European Consumers, Industry Differ on International Roaming Regulation

Under the EC’s new telecom regulatory framework, national regulatory authorities (NRAs) must analyze 18 different markets for evidence of significant market power (SMP). NRAs may impose antitrust remedies only where they find SMP in a defined market. One of the 18 markets is that of wholesale international roaming (WIR). The ERG so far has been working on a market definition and finding SMP operators, said Stefan Backman, legal officer LL.M. of Swedish NRA Post & Telestyrelsen. Its next step will be to collect market data from some European Union member states in order to see whether there are competition problems in the market, Backman said. If there are, he said, NRAs are obliged to impose at least one remedy on SMP operators. They could include access, price or nondiscriminatory regulations, accounting separation requirements and transparency obligations, he said. A draft market definition is expected to be unveiled at the ERG’s Dec. plenary meeting, the group said.

Consumers have been complaining about European roaming rates for about 6 years, said Ewan Sutherland, exec. dir. of the International Telecoms User Group (INTUG). While customers of U.S. mobile operators are charged for receiving calls in Europe only as much as they would pay for making the call themselves from the U.S., they're likely to be hit with fees of close to $1.50 per minute for calls they make here, even if they're roaming in the U.K. to call a U.K. resident. During the Olympics, INTUG surveyed roaming prices, Sutherland said. It discovered that one U.K. operator was charging a “simplified tariff” of Pounds 1.49 (about $2.67) per minute to call Athens from London. That charge isn’t at all unusual, he said.

What upsets INTUG even more is that since it began complaining about high roaming charges in 1999, technology has evolved from voice to data services, leaving consumers facing high data charges as well, Sutherland said. Europeans are now in the “absurd” situation in which mobile data services are available but aren’t used because they're too pricey both at home and across borders, he said. Sutherland has met recently with senior officials in the ERG, he said. “I'd like to push them into doing something.”

Roaming isn’t a wholesale product, a spokesman for the GSM Assn. (GSMA) told us. It’s based on bilateral contracts between operators that agree on pricing and other provisions, he said. New entrants are as free to enter into those agreements as more established players, the spokesman said. What tends to happen, particularly in high-mobile-traffic countries, is that home operators that notice many of their customers roaming in those countries will seek roaming relationships with operators there. Alleged SMP operators recognize that new entrants have customers who may want roaming services, the spokesman said. Roaming not only provides service to the operator’s own customers, it allows them to earn money from other operator’s customers when they visit, giving more entrenched companies an incentive to open the door to competition, he said. Moreover, he said, roaming’s higher price is partly because it’s a value-added service. And given the volume of roaming calls, the spokesman said, consumers appear to appreciate that service.

But the EC is already looking at possible price abuses in WIR. Its investigation of the U.K. WIR market - - under general competition rules, not the sector-specific analyses called for by the new regulatory framework -- found that Vodafone and O2 abused their dominant positions by overcharging European mobile network operators from around 1998-Sept. 2003, Backman said. The EC has sent “statements of objections” to the companies, setting out its preliminary position on the infringements of competition law. Vodafone has until roughly the end of the year to respond, a company spokesman said. The EC is also analyzing Germany’s WIR market, Backman said.

The telecoms regulatory framework allows the EC to find “joint dominance” by several operators Sutherland said. INTUG just want “to get something that works,” he said.