1. International roaming Pál Belényesi University of Verona November 2006

2. Why do we talk about this?  We experience high charges  Existence of Single European Market  11th Report on European Electronic Communications Regulation and Markets – indication  Int. Roaming regulation is in process

3. What is international roaming?  International roaming is the ability of mobile phone subscribers to use their phones whilst traveling abroad  (National roaming is different!)  The importance of international roaming agreements (by MNOs)  Wholesale level: MNOs (foreign- home) IOTs  Retail level: Consumers traveling

4. Int. Roaming in the Electronic Communications Framework  Comm. Rec. 2003/311/EC: market No. 17 – Wholesale Int. Roaming (WIR)  Given the particularities of the market (buyer-seller location): concerted practice in the ERG or Regulation  ERG Common position on the coordinated analysis of the markets for Wholesale Int. Roaming – May 2005

5. The Commission’s involvement  July 2004: United Kingdom – O2 and Vodafone (statement of objections)  February 2005: Germany – T-Mobile and Vodafone (statement of objections)  December 2004: EU-wide investigation on roaming charges – July 2005: first result

6. The UK case (O2, Vodafone)  Time period: 1997-2003  Charge: both companies exploited their dominant position on the market of WIR  Findings: Each mobile network is a separate market Both are dominant in their networks IOTs are unfair, excessive, high

7. The UK case (O2, Vodafone) II.  Income on IOTs  ISPs with regards to IOTs  Domestic roaming / Intern. roaming Similarity Enormous price difference  Statement of objections – Hearing June 2005

8. The German case (Vodafone, T- Mobile)  Time period: 1997 (2000) – 2003  Charge: Their practice may be contrary to Art. 82. of the EC Treaty (abuse of dominant position)  Allegations: The companies charge IOTs at a price being excessively high to other MNOs.

9. The German case (Vodafone, T- Mobile) II.  Findings: Each individual German network is a separate market They enjoy dominant position on their markets Roaming charges accumulate to higher profits than national roaming charges (airtime access supplied to national roaming for other MNOs)

10. Commission starts EU-wide investigation  December 2004: (ERG) – questionnaire sent to MNOs to indicate roaming charges – sector inquiry  Reason: Serious concern about charges  To help NRAs to analyze  Foretells a EU-level Regulation  July 2005: transparency announced

11. General conclusions  Retail charges are very high – no justification  Reductions on wholesale charges are not passed to the consumers  Users have no clear information about International Roaming charges  Linkages between national markets

12. Issues  Competitors claim more competition to bring down prices  Interdependence (?)  National market specificities (?) – GSM Association  Prices are high at retail level Wholesale price reduction is not passed onto costumers Traffic direction technique

13. Ideas  Remedies within the framework of market analysis (Joint dominance)? Gencor, CMB, Airtours  Investigation under Article 81 could lead to concerted practice?  Direct Regulation at EU-level (compare to banking)? – NRAs are not fully equipped to deal with the issues at national level

14. Action is taken  February 2006: speech at the ERG meeting in Paris (Reding) followed by the official proposal of the EC on the 28th of March  Regulation is proposed similar to cross-border payments  International roaming page updated  Cost-based regulation

15. Problems  What happens to those who only offer national roaming?  Multiple commercial agreements hard to implement  Missing cost data (in the NRAs)  Retail price regulation is fortunate?

16. Current state of art  Neither wholesale nor retail prices are justified by the underlying costs of the service  existing regulatory tools NOT ENOUGH  Market cannot deliver alone  Everyone welcomed the initiation of the regulation safe for operators

17. Cont’d  „home pricing principle”  No pay for receiving the call  ERG favoured wholesale regulation instead of retail regulation

18. Possible content of the regulation  Prices paid for international roaming will not be unjustifiably higher than the charges for calls paid within the user’s country.  Consumers will benefit from lower prices for making calls in the visited country, back home or to any other EU Member State  Prices that operators charge each other (wholesale charges) will be considerably lower than what they are today.  Mobile operators will be required to provide customers with full information on applicable roaming charges  National regulators will also be tasked to monitor closely the development of roaming charges for SMS and multi-media message services (MMS)