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An end to roaming charges within the EU?

Regulation (EU) 2015/2120 combines the hotly contested network neutrality rules, together with the removal of roaming charges on public mobile networks within the EU (“Regulation”). Since it was adopted on 25 November 2015, and in conjunction with the Digital Single Market agenda, the European Commission (“Commission”) with support from the European Parliament[1] – has been focussing its attention on abolishing roaming charges throughout EU member states.  The Commission was tasked with devising a “fair use policy” to prevent potential abuse of the Regulations.[2]  On 5 September 2016, the Commission published it’s “fair use policy”, which will obligate EU telecommunications providers to offer 90 days per year of free roaming access for their consumers, of which a maximum of 30 days could be used consecutively.[3]  If these caps are exceeded, mobile operators will have the freedom to apply roaming charges to their customers.  It is no surprise that such caps were proposed considering the disparity in charges across member states (for example, on average a user in Latvia spends €3.70 a month to use their mobile phone, while in Ireland the average is €23.80)[4] in a bid to avoid consumers abusing the benefits of the Regulations.  Without caps, users could take out a mobile contract in a member state with lower monthly mobile charges, but use their device at no additional cost in their home member state. Realising the proposed draft implementation paper of the Commission’s “fair use policy” may not have struck the right balance between consumer and operator interests, the Commission withdrew the paper and has reverted back to the drawing board with an intention to publish a new policy that would end all roaming charges by 15 June 2017.

A brief history of roaming charges in the European Union

What problem is the Commission trying to solve?  Before the EU legislators got involved, consumers in the EU faced higher charges when (just as in any other foreign country)  using their mobile phone outside of their home country; such charges are known as the ‘retail roaming surcharges’.  Operators are required to pay ‘wholesale roaming charges’ to use the network of the operator located within the member state their customer is travelling to.  Retail roaming surcharges have enabled operators to generate additional revenue when their customers travel abroad, by passing on the wholesale roaming charges to the customer at a mark-up (the retail surcharge).  The Regulation will see retail roaming surcharges abolished for the benefit of consumers and to make advances to a digital single market throughout the EU.  This raises a concern from operator’s that they’ll be open to abuse.

The Commission announces the “complete abolition of roaming charges”,[5] or does it?

On 7 September 2016 the Commission announced it had achieved what it had set out to do;[6] the initial draft “fair use policy” published two days earlier saw the end of roaming charges within the EU… or did it?  Not quite, the “fair use policy” introduced a maximum 90-day annual cap on free roaming, of which 30 days could be used consecutively.  The Regulation set out factors the Commission must take into consideration when drafting the “fair use policy”.[7]

Shortly after the Commission’s announcement, the draft was withdrawn from the EC’s website following views from members of the European Parliament that the draft rules should not include a 90-day cap.[8]  The draft proposal was replaced with the following statement: “An initial draft was published on 5.9.2016. The Commission services have, on the instruction of President Juncker, withdrawn the draft and are working on a new version.”[9]… leaving many unanswered questions, and particularly whether roaming charges would be completely abolished.

Has the Commission back-tracked on their proposal?

While the Commission appeared to have turned 180 degrees following their recent announcement, in a State of the Union address on 14 September, EC President Junker confirmed that “the Commission, the Parliament and the Council [were committed] to abolish[ing] mobile roaming charges”, stating it was “a promise [they] will deliver”.  In the same statement, Junker explained that “the draft was not technically wrong, but it missed the point of what was promised.”[10]

It was always the Commission’s intention to introduce a “fair use policy” to avoid abuse by consumers.  To use the example above, if roaming charges were completely abolished; a user in Ireland who pays €23.80 a month for their mobile phone contract may opt to move their service provider to a mobile operator in Latvia at a reduced cost of €3.70 per month, and take advantage that their operator in Latvia could no longer charge the retail roaming surcharges when the user used their mobile in Ireland.  The Commission has stressed that these proposals are intended to benefit travellers, therefore it’s paramount that the proposals aren’t open to abuse by non-travellers within the EU.

The balance the EU is trying to strike is to allow mobile users across the EU to take advantage of the low prices for data use and calls when they travel abroad on holiday, while ensuring that mobile operators “have the tools to guard against abuse of the rules.”[11]  For mobile operators, their concern will be the predicted loss of c.$3.1bn in roaming revenues for EU operators’ until 2019.[12]  Since the Regulation is largely pro-consumer, there is concern within the telecommunications industry that a complete abolition of roaming charges may impact smaller telecommunications operators whose main business may be generating revenue through roaming charges.[13]  To address this, operators that may be severely affected by the removal of retail roaming surcharges are entitled to seek authorisation to apply a roaming surcharge to ensure “the sustainability of its domestic charging model”.[14]  However, such authorisation must be obtained through the mobile operator’s national regulatory authority who will assess whether or not the mobile operator meets the test (based on “relevant objective factors specific to the roaming provider”) set out in the Regulation.[15]  The test as drafted lacks clarity on how smaller operators will be expected to demonstrate the sustainability of their domestic charging model will be undermined by the Regulation.  However, there is an indication of the factors that the EC will take into account when laying down the detailed rules for national regulatory authorities to take into consideration when granting authorisation:

  • overall actual and projected costs of providing regulated retail roaming services (by reference to wholesale roaming charges for unbalanced traffic and a reasonable share of the joint and common costs necessary to provide regulated retail roaming services);
  • overall actual and projected revenues from providing regulated retail roaming services;
  • the operator’s customers’ domestic and regulated retail roaming services consumption; and
  • level of competition, prices and revenues in the domestic market, “any observable risk that roaming at domestic retail prices would appreciably affect the evolution of such prices”.[16]

Dealing with an estimated $3.1bn loss in revenue for EU operators

As June 2017 looms on the horizon, mobile operators (if they haven’t already) will soon start considering how to mitigate the anticipated $3.1bn loss in revenue to the industry, when operators can no longer charge consumers to roam within the EU. 

By removing roaming surcharges at the retail level, we might expect operators to focus their attention on roaming charges at the wholesale level.  However, and surprisingly, this is very unlikely.  This is because the current regulations state that mobile operators who allow foreign mobile users to roam on their network may only levy wholesale roaming charges up to a specified cap from the foreign users’ domestic mobile operator.[17]  These regulations help to protect smaller mobile operators, and particularly mobile virtual network operators, who rely on wholesale access to provide roaming services to consumers.  It prevents discrimination and an abuse by larger mobile operators who already benefit from economies of scale.  As a result, the attention may turn back to retail prices.  It’s been acknowledged that the abolition of roaming charges may just move the problem elsewhere, for example, consumers may see a rise in their domestic mobile contracts.[18]  It’s unlikely that mobile operators will absorb the entire loss.  

The end to roaming charges by 15 June 2017

Without a revised policy, it’s unclear where the policy makers will end up.  We’re certainly expecting a revised “fair use policy” that delivers what has been promised by the Commission, European Parliament and European Council, but will we see a complete abolition of roaming charges throughout the EU?  It’s unlikely due to the potential for abuse.

In the UK, mobile operators will have to comply with the Regulations from 15 June 2017, however once the UK leaves the EU a move to re-impose roaming charges on customers is likely to prove extremely unpopular.

[1]European Commission Press Release, 27 October 2015

[2] Regulation (EU) 2015/2120, whereas (22) and Article 6d

[4]European Commission Fact Sheet, 22 September 2016

[5]European Commission Statement, 7 September 2016

[6] European Commission Statement, 7 September 2016

[7] Regulation (EU) 2015/2120, Article 6d(2)

[11] European Commission Press Release, 21 September 2016

[14] Regulation (EU) 2015/2120, whereas (23)

[15] Regulation (EU) 2015/2120, Article 6c

[16] Regulation (EU) 2015/2120, Article 6d(3)

[17] Regulation (EU) 531/2012, Articles 7, 9 and 12

Contact our experts for further advice

Emma Wright, Chris Benn