New EU mobile regime pits roamers against stay-at-homers, prompting more change
Roam if you want to? Listen to MLex's Chief Telecom Correspondent Magnus Franklin and Brussels Managing Editor James Panichi discuss a watershed in EU telecom history: the day the EU brought about the end of roaming surcharges.
15 June 2017. By Magnus Franklin.
Today marks a watershed in EU telecom history: the day the EU brought about the end of roaming surcharges.
From this moment on, the users of mobile devices will be able to "roam like at home" — make calls and download data without having to worry about crossing national borders.
The EU's message is clear: Today is the final word on roaming.
But beneath the hype and the self-congratulation, there are winners and losers — as is to be expected when policymakers interfere with markets.
And the cleavage between those emerging from the changes smiling, and those who have been left to grit their teeth, has been enough to ensure that the gears of "Roaming V" are already in motion.
That's right — with the ink not even dry on this raft of reforms, there are already those planning their next move.
The reason for this is that the divide between the winners and losers of the roam-like-at-home revamp is stark.
On the one hand are the consumers who feel that an enormous scam in the mobile sector has been brought to an end — these are the ones now champing at the bit to go abroad and reap the benefits.
Many of them won't have to pay roaming fees at all, and those who do will continue to face significantly reduced charges.
On the other side are the traveling mobile subscribers who, despite paying less, will still feel that they've drawn the short straw.
In countries such as Sweden, Norway, Denmark and Lithuania, consumers will have their data allowances throttled when they go to another EU state, or they will continue to face surcharges — albeit at much lower rates than before.
Finally, there are those who don't cross national borders at all. For this group, the end of roaming will bring no benefits. Zero. Nada.
In fact, for some non-travelers in countries where more visitors arrive than locals go abroad — think Mediterranean states — the end of roaming surcharges will largely go unnoticed. And we'll return to that "largely" caveat later.
In EU countries where more people travel abroad than arrive, many consumers will be squeezed by higher tariffs. That's because operators have a choice: either continue to charge roaming surcharges, or spread the cost of providing roaming across the whole subscriber base.
In other words, they may have to increase the price of subscriptions, even for those who never travel.
This scenario, in which non-roamers effectively subsidize the lifestyle of those wealthy enough to travel abroad, is screaming out for a rethink — let's call it "Roaming V."
Other consumers may wake up in Ibiza on Day 1 of their holiday confused, having discovered that their provider simply switches off their ability to roam, and their tablets are slaves to their hotel's fickle WiFi signal.
What happened? Well, their provider has decided that roaming isn't worth the headache — the dark side of the "roam like at home" equation.
But the most clear consumer divide will be geography: The countries with the largest proportion of people traveling will be the ones to feel the benefits of the roaming regulation the least.
Groan when at home
For most consumers, the "end" of roaming will indeed be the last time they have to fret about the price of using their mobiles. Not so for operators — particularly the smaller players.
Large mobile operators will, as always, be well placed to absorb the effect of the end of roaming surcharges for consumers.
Groups such as Vodafone, Orange and Deutsche Telekom spread their operations across countries that largely have a balance of incoming and outgoing traffic. They can also shunt traveling subscribers onto their subsidiaries in other member states, rather than hand them over to rivals that will charge hefty wholesale prices to carry their subscribers' data, SMS and calls.
Meanwhile, operators in the Nordic-Baltic region, and low-price countries along the eastern fringe of the EU, will face a value transfer to Mediterranean tourist hubs — particularly during the summer months.
But the biggest losers will be the "virtual" operators: a collection of low-cost carriers or providers that target particular communities. For example, the Turkish diaspora in Germany or the Netherlands.
These operators don't have a wireless network and, therefore, won't be hosting any incoming roaming traffic, depriving them of wholesale revenues that other operators receive.
As a result, roaming is nothing to them but a cost, leaving them to face a bleak choice.
They can stop hitting their customers with roaming surcharges and absorb the cost by smearing it across the bills of all subscribers — even those who never cross national borders. Or they can continue to charge for roaming.
This second option isn't that much of an option, because to charge for roaming puts the provider at a competitive disadvantage with larger operators, which can offset part of their roaming cost with wholesale income from those traveling onto their domestic market.
The finance wonks will call it "market consolidation." But the reality is that the permanent, structural disadvantage faced by smaller and niche operators will drive some of them — if not all of them — out of the market.
Fifth time lucky
Those lobbyists fearing that the end of roaming as we know it will dent their ability to pay the kids' school fees need not despair. Roaming will be back — just in time for the next EU elections.
That's right: The issue will rear its head again as the EU's never-ending push to drive down roaming prices will yet again be used to full effect by candidates jockeying for seats in the European Parliament.
Which makes speculation about what the next round of roaming regulation will comprise both legitimate and necessary.
"The commission will conduct a review of the wholesale market by the end of 2019 and provide the co-legislators with an interim assessment by Dec. 15, 2018," the EU executive says, making a rod for its own back.
But putting aside the windfall for lobbyists, the opportunity to crank up the roaming debate once more could also be a genuine opportunity to fix the mistakes in the regulation that enters into force today.
The Nordic-Baltic-East EU bloc can be expected to settle the score with southern states over the transfer of value on the wholesale market. It will do so, egged on by those consumers who are either dismayed about continued roaming charges, or who are grappling with smaller data allowances and hiked subscription fees, even without setting a foot outside their national borders.
And with data consumption increasing at a staggering rate, the wholesale price schedule currently in place will rapidly become obsolete.
Operators across the board will also likely want to use the update to get a more generous deal on the "fair use" policy designed to clamp down on consumers' fraudulent ruses to milk the ban on EU roaming surcharges for all it's worth.
But the review could also revive some more surprising elements of the roaming debate.
Roaming III, as the regulation preceding the current regulation was known, provided for "decoupling" of roaming services from domestic bundles, and envisaged a model where consumers would choose a roaming provider, just as they may opt for a Wi-Fi network.
These provisions lie dormant — they haven't been repealed. They could well re-emerge to address problems that the roam-like-at-home regulation that enters into force today left in the too-hard basket.
And consumer groups are already banging the drum to claim their next scalp: overpriced international call rates. The review of roaming could well provide lawmakers with an opportunity to tackle this problem too.
And let's add just one, final ingredient to the cocktail: Brexit. The negotiations that will unfold over the next 20-or-so months could see roaming surcharges used as either a carrot or a stick to coax or cajole the other side into accepting a better deal.
The conclusion: Roaming V — here we come!
Complete this form to receive emails from MLex with selected highlights from our global coverage of regulatory risk and opportunity, as well as upcoming events, special reports and exclusive interviews.