Roaming regulation The Consumers’ Perspective Dominique Forest Senior Economic Adviser

1. Roaming regulation The Consumers’ Perspective Dominique Forest Senior Economic Adviser EPP – ED Hearing 08/03/2007

2. Consumers expectations • What consumers want: • A simple regulation delivering clear, tangible benefits • Fairer prices, more transparency • Making the Single Market concrete (Citizens’ Agenda) • What consumers do not want: • A regulation so complicated that it will not be implemented • A regulation that leaves extortionate tariffs untouched • A regulation consumers have difficulty benefiting from • Untransparent tariffs, offers difficult to compare • Adverse impact on other segments of the market

3. Why a retail regulation? • Altex study: independent analysis of the effect of the regulation looking specifically at the claims of operators and focusing on overall welfare • Lack of detailed information on international voice and data telecom services • Consequence: opponents of price control can exaggerate the impact and/or argue for higher ceilings • Contrary to industry claims, prices have not reduced recently • Operators’ claim that price reductions will have limited effect on demand is not credible. • Increased use of mobile phones while on holiday: North-South pattern in roaming • Consumers switching off mobile phones

4. Eurostat: % of tourists going to main destination

5. Eurobarometer: using mobile phone more with lower prices

6. A retail regulation to the benefit of society • The regulation will have a clear positive effect on welfare. (need to take into account the correct effect of price decreases on demand) • The effect on overall profitability is low. The effect on investment is limited as well. Investment would be reduced at most by 1.5% yearly. The industry will remain profitable.

7. The risk of rebalancing • Operators have threatened policy makers with the argument that the loss of roaming revenue would lead to an increase of the domestic prices • The report looks at the claim. • The MTR covers for the cost to have a national network. • Roaming would not be free. The income of roaming will be more than enough to recover the costs of providing the roaming service.

8. Demand 1: Low retail caps • BEUC calls for low retail prices in line with other international telecom services. • To make international roamed calls: 33 cents on retail and 25 on wholesale level • To make local roamed calls: 25 cents on retail and 18 cents on wholesale level • To receive calls while roaming: 16 cents on retail and 12 cents on wholesale level

9. Demand 2: A simple regulation, to avoid that consumers are overcharged • Averages complicate things. NRAs will have to calculate them, leading to differences within the Union, delay, legal uncertainty and most importantly, confusion for consumers. • The discussion should be focused on the level of the caps • The analysis of the operators offers shows that the packages and bundles are only beneficial to specific types of users. • Consumers have been overcharged for many years. The regulation should therefore include every consumer automatically (opt out).

10. Key points • Prices have not come down recently • Volumes will go up when prices decrease • Low Price caps: still the best way forward • Averages: difficult to implement (complicates the debate, introduces legal uncertainty) • Opt out is necessary - regulation has to benefit consumers • Consumers need to be informed and operators need to be stimulated to publicise better offers. This will happen with a mechanism of opt out. • Push system of information

11. The European Consumers Organisation Bureau Européen des Unions de Consommateurs Avenue de Tervueren, 36 -1040 Bruxelles Tel: 0032 2 743 15 90 - Fax: 0032 2 740 28 02 Email: dfo@beuc.org www.beuc.org