Roaming Charges: UK tries to block EU deal

A new defeat for the mobile phone providers.
The EU Commission proposal for a cap on roaming charges gets support from national ministers in a meeting in Germany.

But that is not yet the end of the story. In one of its next meetings, a formal European Council will have to accept the proposal. The Companies are trying to get a compromise by offering complicated programmes for customers, that may roughly cut 40% of the extra roaming charges.

But the conditions are unclear, and are linked, as in the case of my provider, the Belgian Proximus an affiliate of Vodafone, to subscriptions that make a change of provider very difficult. The programmes do not offer, either, a reduction of the high costs for receiving calls abroad, nor for extra international SMS-charges.

An EU-test case
The EU-Commission initiative is a test case for its capacity to show European citizens, that Europe protects them. In view of rising Euroscepticism, the cap on roaming charges has become a major issue. It may show, that the Barroso Commission is as social as its predecessor, who capped to 0% the international transfer charges in Euros of the banks.

Today's EU-Observer evaluates the question:

"All citizens in the EU should be able to judge in July how effective the work of their ministers and their parliamentarians has been," said EU telecoms commissioner Viviane Reding - a staunch supporter and initiator of the roaming price cuts.

The Test Case reasoning, as you see.
However, Vodafone's lobbying in the UK has had some effect:

But British [Minister] Margaret Hodge has argued against a system which would introduce rigid price limits for roaming, saying the potential costs to companies of €2.9 billion would be spread across the sector and harm innovation in the area.

"If we have a rigid maximum price ceiling it will quickly turn into a minimum price, and that I think will inhibit real competition. You don't want to lose flexibility," Ms Hodge said in an interview with the Financial Times.

Ms. Hodge argues against something the Commission is NOT proposing. The price cap is not 'rigid'. It imposes solely a maximum percentage extra costs for roaming above the existing charges related to the moment, the time and the distance of calls. If those costs rise or sink, the value in money of the maximum extra roaming charge will correspondingly rise or sink. That is not what is commonly called 'rigid', isn't it?

A conservative, anti-free market struggle
In fact, as we explained earlier here, Mobile Communications providers are since about 10 years profiting from an anomaly in Europe's common market. National frontiers, that are technically no obstacle at all for transmitting communications, are used as milk-cows for imposing extra charges. Licenses for mobile phone (and internet access-, see later) net works, are nationally allocated (and -heavily- paid for). This creates technically redundant frontiers, separations, between national network complexes.

This situation is falsifying open competition, a configuration that would result in lower prices for transnational calls and communications. The champions of open competition should attack this national allocation system as the real falsifier, and not the European regulations that intend to limit the harm it does to the market and its providers and consumers!

But no, oligopolistic market providers are conservative at heart. Rectifying the division of charges between national and international callers, would mean, that an easy and profitable extra source of income will need to be replaced by others. That is difficult and painful. It means extra work for the top bureaucracy of the providers. And, maybe, the loss of extra fat that is now invested into sponsoring of, for instance, golf tournaments (with free tickets for the direction) and conventions in the Caribbean for top- and middle managers and their spouses and secretaries. Money that is not serving any 'innovation'.

Setting up one category of consumers against another
So, as a last resort, our companies are playing the card of setting up two categories of consumers against each other. "If we will have to cut the charges for transnational callers, we will be obliged to rise them for national calls!" Ms. Hedgehodge obediently launches this scarecrow point to her European colleagues:

As opposed to the commission's proposal to see the new roaming limits apply automatically, Britain favours an "opt-in" regime in which the new maximum tariff is only applied if customers request it.

"People are not daft. People are pretty adept at working out the best package," Ms Hodge said in the interview.

Ms. Hedgehodge sticks all her pins out against those continental dirigists. Her arguments are exactly those, we denounced earlier, when we analysed a 'Financial Times' contribution by a hired British lobbyist for Vodafone. Most mobile phone consumers go on holiday abroad. They have all the experience of bad surprise at the ensuing monthly bill. They are outraged at the exceptional high costs for their international calls, made and received.

An European price regulation would be an obstacle to free competition and innovation?
Nor Ms. Hodge, neither the lobbyists, will be able to reason that away. Even, if the side of the professional international callers has been weakened by granting preferential tariffs for roaming to big companies. That argument is pure demagogy.

It is very sound for the companies and for the economy in general, if extra profits resulting from pre-common market anomalies, are regulated away. The EU position is more in line with free market thinking than that of the mobile phone providers and of the British Government.

An alternative for sound companies: Open the national networks to everyone!
I do not understand the opposition of big European transnational players like the French Orange, the German Telekom (T-Mobile), the British Vodafone and -even- the smaller Dutch KPN with its dedicated networks in Germany, Belgium and some central European countries. They could deploy in a free European market, that would be no more falsified by national allocations. They could demand access to national markets that are now closed to them, in order to offer European-wide competing tariffs and get, in that way, millions of new clients, who would provide them the means for innovation. In stead of rear-guard lobbying, they would do better to justify their claim on a supplement to the EU regulation, allowing any European provider to sell his subscriptions in every EU country.

They would quickly take an advance on their competitors like the Luxembourg providers, who, profiting from the national allocation, operate from an area not bigger than a post stamp, mainly in order to catch the calls of transiting European citizens in their networks and being able to charge them extra roaming tariffs!

You see, all this is why so-called free markets need reasonable regulators. For their own well-being!