Cross-border mobile services at risk in
Faced with a crisis of confidence after Britain’s decision to leave the EU, tweaks to the new rules ending roaming charges were presented last month as proof that Brussels can work for consumers. However, continued failure to work out who will pick up the bill could yet throw a spanner in the works.
Politicians have long portrayed roaming fees as an insult to single-market ideals and a symbol of corporate greed. The problem, however, is that companies banned from charging extra for calls or data while customers are abroad still face wholesale charges from the foreign networks that connect them.
“The wholesale pricing issue still hasn’t been dealt with,” said one senior EU official familiar with a decade of roaming negotiations. “They’ve created a big expectation on roaming and they now have to solve a problem they’ve had for years.”
And the clock is ticking. The ban on roaming charges will require lower caps on wholesale prices to avoid a knock-on jump in domestic prices, which diplomats say need to be agreed by around the end of February to become law before June.
Yet dreams of a United States-style continent-wide market appear as elusive as ever, with the 28 EU states jealously guarding their lucrative control of national airwaves while wide disparities in living standards mean prices vary hugely. The Irish, for example, spend nearly 10 times more on mobile phone bills than Latvians. In tourist-rich southern Europe, meanwhile, companies are fighting pressure to cut their rates.
Retail roaming fees account for about 5 percent of all EU retail mobile revenue and companies warn that if wholesale charges do not fall they could recoup income by raising prices in their home markets, effectively making poorer customers subsidise frequent travellers. There is also the possibility that some operators will simply decide to stop offering roaming services entirely.
Finnish operator Elisa said in a written submission to the European Commission that the risk of a waterbed effect on domestic prices was very high in markets like Finland, where domestic prices are low and mobile service bundles are very generous. Yet passing on the cost to consumers has the potential to damage market share and could amount to commercial suicide, argues Innocenzo Genna of MVNO Europe, a mobile operators trade association.
“Increasing prices in a competitive market is a deadly solution,” Genna said.
Deutsche Telekom’s response to the Commission’s consultation on the subject said that without limits on how much customers can use their phones abroad, operators would be “put under severe pressure” if they are unable or unwilling to increase domestic prices. Such pressure would be particularly keenly felt by operators that offer cheap and generous domestic packages, such as those in Scandinavia.