roaming_charges

Pressure from the EU has meant that the costs of using your phone in Europe have plunged in recent years, and under EU rules, roaming charges are due to be abolished entirely in June 2017. Whether this will now happen is open to question. Presumably the UK government will cease to implement EU directives from now on. 

The overall approach to regulation of telecommunications within the UK will not necessarily change much. The Regulatory Framework for Electronic Communications (RFEC) that the European Union enacted in 2002 was largely based on procompetitive UK ideas in the first place.

Certain international aspects are, however, likely to change. The most obvious examples are (1) the relationship of the UK and its national regulatory authority (NRA) Ofcom to its European counterparts; (2) the wholesale payments that UK network operators make to their European counterparts for interconnection; and (3) wholesale and retail arrangements between the UK and the European Union. Our focus here is on roaming.

If the UK were to become a member of the European Economic Area (EEA) (comprised of all EU Member States plus Norway, Liechtenstein, and Iceland), the applicability of the European regulatory framework  for electronic communications would be clear.

Joining the EEA could be expected to oblige the UK to accept most of the burdens of EU membership (including freedom of movement), with fewer of the privileges than the UK currently enjoys. In the discussion that follows, we assume that a UK membership in the EEA will not happen, but it cannot be categorically ruled out.

The prices that Businesses pay for roaming reflect wholesale international payments between the mobile network operators, since the actual service has to be provided in the visited country. Among EU/EEA members, these payments at wholesale level are subject to price caps.

The EU is expecting to migrate over the next year to so-called Roam Like at Home (RLAH) arrangements over the next year, where international roaming prices will be the same as domestic prices. If this indeed comes into play, roaming prices will be even lower than they are today; however, the basic linkages between wholesale charges and Business prices will remain.

To the extent that UK mobile network operators such as Vodafone and O2 (Telefónica) have international affiliates, they have some ability to internalise these wholesale costs. It is nonetheless the case that no MNO covers all EU/EEA Member States; moreover, the ability of MNOs to steer traffic onto their preferred network in the Visited Country is good, but not perfect. The cost of the roaming service will in the end be somewhat higher for UK mobile network operators than for EU/EEA mobile network operators.

Taking all of this into account, it is a safe bet that UK Businesses with UK mobile subscriptions will pay more for use of the mobile services when roaming in EU/EEA countries than will EU/EEA Businesses.

 

Extracts taken from Bruegel.org, written by J. Scott Marcus