GSMA Response To Vote By The ITRE Committee Of The European Parliament On Proposed Roaming Regulation
12 April 2007
12th April 2007 - London, England: The GSM Association (GSMA), the global trade association for mobile operators, believes that the dynamic and competitive European mobile market could be seriously harmed by many of the amendments to the proposed roaming regulation adopted by the ITRE committee of the European Parliament today.
If these amendments are approved by the plenary vote in the European Parliament, scheduled for May, the proposed regulation would introduce distortions into the roaming market that will remove incentives for operators to invest and compete, which will penalize a large number of mobile users.
The GSMA maintains that retail price regulation is inappropriate and unprecedented on the basis of the principles of a market economy, which is the foundation of the EC Treaty. The proposed price cap of 40 Euro cents per minute for outgoing calls and 15 Euro cents for receiving calls, which were approved in the ITRE vote, will force European mobile operators to offer roaming services at below cost and give them no scope to compete with each other on price and on new services. At these price levels roaming customers will, in many cases, pay less than domestic customers for the same types of calls, thereby reintroducing the market distortions that were present, and strongly criticized, in the Commission's proposal last summer.
The position of the ITRE Committee runs contrary to the findings of the Parliament's own expert consultants, Copenhagen Economics, which advised that the price caps suggested in the Commission's original proposal would not have allowed the mobile industry to recover its costs and would have damaged competition. Copenhagen Economics suggested that the caps be increased significantly - in the case of caps for receiving calls that they be doubled to at least 33 Euro cents per minute (compared to the original Commission proposals of 17 Euro cents).
The proposed amendments would damage competition
Regulation should, at a minimum, not jeopardise or impede the benefits of competition. Yet the GSMA has found that many of the amendments approved in today's vote would do exactly that. In particular:
- The agreement to set caps at artificially low levels, which do not allow proper recovery of costs or room for competition would force the industry to cross- subsidise roaming with other services and could replace competition with a rigid regulated tariff: that is why the GSMA has consistently argued that regulators should properly investigate and understand the industry's costs for providing roaming. Having done so, caps of at least 65 Euro cents for making calls and 35 Euro cents for receiving calls are necessary.
- The agreement to implement absolute price caps would impose a straightjacket on industry and inhibit tariff innovation: That is why the GSMA (and many national regulators, as well as Member States) has consistently argued that operators and customers should be allowed the freedom to agree on any tariff scheme they like.
- Moving customers, automatically to a regulated tariff, whether they wish to or not, would alienate customers and harm competition: that is why the GSMA has consistently argued for an approach that allows customers to choose whether to opt-in to the regulated tariffs.
About the GSM Association:
The GSM Association (GSMA) is the global trade association representing 700 GSM mobile phone operators across 218 countries of the world. In addition, more than 200 manufacturers and suppliers support the Association's initiatives as key partners.
The primary goals of the GSMA are to ensure mobile phones and wireless services work globally and are easily accessible, enhancing their value to individual customers and national economies, while creating new business opportunities for operators and their suppliers. The Association's members serve more than two billion customers - 82% of the world's mobile phone users.
For more information please contact:
For the GSM Association:
Mark Smith or David Pringle
Email: press@gsm.org
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