Wednesday’s European Commission announcement on proposed changes to mobile roaming tariffs will effectively end the EU mobile roaming market as it stands today. According to Informa senior analyst Paul Lambert, the Commission’s proposed requirement that operators open their networks to other providers has “consigned to history the bi-lateral approach to striking roaming wholesale agreements which has been in place since the advent of GSM.”
According to Lambert, proposals that consumers be free to choose the carrier they roam with will, if adopted, “create a whole new market for operators offering EU-only service packages, injecting a new impetus of competition in the area of roaming.” The creation of a more competitive mobile roaming market is one of the goals of the Commission’s proposals. At a press conference yesterday, Commissioner Neelie Kroes said that competition between EU carriers was “too weak” and that telcos “still enjoy outrageous margins, particularly on data downloads.” She said that a “fundamental new approach” was required to increase competition and lower prices for consumers.
Lambert says that the proposals should come as no surprise to the mobile industry which, despite some exceptions, has “been unwilling to reduce EU roaming rates in line with the Commission’s expectations.” According to Lambert, the reason for this is that carriers have sought to protect the rates they charge corporate customers, which, unlike consumers are “much less price sensitive, as they have a much greater need to stay connected when they travel abroad.” As such, the impact of the proposals, should they be put into effect, will be felt most by the larger European mobile operators, says Lambert, because these firms have the most corporate contracts in place.
Lambert added that the industry’s historical resistance to tariff reduction means it now has no clear view of how much additional usage will be created by lower tariffs, nor does it know how price elastic mobile roaming services are. “The burden is now on mobile operators to aggressively market competitively priced roaming services to try and sign up the highest number of mobile users who use their devices the most while travelling in the EU,” he said.
With Amazon and Google launching smart home initiatives, have the telcos missed out on their chance to cash in on this market?
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