The end of roaming charges in the EU does not only have positive consequences. According to a study published on 13 November, wholesale price caps - which were agreed less than two years ago - are far too high and penalise mobile virtual network operators (MVNOs), which could ultimately have consequences for the development of the Internet of Things (IoT).
This observation is expected to be widely discussed by MEPs at a public hearing on 22 November.
The report, prepared at the request of the Parliamentary Committee on Industry, reviews the end of roaming charges on 15 June 2017. It specifically questions the impact of two regulations: Regulation 2015/2120 on the abolition of retail roaming charges and Regulation 2017/920 on the capping of wholesale roaming charges (i.e., the amount that telecommunications operators can charge each other for the use of their networks when making cross-border roaming calls) (see EUROPE 11716).
A quick review of wholesale price caps
The authors are particularly critical of the current wholesale price cap. According to their calculations, the latter is at least 10 times higher than the cost price, which greatly disadvantages mobile virtual network operators (MVNOs) who wish to offer roaming packages for the Internet of Things (IoT) in the long term, such as connected cars and aircraft.
"If the wholesale price is high, mobile virtual network operators won't be able to buy capacity at a competitive price, and this is really important for the development of services in the Internet of Things. Mobile network operators, however, would prefer MVNOs to be at a competitive disadvantage", says Colin Blackman of Camford Associates Ltd, one of the two authors of the report.
The report therefore recommends promoting the lowering of the wholesale cap for international mobile roaming (IMR) for cost-based pricing, emphasising that "an approximate indicator could be established based on the national average retail price (€/gigabyte) in the EU for aggregated data". It also recommends allowing permanent roaming at the wholesale level for IoT application providers.
A "successful" retail roaming market
The report, on the other hand, is extremely positive with regard to the retail market, pointing out that the lower fares have led to an increase in traffic: + 435% of data traffic and +62% of calls made between the third quarter of 2016 and the same period in 2017. In total, some thirty derogations were granted in accordance with the principles of a fair use policy. These derogations allow operators who observe excessive use of the package in another Member State to continue to apply additional costs, namely 3.2 cents per minute for calls made, 1 cent per SMS and €6 per gigabyte of data (see EUROPE 11688).
The European Commission is due to publish its interim report on the abolition of roaming charges in mid-December. According to Colin Blackman, the focus will probably be mainly on the retail side and it is unlikely that the Commission’s view on the wholesale market will become clear until their final report in late 2019.
The study is available at: https://bit.ly/2zOM1oE. (Original version in French by Sophie Petitjean)