Mobile Phone Charges in the EU: Follow-up Report - European Union Committee Contents


Mobile Phone Charges in the EU: Follow-up Report


Background

1.  In April 2007, we published a report on the Commission's proposals to introduce price caps for mobile phone voice roaming charges.[1] The Council and European Parliament adopted the Regulation on mobile phone voice roaming charges in June 2007.[2]

2.  Mobile phone operators apply higher charges per minute when a consumer makes calls from aboard. The Commission considered the charges excessive and the Regulation was intended to force the mobile industry to reduce them. The Regulation set a wholesale and retail cap on these roaming charges. In September 2008, the Commission proposed amending the Regulation.[3]

3.  As part of our scrutiny of these proposals, we decided to conduct a one-off oral evidence session with Lord Carter of Barnes (Minister for Communications, Technology and Broadcasting at BERR and DCMS). The hearing was conducted by Sub-Committee B (Internal Market), whose members are listed in Appendix 1 and a full transcript is printed with this report.

4.  We make this report to the House for information.

The proposals

5.  The original Regulation included a sunset clause stating that the Regulation would expire on 30 June 2010. The proposed amendments will extend this clause to 30 June 2013. This will involve setting new caps on retail and wholesale voice roaming charges applicable until 2013 (see table 1).

TABLE 1

Proposed price caps in eurocents
Implementation date of the price cap Wholesale charges Retail charges (calls made) Retail charges (calls received)
1 July 2009
26
43
19
1 July 2010
23
40
16
1 July 2011
20
37
13
1 July 2012
17
34
10

6.  The Commission proposes setting similar caps for text message roaming. From 2009 wholesale text message roaming charges should be no more than 4 eurocents per message and the retail charges should be no more than 11 eurocents per message.

7.  The Commission also proposes capping the charges for data roaming. These are the charges levied when downloading internet content to a mobile device such as a laptop or mobile phone. The Commission intends to set a cap on wholesale charges of €1 per megabyte. The proposal explains that a "wholesale safeguard price limit should therefore be set that will decrease exorbitant wholesale prices but still be high enough not to distort competition".[4]

8.  Added to this, the Commission proposes requiring operators to provide a facility to customers to set a financial limit to their data roaming in advance.

Evidence base

9.  In our first report on mobile roaming we agreed that there was a case for EU regulation but noted that the majority of the evidence we received was circumstantial. Whilst the weight of that evidence was adequate to justify legislating for voice roaming, we recommended that more information should be gathered before consideration was given to applying the Regulation to data and text message services.

10.  In our evidence session we discussed this with the Minister. He said that there is a "significant body of evidence" for both voice and text message roaming but that the evidence in support of price capping for data roaming is "less robust" (Q 3). The Minister concluded that, given the limited evidence base for data roaming regulation, having only a wholesale safeguard price limit is the right thing to do.

11.  An issue related to the evidence base is the timing of these proposals. The Commission was committed in the original Regulation to reviewing its effectiveness before 30 December 2008. We queried whether after 15 months it was possible to assess fully the success of the original Regulation and whether it was appropriate, therefore, to extend it now.

12.  The Minister said that there was a political imperative driving the timetable of these proposals. However, he also regarded it as appropriate to begin this extension now in order to "fire a warning shot" at mobile operators (Q 4).

13.  We believe that this political imperative has played a significant part in the timing of the proposals. We still recommend that the Commission builds up a better evidence base for this legislation.

Sunset clause

14.  In our previous report, we took the view that regulation should only remain in place for the minimum time required. We therefore supported the inclusion of a sunset clause in the original Regulation. The Commission proposes extending this clause because its analysis of the functioning of the Regulation found that prices have clustered around the voice roaming caps.

15.  The Commission concluded that "the fundamental problems which existed prior to the Regulation still remain"[5] and therefore the Regulation's lifespan needs to be extended. The Minister told us that the reason for extending the sunset clause is operators' "reluctance to participate constructively" (Q 8).

16.  We continue to support the sunset clause. As we stated in our previous report, the sunset clause must be used in tandem with better data collection as such data is critical to reviewing the effectiveness of the Regulation.

Text message and data roaming

17.  Lord Carter argued that the extension of the Regulation to text message and data roaming was unfortunate but necessary. He said "having to have retail and wholesale price caps on a function-by-function basis feels very clunky … In my view, the most significant responsibility for that frankly lies with the industry" (Q 20).

18.  We are concerned that the Regulation is to be extended to cover both data and text message roaming so soon after it came into effect for voice roaming, when it has not yet proved to be effective for voice roaming charges and without a robust evidence base. We agree that it is likely that text message and data roaming charges are excessive and intend to return to this subject in the future.


1   European Union Committee, 17th Report (2006-07): Mobile Phone Charges in the EU: Curbing the Excesses (HL 79) Back

2   OJ L171 (26 June 2007) p 32-40 Back

3   13531/08 Back

4   13521/08, p 10 Back

5   Ibid. p 8 Back


 
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