between the cost and the cap is ridiculous and it has thus not been surprising that some MEPS from the ITRE committee are rather suggesting a cap of 10 euros at wholesale level or 20 euros at the retail one .

On the other hand there are still many grey areas on how to increase competition. We will only mention one of the solutions that is proposed to facilitate the entry of new operators: decoupling. This solution implies to encourage the entry of operators specialized in roaming and that would compete wholesale operators on this specific area of the market. However, this proposal is highly debated due to many technical issues that make its implementation difficult. If someone has an alternative provider for roaming, it would mean two different services but only one SIM. How to make this work? Moreover, how to align services between wholesale and only roaming operators and what would be the statute of the last ones? More important for the consumer and its protection, what legislation would these operators be subjected to?

Even if the idea to develop structural measures is good, we need clear and precise rules to protect the consumer and to make sure that none is forgotten. There shouldn’t be a safeguard limit only for post-paid packages (since 2010, operators have to inform their customer when they reach 80% of the 50 euros data cap when they are in another European country) but also some safeguard for pre-paid. The implementation should also be evaluated carefully and that is why the review planned in 2016 is vital.

In conclusion, we are still far away from being able to travel in the EU with no roaming costs whatsoever but the proposed legislation, with its mix of consumer protection measures and more structural measures aiming at developing competition goes in the right direction and we as well as the European decision-makers shouldn’t see it as an end but as a step toward making the invisible barrier to free movement that are roaming costs disappear.