17TH REPORT: MOBILE PHONE CHARGES IN THE
EU: CURBING THE EXCESS
Letter from Margot Wallstrom, Vice-President
of the European Commission to the Chairman
Thank you for your opinion on the Proposal for
a regulation of the European Parliament and of the Council on
roaming on public mobile networks within the Community and amending
Directive 2002/21/EC on a common regulatory framework for electronic
communication networks and services dated 12 March 2007.
In line with the Commission's decision to encourage
national parliament to react to its proposals to improve the process
of policy formulation, we welcome this opportunity to respond
to your comments. I enclose the Commission's response. I hope
you will find these a valuable contribution to your own deliberations.
I look forward to developing our policy dialogue
further in the future.
30 May 2007
COMMISSION RESPONSE
The European Commission, would like to thank
the House of Lords for its observations, which have retained our
fullest attention.
We very much welcome the support you are signalling
in your letter of 12 March 2007 with regard to wholesale regulation
and the introduction of a consumer protection tariff at retail
level. In addition, we would like to stress the following points.
First, on the relationship between the costs
of the provision of roaming services and the prevailing price
level, we agree with your view that the real costs of roaming
are likely to be lower than the proposed wholesale caps based
on a multiple of the average European mobile termination charge.
It is probably true that quite a few mobile termination rates
currently prevailing in the Commurtity still over estimate the
real costs involved in an act of termination—by extension,
a regulated wholesale price cap for roaming services based on
these rates might also be regarded as providing a generous proxy
of the costs involved in originating and terminating a roamed
call.
Moreover we also agree with your suggestion
that the extent of the recently announced cuts in retail roaming
prices by the mobile industry—under the threat of regulation—could
be an indication of the existence of still very high and pervasive
profit margins.
On another issue, we differ from you in our
assessment of whether it would be appropriate for the regulation
to expire automatically after a certain period of time, which
you set at three years. In the Commission's view, the structural
characteristics of the roaming market that have resulted in supra-competitive
outcomes are unlikely to change in the immediate future in the
absence of very significant technological change. We therefore
believe that a simple review clause would be the wiser option.
Finally, we are interested in the anecdotal
evidence you cite with regard to market abuses in the area of
data roaming, and we will consider carefully your advice to extend
regulation to this class of services.
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