EC and GSMA at odds over single market reform

The European Commission is once again pushing its agenda to transform the EU’s 28 telecoms markets into one single market. However, it is facing resistance from industry body the GSMA, which has accused the EC of lacking of understanding of how the telecoms industry operates.

Research undertaken by the EC found that mobile users across the EU face large price differences for the same services. It claimed that the biggest price difference is in domestic mobile calls where there is a 774 per cent difference between Lithuania, the cheapest country, and Netherlands, the most expensive.

The commission said that these price differences cannot be explained by differences in quality, cost to provide the service, or by differences between countries in consumer purchasing power.

“As these numbers clearly show, the 28 national telecoms markets in Europe today are not benefitting consumers like a single market would,” said European Commission Vice President Neelie Kroes. “It is critical for the whole EU to move quickly to build a real single market to achieve a truly connected continent.”

The EC said that much smaller price differentials in other categories of basic goods and services in Europe can be found. It cited that a litre of milk can be bought for between €0.69 and €0.99 anywhere in the EU. However, industry body the GSMA dismissed this comparison and has accused the EC of not fully understanding how the telecoms market operates.

“While I fully support Commissioner Kroes’ desire to create an effective single European market for mobile services, this does not imply a single price,” said Tom Phillips, chief government and regulatory affairs officer.

“The Commissioner compares the different prices of domestic mobile phone calls in EU countries to the price of a litre of milk – a point that reveals a fundamental misunderstanding of market conditions. No serious comparison can be made between the mobile and dairy industries. Dairy producers are not rolling out “next-generation” milk infrastructure that is central to European economic competitiveness, nor are they meeting consumer demands by offering people “all you can drink” contracts.”

Phillips added that the research cited by Kroes mistakenly asserts that there is ‘one standard minute’ of mobile phone service when there isn’t.

“Some mobile phone calls will be pre-paid, some will have subsidised handsets, some will buy bundles of minutes, some will be heavily discounted for volume business users, and so on. Why don’t all insurance policies cost the same across the EU? The answer, like for mobile services, is because different people want different things.”

He concluded that enlightened policy reforms could help bring improvement to the market but to create a successful single European market, he encourages Kroes to “focus on coordinating the release of spectrum made available through the digital dividend, rather than embarking on an unnecessary fourth wave of roaming regulation.”

It is not the first time that Phillips and Kroes have clashed on the topic of single market consolidation. In June this year, following Kroes’ speech calling for the industry to get on board with the idea of market consolidation, Phillips described her comments on the topic “unfortunate”.

“The GSMA encourages the Commissioner to keep her focus on the big picture and to make bold and long-term recommendations,” he said at the time. “In this regard, it is unfortunate that the Commissioner should have used her recent platform with parliament to talk about roaming… The Commissioner should immediately clarify her intentions with regard to roaming, to avoid the industry investing in a roaming solution that has been superseded before it is launched.”

And the GSMA is not the only organisation to have recently questioned the validity of the EC’s plans to create a single European telecoms market. Last month, telecoms consultancy firm Coleago’s CEO Stefan Zehle voiced hisbelief that the part of the Commission dealing with competition is out of step with the part that works on telecoms, putting the authority in a “muddle” over roaming rules.

“Neelie Kroes has made the roaming proposals without having thought through the full impact on the mobile industry.  This deserves much greater consultation,” he said.