Roaming deal inevitable, but questions remain

Roaming surcharge elimination was inevitable once it became a symbol of EU efficacy, but doubts still remain about how it will work out for operators.

On Tuesday night and into Wednesday morning a tripartite meeting with representatives of the EU Parliament, Council and Commission thrashed out a deal on wholesale fees that operators can charge each other when users roam within the EU.

A blow by blow account from Politico recounts: “Council, under pressure from Germany and France, wanted the fees to be capped at €10 per gigabyte, dropping by €1 a year until 2021. Parliament wanted them to start at €4 and eventually fall to €1…”

The Council, led by Malta, pushed for a deal that harmed the interests of French and German operators, who have higher domestic fees than their neighbours to the north. It should also be noted for those that consider the EU as merely an extension of Franco-German power, that in this instance the France-Germany axis was willing to cede most of its position in favour of an agreement. In the end the Council secured an agreement to cap the fees at €7.70 starting June 15, decreasing to €6 as of January 1, 2018. The fees will slide to €4.5 per gigabyte in 2019, €3.5 in 2020, €3 in 2021 and then to €2.5 in 2022.

And so… it is done. In fact, although the arguments have been long and sometimes even bitter, of late there has never been any doubt that the European authorities would, finally, meet a June 2017 deadline for the elimination of roaming premiums across EU countries. Tuesday/ Wednesday’s meeting was urged in public by EC VP Andrus Ansip not to forget that this deal had become about more than roaming.

Rather it was a symbol of the EU’s ability to act on behalf of its consumers, and achieve something of tangible political significance. Ansip released an open letter last week which ended, “If no political compromise can be achieved next Tuesday, people will rightly question our common will and ability to deliver on our promise to them. That is a risk we should not run.”

Risk of a different sort, in fact, has now been passed on to the telecoms operators who have never been very keen to be made the subjects of this desire for a symbol of the EU’s effectiveness.

One operator, DNA in Finland, told TMN that the regulation still remains “challenging” for the Finnish market, and that the operator would have to consider its options from here around sustainability.

Pekka Väisänen, SVP Consumer Business, wrote:

“The suggested roaming regulation is challenging for the Finnish market. The removal of roaming surcharges is a step towards the right direction, but we think that the implementation should not punish the highly competitive Finnish mobile market. EU mobile markets should go towards Finnish model: more unlimited offers.

“Finns are pioneers of mobile data: World’s highest mobile data consumption/pop, unlimited bundles and prices among the lowest in the EU. According to a Tefficient survey, DNA customers are the biggest mobile data users in the world in 2016. Finns also travel more to Europe, than Europeans travel to the North.

The wholesale price compromise in still high for the Finnish market and we consider our options now that the regulation is set. We will definitely discuss the sustainability mechanism with the Finnish NRA Ficora.

Nor does it seem likely the deal will foster a market in innovative roaming providers. MVNO Europe, an association that lobbies for the interests of alternative providers, said, “The data caps set are much too high”. The body argues that for “smaller operators that pay wholesale access at the level of EU regulated caps, there is a high risk for these operators not being able to recover their costs”.

Although you may argue it makes little difference to consumers whether prices drop by decree or competition, MVNO Europe Vice-President, Innocenzo Genna stated,”European citizens expect the end of the roaming surcharges to happen without losing competitive tariffs and innovative offers: by contrast, with the present deal on wholesale caps, they will be heavily disappointed”.

The body argues that with “excessive” wholesale roaming charges, “dominant mobile operators will be the only ones to drive the market, adding barriers for smaller players.”

However, consumer groups appear to be happier with the outcome. A spokesperson for The European Consumer Organisation (BEUC) told TMN: “The lower the wholesale caps the better. We would have hoped them to be even lower but the deal which was struck is good from a competition point of view.”

In an official statement, Monique Goyens, Director General of BEUC, commented:

“We are relieved that EU legislators have shown ambition to deliver on their promise to end roaming charges. This deal ensures that roaming without surcharges will become a reality in June. The price caps which where agreed last night have a direct impact on how much mobile data a consumer can use when abroad. The lower the wholesale price cap, the larger the amount of data that consumers will have while roaming.”

And so the major operators are probably not facing a market in which smaller operators or MVNOs tempt customers away with extremely low cost roaming contracts. On the other hand, they are not going to be able to charge a premium for roaming, and low cost operators with heavy users (eg Finland and the others in the north) risk having to pay more in wholesale than they charge in domestic retail, which will give them issues.

Overall the story has not been a good look for mobile operators. They have been cast as greedy and obstructive and although they were effective in delaying matters, in wider terms this has been a PR battle they have largely lost – being unable to articulate their arguments or defend their position.

In the end, they did probably all they could do, which was string out roaming fees for a few more years while delaying the inevitable. And although the elimination of roaming fees started out as an expression of frustration with MNO’s high fees, it became something more.

With the European project under pressure, the end game on roaming was not just about how much money people pay to use their phones within the EU. It became a political imperative.