18-02-15

Ending roaming surcharges is arbitrary and uneconomic

Why the EU Commission's policy-driven aim of achieving the same retail prices for roaming and domestic services makes no sense

The EU Commission Vice President for the Digital Single Market, Andrus Ansip, told the news agency Reuters that EU member states were "not ambitious enough today" regarding the abolition of roaming surcharges in Europe.

However, we believe that a swift end to roaming surcharges would be problematic. The Commission's policy-driven aim of achieving the same retail prices for roaming and domestic services is arbitrary and uneconomic because the Commission's assumption that the roaming agreements which it is imposing will lead to identical wholesale prices for roaming and domestic services, is unrealistic.

Thus, mobile network operators can only achieve price equality between domestic and roaming services at the retail level if they cross-subsidise domestic and roaming services. This is uneconomic because prices will no longer correspond to the costs.

The proposed abolition of the retail charge for incoming roaming calls intensifies this problem particularly for those providers who do not have their own networks abroad because, for the termination of each roaming call abroad, these providers have to pay a termination charge to the foreign network operator but can no longer pass this on to their own customers.

Since, on the one hand, this termination charge differs from one member state to another and, on the other hand, there is, especially during holiday periods, a North-South divide, abolition of the charge for incoming calls will lead to a redistribution in favour of the network operators in countries with high termination charges and those in holiday destinations.

Philipp Eckhardt, Telecommunications Division, eckhardt(at)cep.eu