June 16, 2017    8 minute read

“Roam Like At Home”: All That Glitters Might Not Be Gold

A Sense of Mobile Community    June 16, 2017    8 minute read

“Roam Like At Home”: All That Glitters Might Not Be Gold

Every time a European citizen travelled across a frontier, whatever the reason for doing so, they faced a choice: refrain from using their phone as much as at home or face very high charges for doing so from their phone carrier back at home.

Posting a picture, writing back to family, friends and beloved ones meant constantly looking for a Wi-Fi hotspot, or else, paying just for a few days of use as much as for one entire month at home. This isn’t true anymore: from now on, European citizens abroad will be able to call, send text messages and connect to the internet without having to incur extra charges. Using the mobile phone while travelling outside the home country in any EU member state (including the UK) means now not having to pay any additional roaming charges (we’ll have to wait and see how this plays out post-Brexit). The user pays exactly the same price for using the services provided by the national carrier. In practice, the operator simply charges or takes the roaming consumption from the volumes in the domestic mobile tariff bundle.

Not only tourists but also border businesses will find a way to shrink their costs. In particular, border businesses in Northern Ireland say that this change in mobile roaming policies will boost their business. Employees usually spend a significant amount of money for the data or phone calls, often not having coverage at all. They don’t care if the bill is high, they need their phones and they need them to work. Dropping the roaming charges will make a big difference because it means saving a lot of money.

The institutions of European Union have been working hard for the past ten years, so as to allow Europeans abroad to feel as interconnected as back at home. The aim of the EU is getting populations closer together and facilitating the life of people. For sure we have to give credit to the EU for having achieved something with a socially levelling function with their “roam like at home” policies. The end of roaming charges is another step towards the EU Single Market, accessible to every citizen. By doing so, the EU has achieved what until three or four years ago seems unimaginable.

Will the End of Roaming Charges Increase Domestic Prices?

In the short run, the introduction of EU regulations will lead to a reduction of domestic mobile prices. This will be the effect of increasing pressure coming from the exposure to foreign competition. In the long run, however, this trend might be reversed leading to an increase in prices, so as to avoid bankruptcy. It is also true that roaming traffic is expected to grow significantly as more subscribers will make use of data roaming, now that this favourable option exists. As a consequence, the volume increase in mobile services abroad may offset the negative effect arising from increased competition. What we should expect is a period of change for the industry of telecommunications. Mobile operators need to adapt if they want to reap off the benefits coming from this increase in digital interconnectedness put forward by the EU. We could also expect different mobile operators to merge so as to better exploit the market.

There exist two safeguards to avoid distortions in the market. The first rule concerns fair use rules. In particular, this means avoiding permanent roaming. The second rule regards a derogation system for operators. National carriers will be able to use it only if the national regulator allows it, under very strict circumstances, in case the regulator detects situations that could lead to domestic price increases for the customer.

What Does this Mean In Practice?

The policy allows phone users to roam abroad no more than 90 days per year. This cap was introduced to protect national carriers: without it a person could have bought a SIM card in a country where prices were cheaper and use it permanently in their home-market. Frontier workers, however, are not included in this 90-days-per-year policy, because of their anomalous work situation. In particular, of they log on to their domestic network at any time of the day, this counts as a day of presence in their home country. The European Commission has decided that within the 90 days framework, the user is obliged to connect to the home network provider at least once every 30 days. This measure was introduced as well to protect national mobile network operators. Surcharges may be applied in case the wholesale roaming cap is exceeded. While avoiding excessive checks on consumers, operators need to be able to detect abuses, as these may harm domestic markets.

Are Roaming Caps the Leak?

The largest mobile operators (such as Orange and Vodafone) will comply with the “roam like at home” rules. However, smaller networks have already applied for exemptions to avoid the new rates, so as to avoid losses in EBITDA (earnings before interest, tax, depreciation and amortisation). The drop is estimated around 1-3 %. In total, the industry group ETNO estimated that this policy of roaming charges abolition would cost 7 billion euros in lost revenues from now to 2020 to the European mobile operators.

Border businesses in Northern Ireland say a change in mobile roaming charges means a boost for their business.

What would allow to the domestic carriers to make up for the loss is charging very high extra fees for those who exceed the roaming caps. This will mean that many users may still be hit by unexpected bills, with carriers providing different levels of coverage and ‘fair use’ policies, meaning that those using a lot of data will be charged extra. In particular, the problem is represented by offers that have bundles with unlimited data. In this case “roam like at home” regulation won’t work. If a person with an unlimited data plan goes to a foreign country and uses a certain amount of data when abroad, they will be billed on the basis of the prices of the country in which the data are used. The price charged might be much higher than the fixed monthly rate charged originally by the carrier if the data would have been used at home exclusively. The European Commission reassures, however, that 98% of the citizens of the European Union have access with a mobile offer with “roam like at home” offer already included.

Mobile operator companies are for sure trying to circumvent the ban, and they actually hope to make more money. However, regulators and national consumer groups will keep an eye on the mobile operator providers, reassures director-general of the European Consumer Organization, Monique Goyens. The European Consumer Organization acts as the “consumer voice in Europe” by defending the interests of consumers in the decision processes of the Institutions of the European Union. Ms Goyens recommended to the customers of the mobile carriers to vote with their feet and switch provider in case the operator makes a foul move. (This is obviously something the carriers can take advantage of by stealing from the competition a share of the market through particularly convenient deals.)

Other Issues to Tackle

We have to keep in mind that this is not the end of the story. There are already other issues that could endanger the success of the “roam like at home” regulation. The countries outside the European Economic Area are excluded from the regulation. In fact, EU roaming rules cover the 28 countries (sooner or later 27) of the European Union – the problem is that some operators are covering countries in the European Economic Area, such as Norway or Lichtenstein. Every carrier does something different here.

Also, Britain’s future participation remains a question mark. Only one major British mobile company has made a commitment to keep away roaming charges no matter what the outcome of the Brexit negotiations. Three has eliminated roaming charges already ten months before the legal order. Their aim is the one of ‘retaining the feel at home roaming deal regardless of negotiations’, says Three’s spokesperson. Instead, 02, Vodafone and EE will wait until Britain is no longer part of the EU to decide what to do. The spokespeople of the latter three companies report that they want to discuss with the government and Ofcom which are the future prospects of the UK once it officially leaves the EU. According to them, it’s now too soon to make commitments, as the outcome is still uncertain. Tesco Mobile, another British operator will try to ensure the same pre-Brexit deals also after Britain’s withdrawal from the Union. The European Parliament has stated that the regulation concerning the roaming in the EU will “no longer apply with respect to the UK, impacting business and other travellers and and from the UK”; as a consequence “transitional arrangements will be necessary”. Oversees charges in the UK for using a SIM card from a different EU country will take place.

Furthermore, international calls could represent a very large cash cow for mobile operators which Members of the European Parliament have to deal with quickly.

Let’s wait and see. For now, this is one of the most tangible achievements of the European Union so far.

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