DUBLIN, Ireland-The recent decision of the European competition commissioner to sanction raids on U.K. and German mobile operators as part of investigations into collusion over roaming charges came as little surprise to most industry observers. It is becoming increasingly difficult for operators to explain why roaming calls should generate up to five times as much revenue per user as ordinary calls.
Operators were reluctant to comment, but a senior source with one U.K. operator admitted that it was no longer possible to blame switching charges-a common “excuse” in recent years. “Switching charges are now very low and market liberalization means mobile operators have a choice of carriers to handle fixed-line traffic.”
“Pan-European players are able to originate, carry and terminate calls on their own networks so they have considerable scope for aggressive pricing,” confirmed Daragh Stokes, managing director of Dublin-based consultancy Hardiman Telecommunications.
According to Sara Harris, senior European industry analyst at Strategy Analytics, the European Commission’s (EC’s) patience was finally moved to action through sheer frustration. “Over the last few months we have seen the emergence of pan-European roaming tariffs (from Vodafone in particular), but there has still been no significant reduction in costs.”
The fact that competition has not worked in reducing roaming charges-coupled with the evidence that the new pan-European tariffs are terribly complex and still relatively expensive-led the EC competition body to the conclusion that high-profile action was justified.
While there is only so much that the European Commission can do directly to introduce lower roaming tariffs, Harris believes that this is not necessarily an obstacle to its objective of reduced call charges. “The commission has the authority to compel operators to publish their charges, but it would be difficult to enforce call rates across every operator in Europe. It is more likely that the commission hopes to shame the operators into reducing their charges, which would be much more effective. If the operators voluntarily reduce roaming costs, there is no need to enforce compliance.”
Stokes also believes that the commission should do more to educate customers. “Rather than focus on attacking a perceived cartel, the commission should be highlighting the savings that can be made through informed purchasing decisions.”
There is some sympathy for the efforts of pan-European operators to reduce roaming costs. “It is worth noting that one of the biggest obstacles to price competition seemingly is the restrictions imposed on Vodafone by the European Commission at the time of its takeover of Mannesmann,” said Gordon Mooney of UK consultancy Mason Communications.
However, Mooney adds that prices are often not well advertised so it is not easy to choose the most competitive network when abroad and that operators “have been slow to bring prices down.”
While discrepancies of up to 400 percent in roaming charges between operators in the same country suggest collusion is not common, a combination of commercial and regulatory pressure should see roaming costs fall over the next few years. Apocryphal tales such as the operator that claimed it had to charge roamers more because they were taking up room on its network might then be laid to rest.
