Since February 2009 , this blog and Huib's 3 other Euroblogs are together at:

- In Europa Zu Hause [DE]
- L'Europe Chez Soi [FR]
- At Home in Europe [EN]
- In Europa Thuis [NL]

Tuesday, June 13, 2006

380m EU mobile phone owners claim roaming freedom abroad

Source: / Europe / Brussels briefing - EU simplifies plan to scrap mobile roaming costs

Two weeks ago, after Vodafone (see post in this blog), some more European Mobile Phone Companies agreed to cut "volunarily" their roaming charges for clients using their phones abroad. At the same moment they attacked the EU Commission's plans to impose a "cap" on roaming charges, saying that they were unnecessary, now, that "the market demonstrates that it can govern itself". The companies are hoping that we have a short memory. For, what happened? (FT, 12.6.06, by Sarah Laitner in Brussels :)
Viviane Reding, EU telecoms commissioner, pledged in February to outlaw roaming fees, the add-on costs consumers pay to make and receive calls on their regular mobile phones while in other EU countries.

She argues that Europe’s 380m mobile phone owners are charged unjustifiably high costs to use their handsets while abroad, and her plan has won consumer backing.

But the industry, facing a slowdown in the growth of European revenues, has vigorously fought the proposed bar on roaming fees, which analysts estimate account for 10 to 15 per cent of operators’ profits. In an effort to undermine the case for legislation, companies such as Vodafone and Orange have pledged to slash the costs, and the suggested tweaks to the proposal will be closely monitored by the industry.

Well, they will be closely monitored by consumers' organisations and 'At Home in Europe', too!

For, like during the struggle with the banks of the Eurozone, who wanted to continue to charge change fees for transborder payments from one euro-country to another (!), the private telephone companies are not, as they say, championing "free market" ideas, but, on the contrary, fighting for maintaining an artificial and redundant compartmentalisation of the markets, just to keep some artificial extra benefits! Here is, why.

Mobile telephone traffic works, like the internet, as a network of networks, where data are sent from one point to another, without any human intervention. Everything is steered by computers. At this moment, the software is so far developed, that errors have become extremely rare. When you are calling, you are paying for the investments in hard- and software and for the use you make of sender-receiver capacities. Fundamentally, the distance between the caller and the called plays but a subordinate role in the total real costs of a call. National borders between networks in different countries play no role at all any more. Just like in the case of the banks' "change" rates between the eurozone countries.

So, who is trying to impose "artificial" charges here? Not the EU Commission! Their idea was originally, to forbid all extra roaming charges. Now, the FT announces a study into a "simplification" of this point of view. How? (FT:)

At the heart of the changes are fresh plans to introduce a cap on the wholesale fees companies charge each other to use their networks.

This will be calculated on an average of certain rates in the union’s 25 member states. Retail charges for consumers can be up to 30 per cent more than this wholesale cost.

Ms Reding had initially proposed that, while abroad, consumers were charged the same price they paid to use their phones in their home countries. Operators argued this move would lead consumers to register with mobile phone groups abroad to benefit from lower fees.

So, is this what you call a "simplification" of the original idea? I have a simpler idea of what simplification means: I cannot imagine a simpler idea than the initial idea, i.e.: abolition of all extra roaming charges!

And, maybe my mind is too simple too, to understand, why champions of free markets can be against freedom for consumers "to register with mobile phone groups abroad to benefit from lower fees". I have always learned, that freedom for buyers to buy at the lowest price offered on the market for the same product, was not less than the "engine" of innovative markets!

And it is worse still: As most of the operators ARE already working in different countries, why should Vodafone be afraid when I register, not in Belgium, where I am charged with "roaming", the moment I am 100 KM away from my office, but for instance, with their company in France (SFR) or with Vodafone DE (Germany) or with Vodafone-Britain? I am still their client. I make the same calls. Only, they can charge less "roaming extras". Is the freedom of one European market only a freedom for providers, and not for consumers?

The FT again:

One industry analyst said on Monday night that the changes gave companies more scope to recover costs in particularly competitive markets. He said: “This is good news for the operators. Overall they will benefit from this.”

Yes, I am sure they will. THEY will. It will help to keep alive small local oparators, who benefit from the compartmentalisation of the European market along national borders. Who else will benefit from such a half-measure? And, stagnation will be the result:

However an industry representative argued: “The Commission seems to be back-pedalling. But it is putting in place something even more prescriptive. If this comes into place there will be no incentive for any operator in Europe to innovate.”

Well, that is simple enough for me, to understand. And I am curious, to read the "economic analysis" that points to another outcome:

A Commission official said on Monday night: “We have fine-tuned our proposal to make sure that this regulation is based on a sound economic analysis.”

We will continue to watch!

No comments:

Related Posts with Thumbnails