Operators lose battle against roaming price caps

Four of Europe’s largest mobile operators – Vodafone, Telefónica O2, T-Mobile and Orange – lost their battle with European authorities on Tuesday, after the European Court of Justice ruled that roaming caps can stick.

The Roaming Regulation established maximum prices that can be charged by mobile operators for calls received and made by a user outside their home network, and is based on 2007 proposals seeking to reduce roaming charges by up to 70 per cent. But in 2009, the four carriers challenged the validity of the EC’s Roaming Regulation before the High Court of England and Wales. This court then asked the Court of Justice whether the EC’s regulation was in fact legal.

As it turns out, not only is the regulation legal, “it is proportionate essentially to the objective of protecting consumers against high charges and is justified on grounds of subsidiarity”.

The Court pointed out that before the Commission proposed the regulation, it carried out an exhaustive study of alternatives and evaluated the economic impact of various types of regulation. “The average retail charge for a roaming call in the Community at the time the regulation was adopted was high (€ 1.15 per minute, which was more than five times higher than the actual cost of providing the wholesale service) and the relationship between costs and prices was not such as should have prevailed in fully competitive markets,” the Court said. “The tariff provided for in the regulation is significantly below that average charge and is set in relation to the ceilings for the corresponding wholesale charges, so that the retail charges reflect more accurately the costs incurred by providers.”