EU starts wholesale-roaming review by commissioning updated cost analysis

Roaming

30 August 2017. By Magnus Franklin.

The true cost of providing roaming services, masked by European rules that ban mobile operators from charging subscribers when they use their cell phones in another EU states, is set to be revealed in the summer of 2019, in a report that will form the basis for potential future updates of wholesale roaming-price regulation.

The ink has barely dried on the last round of wholesale-roaming regulations, published on June 9 in time for EU "roam like at home" regulations that came into force on June 15.

The new rules forbid operators from charging extra when their customers use their mobiles and tablets abroad under most circumstances. The wholesale price caps seek to ensure that operators can comply with the new rules without going bankrupt from the payments they must make to other providers that host subscribers when they travel abroad.

But agreeing on the wholesale rates wasn't uncontroversial. There were deep divisions among lawmakers on whether to keep the rates high, to ensure countries that host hordes of visitors around the shores of the Mediterranean can recoup the additional network investments they have to make in tourist hotspots, or low, to ensure countries with a lot of outbound tourists in the Nordics don't go out of business.

The European Commission says the wholesale rates strike the right balance. The most important is the price cap on mobile data which will gradually decline from 7.7 euros ($9.20) per gigabyte to 2.5 euros by 2022. But in a sign that the calculations may not be as robust as they need to be, the commission is now reviewing them.

The first attempt to calculate the true cost of providing roaming services was published by the commission in June 2016. The paper, drafted by TERA Consultants, had a maximum budget of 60,000 euros.

Improving cost model

The commission has now allocated 244,000 euros via a public tender for the new report, and companies interested in drafting the updated calculations should submit their bids by Nov. 6.

Of this sum, a maximum of 36,600 euros has been earmarked for extra work should the wholesale regulation need to be updated. The commission doesn't say this will necessarily be the case, but if new legislation is proposed, the authors of the report would be called in to defend their analysis in Brussels during legislative negotiations.

If these negotiations take place, that will happen between October 2019 and September 2020, coinciding with the start of the next commission term.

But the bulk of the money will go to improving the model itself, and helping regulators implement it.

"The contractor will make proposals to further improve the cost model," the commission says in the tender documentation.

Specific parts of the 2016 report that the EU regulator thinks could be improved include the "non-network" cost estimates, such as managing wholesale roaming contracts or billing. The new study will also take a closer look at the impact of seasonal roaming patters on investments, after the original report concluded that seasonal consumption changes affect only voice services, and not data.

The new paper will also be expected to make a more precise estimate of roaming volumes, based on the data gathered since retail roaming surcharges were abolished on June 15.

The commission has also warned would-be bidders for the contract to expect controversy: "In light of the variety of views that are likely to arise on many aspects of the cost model, it is particularly important that it will be widely considered fit for the purpose of the wholesale roaming review, as well as reconciling appropriately the different views of National Regulatory Authorities and stakeholders. "

"In this regard, the consultation process with NRAs, Berec [the Body of European Regulators for Electronic Communications] and other stakeholders throughout the project, and the contractor's response to the feedback received, will be of utmost importance," the commission added.