EU roaming pulls on operators ARP strings

EU roaming pulls on operators ARP strings

Market news |
By eeNews Europe

The proposed law, drawn up by Neelie Kroes, includes both “Carrot and stick” elements to encourage operators to remove roaming charges for customers traveling in the EU.

Before the new proposal was announced, Kroes had already ratified Alternative Roaming Provider (ARP) regulation that allows consumers to have the right to choose their provider of international roaming services within the EU, from 1st July 2014. This requires operators to decouple their networks to allow other companies to provide roaming services. The requirements for suitable solutions were tough and would have had a significant impact on network signalling and would involve substantial investment – the “stick”.

Kroes offers operators a “carrot”

“Today Kroes has offered operators a “carrot”. According to the new proposals put forward by the European Commission, operators will be exempt from the ARP regulations if they offer phone plans that apply across at least 85% of countries in the European Union (“roam like at home”). However, the proposal favours large operator groups, which have a presence in a majority of the EU states, and pushes us towards a more US-style market.

“But Kroes needs to be careful with what she wishes for, as there are only three national providers in the US, consumer bills are double the price of European ones – as they tend to use more services, resulting in double the revenue per subscriber for the operator – and, when they roam, their roaming charges are significantly higher than the charges from a European operator.

“There may also be unintended consequences, as it is entirely possible that national calling, as well as monthly subscription, costs will have to rise in order to generate the revenue to offset the revenue lost from roaming charges and cover the cost of the wholesale charges that need to be paid when roaming. The wholesale costs are associated with the change in networks, change in regulator and change in spectrum that occur when roaming in Europe – unlike the US which has a single network and regulator.”

ARP’s have a reduced incentive to launch

“The new proposals also makes becoming an ARP a much more questionable decision. If operators in the EU begin to abolish roaming charges, potential ARPs will be unable to plan on how many roamers they are likely to get. In addition to this, if operators move significantly towards abolishing roaming charges, but not to the extent that frees them from ARP regulation, will ARPs step forward? Would any subscriber choose an ARP if they deemed roaming rates acceptable – say €1 per day – or would they remain with their home operator knowing the service will just work and avoiding the hassle of finding a more basic roaming service from an ARP? This new set of proposals has neutered any business case for becoming an ARP and snookered operators into lowering their roaming tariffs to near zero.

“Operators in countries with generally higher tariffs would be pressured to reduce tariffs, and oddly enough, Operators with very low tariffs would need to raise their rates. For consumers, while roaming may become cheaper the total we spend on using our phone will stay the same. Studies have shown that when you squeeze costs in one area they push up in others to keep the balance.”

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