Transcript International Mobile Roaming in the EU

International mobile roaming:
regulatory policies in the EU
Hans Bakker
Director, Regulaid
NATP-II Project leader
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What is international mobile roaming?
Service by a mobile network operator
enabling access to its network for
subscribers to a foreign mobile network for
making and receiving calls
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Calling home: how does it work
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Calling home: what does it cost
1. Wholesale fee of Host operator including
profit mark-up
2. International transit charge including profit
mark-up
3. Destination network termination fee including
profit mark-up
4. Your home operator profit mark-up
__________________________+
5. Your invoice
4
Receiving calls: how does it work
.
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Receiving calls: what does it cost
1.
2.
3.
(Caller pays own call to your home operator)
International transit charge incl.profit mark-up
Host network wholesale termination fee incl. profit
mark-up
4.
Your home operator profit mark-up
____________________________+
5. Your invoice
6
Why are the rates so high?
•
•
•
Costs not significantly different from non-roaming
calls
No competitive pressures in wholesale market
Low consumer awareness: Many travellers
– not aware of high rates and of “called party pays”
– not aware of choice options
– no easy access to alternatives
Compare: hotel room telephone tariffs.
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No competitive pressures in wholesale
roaming market
• Random selection of roaming network:
wholesale buyers can not exert buying power
and induce competitive behaviour
• However, emerging traffic direction technologies
enable operators to lead calls to specific
roaming suppliers, thereby enabling themselves
to take a negotiating position
• But do they want to? International standard
agreements between operators in GSM
Association
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European Union efforts to address
international roaming price problem
1.
Use of antitrust powers (EU Treaty) for ex post
sanctions against “abuse of dominance” with cross
border effects
2.
Promotion of transparency
3.
Ex ante regulation
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Use of antitrust powers
•
•
•
•
1999 start of ‘Sector Inquiry’ 1997-2000
2000 Initial findings
2001/2002 on-site inspections
2004 statement of objections against two UK
mobile operators: abuse of 100 % dominance on
own network by charging excessive prices
• 2005 statement of objections against two
German operators
• Ongoing. Very slow, difficult legal issues:
– Delineation of relevant market
– Prove excessive prices.
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Ex ante regulation: the old framework
- Cross border problem by definition
- Regulation on behalf of foreign stakeholders
calls for reciprocal and concerted action, which
was not taken
- Regulators inactive under old regulatory
framework:
- not all were empowered
- not all were inclined to take action
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….so for a while nobody moved
-
Ex post measures too slow and uncertain
Ex ante regulation deadlocked
Only transparency initiatives (website EC)
Some initiatives by operators to introduce
wholesale discounts (up to 50 % - from what
margins?) but these were not passed on to
consumers
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….until introduction of new regulatory
framework 2002:
- 2003: Wholesale international roaming one of 18
markets eligible for ex ante regulation
- 2004: Regulators send questionnaires to
operators
- 2005: ERG drafts common approach to market
analysis
- Market analyses now being implemented
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ERG common approach (1):
- Although terminating incoming calls to foreign roaming
end users is part of the wholesale market, this is
generally done against usual terminating tariffs (same as
other calls coming from international transit). High end
user prices for “receiving calls abroad” therefor come
from home network mark-up
- Handling originating calls from foreign end users (“calling
home”) is charged heavily by Host network to Home
network through Inter-operator Tariffs (IOT). End user
prices for “calling home” are combination of IOT and
Home network mark-up.
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ERG common approach (2):
Role of traffic direction
- Growing use of traffic direction technology makes it
possible to single out preferred roaming partner network,
but unclear if this is used to negotiate lower IOTs or just
to enhance alliances
- Where fully operative, traffic direction technology may
enable substitution of preferred providers, enhancing
competitive price incentives
- It is not expected that MNOs will direct 100 % of traffic to
one preferred partner network in the short to medium
term; contracts will all MNOs.
- All MNOs in a given country therefor part of the
wholesale roaming market.
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ERG common approach (3):
Single player SMP
- Market dominance of single Significant Market Power
(SMP) players not indicated by market share: no evident
high and persistent market shares.
- Single player SMP less likely if widespread use of traffic
directions technology for price negotiations and
countervailing buying power
- Single player SMP may however result from ability to
use membership of alliance to behave independently
from buyers
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ERG common approach (4):
Joint dominance
- Joint dominance/Tacit collusion: “Even in the absence of
structural links between operators, market structure can
be conducive to co-ordinated outcome”. Likely if:
-
Mature product: yes
Homogeneous product; yes
Stagnant growth on demand side: yes
Similar cost structure of operators: yes
Low elasticity of demand: yes
High entry barriers: yes
Lack of potential market entry: yes
Likely collective interest stronger than likely gains of individual
competitive behaviour: yes
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Market analyses ongoing
1.
2.
3.
4.
5.
Market analysis in each member state: “market 17”
often is last in line, possibly to enable concerted
approach
Consultation procedures
Notification to European Commission, which can veto
market definition
Choice of remedies
And then…..appeal procedures.
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Recent consultation document ARCEP (Fr.)
1.
2.
3.
4.
No single SMP player in wholesale international
roaming market
Situation qualifies as joint dominance
European Commission should assess legitimacy of
GSM Association agreements
If necessary, regulation by new law
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Options for remedies (1): Transparency
ERG report lists transparency options, e.g.:
Websites by regulator or independent third party
SMS initiated by home operator or end user
SMS by host operator (expanded welcome message)
Paper info in airplanes
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Options for remedies (2):
enhance competition
1. Bypass option: local prepaid SIM cards
2. Competition on the networks: mandatory
networks access for MVNO’s targeting
roaming prices
3. “Carrier selection” for mobile roaming
4. Voice over broadband bypasses will grow in
use
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Options for remedies (3): price regulation
1. In retail price control (not EU): Linking up
with non-roaming retail tariffs for identical
functionalities
2. In wholesale: Retail-minus wholesale rates
Remedies must be internationally co-ordinated
to prevent market distortions.
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NATP-II Project
1. Workshops with in-depth transfer of
information
2. Bilateral direct assistance (“leverage”)
3. High level meetings EU and MEDA
country regulators
4. Help prepare common approach
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Thank you
[email protected]
[email protected]
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