ROAMING ON PUBLIC MOBILE NETWORKS (11724/06)
Letter from the Chairman to Rt Hon Margaret
Hodge MP, Minister of State for Industry and the Regions, Department
of Trade and Industry
Sub-Committee B considered this document, and
your Explanatory Memorandum, at its Meeting on 16 October 2006.
We share your concern that any action by the
Commission in price capping does not have any unintended "spill-over"
consequences for consumers using other mobile services. We recognise
that this is an issue of great concern to the public, and will
consider conducting an inquiry into the proposals in early 2007.
In the mean time, we would be grateful if you kept us informed
of any progress in negotiations, particularly regarding the Government's
favoured alternative of a "sunrise clause".
We will maintain scrutiny on this document at
this stage.
17 October 2006
Letter from Rt Hon Margaret Hodge MP to
the Chairman
Thank you very much for your letter of 17 October
on the EM 11724/06.
I am very grateful for your timely consideration
of the Explanatory Memorandum on the Commission's proposed Roaming
Regulation and for your recognition of the importance of this
dossier. I will certainly be happy to keep you informed on the
progress of negotiations and on how our ideas (including the "sunrise"
provision) are being received in Brussels.
At present the dossier is being considered in
the Telecoms working group (under the Finnish Presidency) and
has started its process through the European Parliament with initial
"exchanges of views" in the ITRE and IMCO Committees
planned for later in the month. At the Telecoms Council in December,
at which I will represent the Government, we expect a further
general discussion on the Commission text, with perhaps some questions
posed by the Presidency. The EP timetable, with a first reading
in plenary not expected until next May, has ruled out any form
of political agreement this December. It also remains uncertain
whether sufficient progress on agreeing a text could be made for
there to be an agreement at the June Council under the German
Presidency.
On the substance, the discussion in Council
has tended to concentrate on three main aspects of the proposal;
wholesale regulation (namely the type and level of "cap"
on prices paid between operators); retail regulation (whether
there should be a retail cap and how it should be calculated)
and transparency (information available on pricing to consumers).
The UK, while supporting the need for a robust wholesale price
cap and greater price transparency, has duly tabled its retail
"sunrise proposal" in the working group where it received
welcome support from a number of delegations. Basically we believe
regulated wholesale prices should deliver reduced retail prices
without the need for formal controls.
We are, of course, furthering the UK position
by liaising with other Member States and have already stated lobbying
MEPs. I will forward a briefing note to you when this is finalised.
We have also recently launched a consultation of the proposed
Regulation, which I attach for your information (not printed).
I hope the above allows you and your Committee
an oversight of the progress on this important dossier. I will,
subject to your wishes, report further after the December Council
when the intentions of the German Presidency on handling the Proposal
may become clearer.
13 November 2006
Letter from the Chairman to Rt Hon Margaret
Hodge MP
Thank you for your letter of 13 November 2006.
Sub-Committee B considered your letter at its meeting on 11 December.
We are grateful to you for keeping us informed
on the progress of negotiations in the Council and discussions
in the European parliament. We look forward to receiving further
updates from you on the progress of the negotiations in the near
future.
Have you any estimate of the number of EU consumers
who avoid roaming charges by purchasing SIM cards locally in another
Member State when they travel?
Sub-Committee B is considering holding an inquiry
into the proposals in early 2007 and will maintain scrutiny on
the document at this stage.
12 December 2006
Letter from Rt Hon Margaret Hodge MP to
the Chairman
Thank you very much for your letter of 12 December
on this subject in response to mine of 13 November.
In my earlier letter I agreed to update the
Committee on developments on the dossier and, in particular, on
the discussions that took place at the EU Telecoms Council on
11 December. I hope this brief note will suffice.
Essentially the Council was an opportunity for
the Presidency to report on the deliberations that had taken place
under their watch and to seek views of Member States on the detail
of the Commission proposal. It was also an opportunity to consider
how a compromise could be found that would enable the Council
and Parliament to agree the dossier by the end of the forthcoming
German Presidency.
The debate was both constructive and informative.
It gave me an opportunity to outline the UK view and to back France
in setting out a number of high-level principles on which an agreement
should be based. I attach the paper that I and my French counterpart
(Francois Loos) sent to Member States and the Commission just
before the Council. Essentially our position is to agree with
the Commission for a substantial and urgent reduction in roaming
prices but to manage the process in such a way that neither undermines
competition nor stifles innovation.
I am glad to report that the joint approach
gained considerable support from other Member States, and may
well be taken up (at least to an extent) by Germany in a possible
Presidency text for next year.
I am confident that there is sufficient agreement
in the Council for an acceptable solution to be found, though
this will to some extent be determined by the views of the Parliament
which will probably not become clear until around Easter next
year. I will, of course, keep you up to date with developments.
Finally, your letter raised an interesting question
concerning SIM cards being purchased locally to avoid roaming
charges; a practice that we know is relatively commonplace. We
will endeavour to provide you with details on the extent of this
practice as soon as possible.
19 December 2006
Annex A
PRINCIPLES ON
ROAMING
France and United Kingdom believe that the following
principles should form the basis of an efficient, balanced, consumer
protective, regulation on roaming:
1. Comprehensive information to the consumer
on the retails tariffs. This in in line with the proposal
of the Commission.
2. A single price cap of the wholesale
average tariff between any two operators based on a multiple of
the average European termination rate enforced by National Regulatory
Authorities. The Commission proposed different price caps
for the wholesale tariffs depending on the type of call (local
call when roaming or international call). Our approach ensures
a price reduction in the wholesale market, a protection for small
operators and is easy for NRAs to enforce.
3. A single control on average retail
charges, covering all intra-Europe roaming calls made and received,
defined in order to cover the retail costs of the operators. This
will be applied only to operators which have not voluntarily reduced
their average prices below an agreed cap within six months and
enforced by National Regulatory Authorities. The Commission
proposed here different price caps based on the type of call and
linked to the different price caps for wholesale tariffs; we believe
a single cap is simpler. It would be based on the average retail
prices allowing competition in the offers between operators and
better offers for consumers.
4. A "Consumer protection tariff"
for those customers who want, as a free option to subscribe.
This option will allow customers who do not want to choose from
among the wide scope of commercial offers, that no minute will
be charged to them, when roaming, above a certain price level.
5. A right for NRAs to exercise discretion
and set the national retail price cap below the European price
cap. In exercising such discretion, the NRA shall take into
account the specific situation of the national market.
Further discussions in the Council and the
Parliament will be necessary to define the adequate price cap
levels and protection tariff.
Letter from the Chairman to Rt Hon Margaret
Hodge MP
Thank you for your letter of 19 December 2006,
replying to my letter of 12 December. Sub-Committee B considered
your letter at its meeting on 15 January 2007.
We were grateful to you for your update on this
issue, which will now be the subject of a short inquiry by Sub-Committee
B. We look forward to hearing your views in more detail in person
at a convenient point in the coming months.
We note the joint UK and French compromise proposal,
and agree that it is very important that any measures to reduce
roaming charges do not have the effect of stifling competition
or innovation in the market. We await with interest the possible
German Presidency compromise text which you expect. We would be
grateful to you if you could send us a copy of such a text as
and when it becomes available, as well as for an update on development
in the European Parliament. We also look forward to receiving
details of the Government's estimate of the extent of the practice
of the local purchasing of SIM cards to avoid the charges.
We will maintain scrutiny on the draft Regulation
at this stage.
16 January 2007
Letter from the Chairman to Rt Hon Margaret
Hodge MP
We understand that an informal Telecoms Council
meeting will take place on 15 March, at which there will be an
"exchange of views" on the draft Regulation (11724/06)
to introduce price caps on mobile roaming charges in the EU.
As you are aware, the EU Intermal Market Committee
(Sub-Committee B) has just completed taking evidence for its inquiry
into the Commission's proposal. The Committee were grateful to
you for the evidence which you provided on 26 February, and will
produce a full report shortly. In the meantime, we felt that we
should write to you, ahead of the informal Council meeting, with
our emerging conclusions, based on the evidence we have received.
The first issue we have found it necessary to
address is whether there is a problem with the current state of
mobile roaming charges. Are these charges, in the words of Commissioner
Reding, "unjustifiably high"; and if so, is the market
alone capable of remedying this, or is a Community-level intervention
required?
In attempting to answer this question, we were
struck by the lack of coherent data on the real cost of roaming.
The evidence provided to us does show that Mobile Termination
Rates quoted to us are considerably higher than roaming costs.
Whilst this evidence is circumstantially compelling, it is by
no means comprehensive proof of unjustifiably high charges as
it does not capture the full costs of roaming. However further
weight to the argument that roaming charges were higher than they
needed to be is provided by an analysis of the actions of the
telecoms industry since the threat of this Regulation. Some price
falls have been observed but these changes are not uniform for
all customers on all networks. The industry is a changing scene
and there is a code of practice agreement in place, although it
is unclear how effective this has been so far. It certainly appears
from some of the larger price reductions that the operators' margins
of profit were much larger than originally understood.
Based on the evidence we have received, we conclude
that there is a need for some degree of legislation in the market
in order to achieve a reduction in the cost of roaming that would
benefit consumers but not hurt the industry. The nature, spectrum
and duration of the legislation are discussed below.
We recognise that roaming is funamentally of
a cross-border nature. By definition, it involves operators and
consumers in more than one Member State. In this context National
Regulators face inherent difficulties dealing individually with
the cost of roaming and adopting and implementing measures, under
their own remit, to reduce it. Furthermore, there seems to be
agreement that the cost of roaming constitutes a barrier to the
functioning of the Single Market both in terms of the operation
of the mobile telephony market but also on the extra costs incurred
on SMEs using mobile telephony services. A co-ordinated approach
at Community level is thus required, albeit one that takes into
consideration different geographical, demographic and technical
characteristics in each Member State.
We are aware that the adequacy of Article 95
as a legal base for the proposed Regulation has been contested
by Orange and Vodaphone.[42]
There are serious arguments which have to be addressed and we
hope that these are matters to which the Government are giving
the closest attention.
As matters currently stand, we have identified
four key areas on which we would like to comment: wholesale regulation;
retail regulation; the proposal for a sunset clause; and data
regulation.
We strongly support the need for wholesale regulation.
We believe that an approach based on average Mobile Termination
Rates is the most straightforward option; and there appears to
be a general consensus that the German Presidency's suggested
wholesale cap of 30 eurocents per minute is a sensible level,
and one which will be workable for the industry.
We are less clear on the case for retail regulation.
We have yet to receive convincing evidence that the combination
of wholesale regulation with effective retail competition will
not deliver the desired benefits to the consumer. We believe that,
rather than introduce full retail regulation at present, it would
be more appropriate to introduce a consumer protection tariff,
set at an absolute level to protect the most vulnerable consumers,
those who travel infrequently. We support the German Presidency
proposal that such a tariff be based on an opt-in model for existing
customers, and an opt-out model for new customers.
We believe that it would only be wise to introduce
wider retail regulation at a later period, if there had not been
a sufficient reduction in general roaming charges as a result
of the combination of wholesale regulation and the introduction
of a consumer protection tariff. This would, in effect, be a return
to the "sunrise clause" advocated by the United Kingdom
and France in the December Council.
We are of the view that the Regulation should
be time limited in some way, and that it would be appropriate
for the Regulation to expire through a "sunset clause"
in three years time unless a convincing case is made for it remaining
in place. This case would have to be supported by the collection
and analysis of comprehensive data on roaming costs and prices
across the EU. This work would have to be carried out by National
Regulatory Authorities, along the lines of consistent criteria
set by the Commission.
We are aware that political support for both
the sunrise and sunset clause appears to have waned in the most
recent negotiations on the draft Regulation, but would endorse
firmly their continued consideration.
Finally, the majority of our witnesses focussed
on the issue of voice roaming. Anecdotal evidence appears to suggest
that, if there are currently market abuses above costs, they exist
to a greater degree in the data market. There is at present insufficient
hard evidence on the costs of data roaming, and we believe that
uncovering the costs should be a priority in the cost study mentioned
above. Data is likely to become an ever more important sector
of the market, and once the research has been carried out, the
Commission must consider the extension of regulation to this class
of products.
We would welcome a detailed report from you
on the discussion in the informal Council on 15 March, and we
will be writing in similar terms to Commissioner Reding.
8 March 2007
Letter from Rt Hon Margaret Hodge MP to
the Chairman
Thank you for your letter of 8 March, in which
you set out the initial conclusions of your comprehensive inquiry
into the Commission's draft Regulation on International Roaming.
This was very timely, just ahead of the informal discussions I
had with other EU Ministers in Hanover on 15 March.
I will not comment here in detail on your initial
conclusions, as I look forward to your comprehensive Report later
in the month. I am greatly encouraged with your initial conclusion;
especially with respect to your endorsement of a single average
cap at the Wholesale level and a Consumer Protection Tariff (CPT)
offered to existing customers on an opt-in basis. I would, however,
urge you to look again at the case for an average retail cap,
offering both additional protection for those customers deciding
not to take the CPT, but also encouraging operators to bring forward
innovating and competitive roaming packages.
Turning to the Informal Ministers meeting (on
which there were no formal Conclusions or Report) I will briefly
outline the lunchtime discussion on the Commission's Roaming proposal
and the afternoon exchange on mobile Television. The meeting was
held at the CeBIT Fair in Hanover and was preceded by an opening
reception, the evening before, hosted by the German Chancellor.
During the lunchtime discussion (which was only
attended by Ministers and Heads of Delegations) there was an overall
consensus that regulation at the European level was necessary
and urgent since rates for roaming services significantly exceed
the costs and are thus a burden for European citizens. While the
prime objective of the Regulation would be to help bring about
a speedy and perceptible reduction of roaming charges for all
consumer groups; it was also recognised that competition among
the operators and the incentives for innovation must not be endangered.
Ministers also agreed that the improvement of
rate transparency for the consumer was an important element toward
solving the problem and also considered that a Consumer Protection
Tariff (that had to be offered to all customers) was an essential
element of the package. Finally, it was also considerd important
that operators should be able to offer other innovative price
options, in order to ensure that consumers enjoyed a wide range
of possible services; though there were differing views on the
role of an "average tariff cap" (which, as you know,
we feel is important) in achieving this.
As a result of the discussion on Roaming, the
Presidency have convened additional official level session to
try and secure a way forward, particularly as regards the Consumer
Protection and Average Tariffs in the next week or so; this perhaps
helping the European Parliament to focus on their own discussions.
Currently there are still a majority of countries who support
(like you) an opt-in for the CPT and thus I am confident that
an acceptable outcome, meeting our broad objectives, can be secured.
The afternoon session at Hanover concentrated
on Mobile TV. There were brief presentations from competing business
groups in Germany (on the DVB-H and DAB standards) and then three
Ministers (including myself) gave brief overviews on developments
in their own countries. I, along with my Italian and Finnish counterparts,
stressed the real potential for this business sector but also
that it was a market where little intervention by national Governments
or the Commission was required. I particularly noted that it would
be a mistake, given the rapid emergence of different business
models, to back one standard over another.
I will, subject to your wishes, keep you informed
of developments on the Roaming dossier; and will indicate to you
how the balance of negotiation lies ahead of the Council on 7
June.
29 March 2007
42 We were sent two opinions on this issue, one from
Sir Francis Jacobs QC and David Murray, dated 16 October 2006,
the second from Claus-Dieter Ehlerman, dated 27 March 2006. Back
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