FOREWORD—What this Report
is about
This report examines the Commission's proposal to
introduce price caps into the mobile roaming market. This market
is the provision of international mobile phone services and we
specifically limit ourselves to calls across the EU.
The draft Regulation addresses what are perceived
to be excessively high charges affecting consumers when they travel
across the EU; and forming a barrier to the functioning of the
single market. The Commission intends the Regulation to deliver
immediate benefits to consumers without hampering competition
or innovation in the market.
We conclude that there is strong, albeit circumstantial,
evidence of market failure in roaming. Competition and transparency
are lacking, and national regulators have been unable to address
this. Roaming services are also fundamentally cross-border in
nature, and we agree that action is best taken at a Community
level.
We conclude that regulation at the wholesale level
(i.e. transmission of messages between national mobile phone networks
before domestic delivery to retail customers) is appropriate at
a rate of approximately 30 eurocents per minute. We would regulate
wholesale charges on the basis of average, rather than absolute
caps. This means that network operators could have a range of
charges between themselves, but that the average of these charges
is regulated.
We were less clear on the need for immediate regulation
of the total charges for the ultimate retail customer. Effective
wholesale regulation combined with increased competition at the
retail level should be given a chance to work. Prescriptive retail
regulation could lead to market rigidities and create unintended
consequences for other related markets.
We support the proposed Consumer Protection Tariff,
which would set an upper safety net rate for retail charges, and
protect more vulnerable consumers, such as infrequent travellers.
This tariff should be based on an opt-in model for existing customers—who
would have to make a decision to leave their present tariff arrangements
and opt for a simpler but perhaps higher price level protection—and
an opt-out model for new customers.
We believe that the Regulation should only remain
in operation for the minimum time required, and support the idea
of a 'sunset' clause. Our witnesses focussed on roaming charges
for voice services, but we suspect that, if there are market abuses,
they are likely to be even more prevalent in data roaming services,
which is a rapidly growing market. The Commission must undertake
rigorous studies of the data market and consider the extension
of regulation to such services as a priority.
Underlying all of the above points, we were seriously
concerned at the lack of coherent evidence on the actual, underlying
costs of providing roaming services. Regulatory intervention in
the market should not be undertaken on the basis of guess-work.
More and better research must be carried out on the market, and
should form the basis for a review of the Regulation in the short
term. This work will require close cooperation between the Commission
and national regulators.
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