More

        

          

    HomeInsightsGSMA cautious in response to European roaming "deal"

    GSMA cautious in response to European roaming “deal”

    -

    GSMA and analyst reaction to European roaming restructuring

    The GSMA has reacted with caution to an EU statement that said that it had achieved imminent approval for a restructuring of the European roaming market. It appears that the operators’ body has accepted in principle the separation of home and roaming contract provision, although it remans unhappy about the levels of price caps being proposed. Informa analyst Paul Lambert called the proposals “the most profound change in the roaming market operators have to deal with since European roaming regulation first came into effect in 2007”.

    A statement from the GSMA said it could not provide detailed comment on the latest Trilogue’s discussions until the legislative process has run its course but it said it “supports changes to the EU roaming market that deliver more competition and lower prices for customers without undermining the seamless, user-friendly and secure nature of roaming services today.”

    The statement continued (bold text is Mobile Europe’s addition):

    “We welcome the draft new regulation’s intention to steer a course away from indefinite retail price regulation. Stimulating competition with a balanced combination of structural measures and safeguard price caps will be an effective way of meeting consumers’ short-term and long-term interests.

    The level of these safeguard caps has been a key element in the negotiations. Getting the level right so that a safety net for consumers is provided without undermining the competitive effect of the structural measures is a delicate balance to strike. We believe that the European Commission’s original price cap proposals were  an appropriate and balanced approach to foster competition based on structural measures. We do not think that the levels agreed in the Trilogue get that balance right.

    We have consistently maintained that the Regulation should take a technology neutral approach to implementing the separation of roaming and domestic markets. It should focus on the what, and avoid prescribing the how. It appears that the co-legislators have endorsed this approach, accepting that the European telecoms regulators group (BEREC) is best placed to lead the work on defining the technical implementing solution. The GSMA will continue to provide constructive and detailed input into BEREC’s work so that its implementing guidelines fully reflect any technical challenges related to different implementing solutions.

    We look forward to the conclusion of the legislative process and further details on the compromises and agreements reached by the Trilogue participants.”

    BEREC, as Mobile Europe has reported, had previously criticised the likely impact of the structural changes.

    Meanwhile, analyst Paul Lambert, Senior Analyst at Informa Telecoms & Media, said that European mobile users will benefit from “radical shake-up of roaming market”, but operators will suffer.

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

    Lambert’s statement continued:

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

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

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

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