Explanatory Memorandum to COM(2006)382 - Roaming on public mobile networks within the EC and amending Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2006)382 - Roaming on public mobile networks within the EC and amending Directive 2002/21/EC on a common regulatory framework for ... |
|---|---|
| source | COM(2006)382  |
| date | 12-07-2006 |
- Grounds for and objectives of the proposal
The ability of customers of mobile electronic communications services to use their mobile handsets to make and receive calls while travelling abroad ('international roaming') is an important component of the service, and contributes to the social and economic welfare of the Community as a whole. However, the high prices that mobile users pay for this service has been identified as a persistent problem by consumer organisations, regulators and policy makers across the Community. While a range of action has been taken in recent years to address this issue under the existing legal framework, the tools available have not proved effective in reducing prices to a level that reflects the underlying costs of providing the services concerned.
The objective of this proposal is therefore to amend the existing regulatory framework for electronic communications to provide the necessary legal basis for effective and timely action to bring about substantial reductions in the level of mobile roaming charges across the Community in a harmonised manner. This is to be achieved by applying the approach that prices paid by users of public mobile networks for roaming services when travelling within the Community should not be unjustifiably higher than the charges payable when calling within their home country (the 'European Home Market Approach').
The mechanism selected to achieve this objective in a proportionate manner is the application to terrestrial mobile operators within the Community of safeguard maximum price limits for the provision of roaming services for voice calls between Member States at retail and wholesale level.
- General context
The problem of high roaming charges for mobile customers travelling in Europe was first identified in mid-1999 when the Commission decided to carry out a sector inquiry covering national and international roaming services. This led to the Commission opening proceedings alleging the past infringement of Article 82 of the Treaty by certain mobile operators in the United Kingdom and Germany.
International roaming was also recognised as an issue for potential ex ante regulation at the time of the adoption of the 2002 regulatory package for electronic communications, through the identification of the wholesale national market for international roaming on public mobile networks in the Commission's Recommendation of 11 February 2003 on Relevant Product and Service Markets within the electronic communications sector.
The European Regulators' Group (ERG) noted in May 2005 that retail charges were very high without clear justification; that this appeared to result both from high wholesale charges levied by the foreign host network operator and also, in many cases, from high retail mark-ups charged by the customer's own network operator; that reductions in wholesale charges were often not passed through to the retail customer; and that consumers often lacked clear information on the charges for roaming.
In October 2005 the Commission drew attention to the problem of high international roaming charges and the lack of price transparency by publishing a consumer information website that not only corroborated the fact that charges are in many cases manifestly excessive, but showed a variation in prices across the Community that could not be justified for calls with the same characteristics.
The European Parliament, in a resolution on 1 December 2005 on European electronic communications regulation and markets 2004, welcomed the Commission's initiative on transparency in the international roaming sector and called on the Commission to develop new initiatives in order to reduce the high costs of cross-border mobile telephone traffic.
In December 2005, the European Regulators' Group alerted the European Commission to its concern that measures being taken by NRAs would not resolve the problem of high prices, noting that roaming creates an exceptional instance where an apparent case of consumer detriment is not prospectively solved by the application of the framework.
In March 2006 the European Council noted in its conclusions the importance for competitiveness of reducing roaming charges, in the context of the need for focused, effective and integrated information and communication technology (ICT) policies both at European and national level, in order to achieve the renewed Lisbon Strategy goals of economic growth and productivity.
While some operators have announced plans to reduce the prices for international roaming services in response to the EU initiatives, there has been no general industry response that would achieve the objectives of this proposal without the need for regulatory action. In particular there is no guarantee that all international roaming customers would see the benefits of lower prices envisaged by the proposal.
This proposal therefore aims to provide a harmonised legal basis for such action that will facilitate the completion of the internal market for electronic communications.
- Existing provisions in the area of the proposal
The instruments of Community and national competition law permit competent authorities to sanction anti-competitive behaviour by individual undertakings. However, competition law instruments address the activities of individual undertakings and therefore cannot provide a solution that safeguards the interests of all e-communications users and market players within the Community.
The existing regulatory framework for electronic communications provides a mechanism for the imposition of ex ante regulatory obligations on undertakings within the electronic communications sector, on the basis of the definition of relevant markets susceptible to ex ante regulation and a process of market analysis by the regulatory authorities. This results in the imposition of regulatory obligations where undertakings are found to be dominant in the relevant market. The wholesale national market for international roaming on public mobile networks has been identified as such a relevant market. On the other hand, no retail market for the provision of such services has been identified as a relevant market, since roaming services at the retail level are not purchased independently but constitute only one element of a broader retail package. Consequently, due to the specific characteristics of the markets for international roaming services, and the cross-border nature of those services, it has not been possible for regulators to address high prices for international roaming by means of these procedures.
Arguably the Community regulatory framework may leave some scope for Member States to address the problems identified in the international roaming markets by means of other legislative measures, such as consumer protection legislation. However, given the cross-border nature of international roaming services, in which wholesale providers are situated in Member States other than that of the consumers using those services, any such legislative action by Member States would be ineffective and give rise to divergent results across the Community, in the absence of the harmonisation ensured by this proposal.
The existing Community regulatory framework (Article 19 of the Framework Directive, 2002/21/EC) provides for the Commission to issue Recommendations on the harmonised application of its provisions. However, such a Recommendation in this area would not be effective, since it would not be legally binding and the Member States to which it was addressed would still only have available the existing regulatory tools.
The retail and wholesale roaming markets exhibit unique characteristics which justify exceptional measures going beyond the mechanisms otherwise available under the 2002 regulatory framework.
- Consistency with the other policies and objectives of the Union
This proposal is in line with the renewed Lisbon Strategy for promoting growth and jobs through greater competitiveness and the Commission's associated i-2010 initiative. The importance of reducing international roaming prices within the Community was explicitly recognised by the March 2006 European Council.
- Consultation of interested parties
Consultation methods, main sectors targeted and general profile of respondents
The Commission services launched a two-phased consultation in early 2006 i. During the first round, general feedback on broad principles was sought. The services then launched a second round, with a more concrete concept for regulation as a basis for discussion. During the two phases, 152 submissions were received from a range of stakeholders including operators, NRAs, Member States, trade and user associations and others.
The consultation exercises demonstrated widespread support among Member States, NRAs, consumer groups and even some operators for the Commission's goal of reducing roaming charges. While most operators opposed regulation and argued that the market is competitive and that prices are falling, some proposed either self-regulation or some form of regulation.
As a result of the submissions received, the Commission adapted its original concept of the 'home pricing principle', which would have linked prices for international roaming to the prices paid by roaming customers for equivalent calls made on their home network, to arrive at the concept of the 'European Home Market Approach', under which roaming prices are brought closer to domestic prices through the application of common Community-wide safeguard maximum price limits, thereby achieving a high level of protection for users while safeguarding competition.
- Collection and use of expertise
There was no need for external expertise other than the input from interested parties provided in the context of the public consultation.
- Impact assessment
The impact assessment for this proposal examined the following range of options: no policy change, self-regulation, co-regulation, soft law and targeted regulation.
'No policy change' would involve relying on market and technological developments to solve the problem while continuing to use existing regulatory tools and competition law remedies. It may be noted that national regulatory authorities have already indicated that existing regulatory tools are insufficient to address this problem.
Self-regulation and co-regulation were also considered, although to date there has been no general industry initiative to propose such measures. The risk of certain consumers being left with extremely high charges even though average prices might fall could undermine the overall objective of such approaches.
The option of tackling the issue on the basis of recommendations or other soft law was also analysed. However, given the structural nature of the problem of high consumer prices for international roaming and the fact that existing provisions in the Community regulatory framework for electronic communications have proved to be insufficient to resolve the problem, it was apparent that initiatives that did not alter the legal framework for remedial action would not achieve the desired objectives.
Within the broad option of targeted regulation, three different approaches were analysed: wholesale regulation alone, retail regulation alone and a combination of wholesale and retail regulation.
Imposing regulation at wholesale level only would remedy the problem of high charges between operators but would not guarantee that lower wholesale prices would be passed through to retail roaming customers, given the lack of competitive pressures on operators to do so. The objective of substantial reductions in retail prices for European roaming customers would therefore not be ensured.
Retail regulation alone was also considered, given that it would tackle the problem directly. However, in leaving wholesale regulation to one side such an approach might subject smaller operators to price squeeze, leading to large-scale cessation of service.
Finally, a combination of wholesale and retail regulation was examined, in a number of variations. The conclusion of the impact assessment was that such a combined approach to wholesale and retail regulation, involving the establishment of common Community-wide maximum safeguard price limits at both wholesale and retail level, provides the optimum solution.
Contents
- Summary of the proposed action
The proposal provides for the establishment, on the basis of the 'European Home Market Approach’, of common, Community-wide maximum price limits on the charges that mobile network operators may levy for the wholesale provision of mobile roaming services for mobile voice telephony calls made from a visited network in the Community and terminating on a public telephone network also located within the Community.
The maximum price limits take account of the differences in the underlying costs of providing international roaming services for calls made to a destination within a visited country, on the one hand, and calls made back home or to a third country within the Community, on the other. The proposal therefore provides for a lower wholesale price limit for the former category of calls (set at twice the Community average mobile termination rate for mobile network operators designated as having significant market power) and a higher price limit for the latter category (set at three times the Community average mobile termination rate for such operators).
In order to ensure that there is no price squeeze in the provision of mobile roaming services at retail level, the proposal also provides for safeguard price limits at the retail level for the same categories of roaming call, set at 130% of the applicable wholesale limit.
In accordance with the ‘European Home Market Approach’ and in order to ensure that charges payable by roaming customers for receiving calls while roaming abroad in the Community more closely reflect the underlying costs incurred by their home mobile provider in providing this service, the proposal also provides that those charges should not exceed a maximum price limit.
The price limits provided with regard to the retail charges for the making of regulated roaming calls will take effect as a matter of law six months after the entry into force of the proposed measure.
The proposal promotes transparency for retail charges by introducing an obligation on mobile providers to give personalised information on retail roaming charges to their roaming customers on request and free of charge. Each customer may choose whether to receive the information by means of an SMS (Short Message Service) or orally over their mobile telephone. In addition, mobile providers are obliged to give information on roaming charges when subscriptions are taken out, on a periodic basis and when there are substantial changes to roaming charges.
The proposal also gives national regulatory authorities the power and responsibility to enforce compliance, in line with their existing roles under the Community regulatory framework for electronic communications. It also gives them the task of monitoring developments in retail and wholesale prices for the provision of voice and data communications services, including SMS (Short Message Service) and MMS (Multimedia Message Service), to mobile customers when roaming in the Community.
Finally, the proposal amends the provisions of the existing regulatory framework, notably the Framework Directive (2002/21/EC), to recognise the specific status of the measures contained in the proposal within that framework and to ensure that the general provisions of the framework continue to apply to roaming services regulated by the proposal (subject to its specific requirements).
- Legal basis
Article 95 EC
- Subsidiarity principle
The subsidiarity principle applies insofar as the proposal does not fall under the exclusive competence of the Community.
In view of the specific cross-border nature of the roaming services covered by the proposed action, by virtue of which the operators providing wholesale roaming services are located in Member States other than that of the customer's home operator, and of the fact that the proposed action requires amendment of the existing Community regulatory framework, action by Member States alone would not be sufficient or capable of achieving the objectives of the proposal.
Action by Member State alone to address the problem covered by this proposal could risk raising issues of conformity with the existing Community regulatory framework (if left unamended) and/or lead to divergent results, thereby jeopardising the achievement of the internal market.
Since the provision of mobile roaming services within the Community by its very nature affects all Member States and touches on the interests of parties in different Member States simultaneously, a harmonised approach at Community level is essential to guarantee consistency of application and ensure that the interests of consumers and undertakings in all Member States are safeguarded.
Since the proposed action requires the amendment of the existing Community regulatory framework for electronic communications and the establishment of common safeguards for mobile users and operators on a non-discriminatory basis across the Community, the objectives of this proposal cannot be achieved by the Member States in a secure, harmonised and timely manner and can therefore be better achieved by the Community.
The proposal therefore complies with the subsidiarity principle.
- Proportionality principle
The regulatory action opted for in this proposal involves the least amount of interference possible in the commercial behaviour of the undertakings affected. The setting of safeguard maximum price limits at wholesale and retail levels ensures the minimum distortion of competitive conditions consistent with the objectives, since it preserves the freedom of operators to compete and differentiate their offerings within the safeguard limits provided. Of all the regulatory options considered, it also presents the least risk of creating distortion in related but separate markets for mobile services, whether at retail or wholesale level. The proposed action also leaves the task of monitoring and enforcing compliance to the regulatory authorities responsible for electronic communications in each Member State, since they are closest to the markets and operators concerned.
Due to the simplicity of the mechanism to be established by the proposal and the fact that it will apply directly within the Community by virtue of its status as a Regulation, the administrative and financial burden on the Community, national governments and authorities will be minimised. There will be no need for transposition or extensive implementation of its requirements within national law and the process of monitoring compliance will fall within the normal activities of national regulatory authorities. Indeed the proposal will lighten the administrative burden on national regulators in as much as it will remove the need for those authorities periodically to analyse and review the national wholesale market for international roaming on public mobile networks within their territory.
- Choice of instruments
Proposed instrument: regulation.
The urgency and persistence of the problem identified requires a simple, effective and timely solution for the European consumer, applied in a harmonised manner across the Community and without the need for transposition or extensive implementation at national level. Such a national implementation process would be likely to significantly delay the effect of the measure in some Member States, with the result of distorting the competitive conditions for mobile operators in different Member States. A Regulation is therefore the only instrument that will achieve the desired objective.
The proposal has no implication for the Community budget.
- Simplification
The proposal will create legal certainty for mobile users and market players alike, by replacing the existing mechanisms under the regulatory framework, which are of uncertain application to international roaming services for voice telephony, with a simple mechanism that is transparent and predictable for all concerned.
The proposal will remove the requirement for national regulatory authorities to carry out extensive and complex data gathering for the purposes of analysing the wholesale national market for international roaming on public mobile networks and obviates the need for national governments and authorities to expend resources in seeking alternative solutions and strategies at national level.
Since it provides for a simple and transparent price limit for regulated roaming calls, the proposed action will not impose significant administrative burdens on undertakings or other interested parties. Indeed, by removing the need for national authorities to carry out analyses of the wholesale market for international roaming, it will also lighten the burden of the periodic data collection and consultation procedures required by the market review process. The data required for the application of the proposal are of a kind already produced by operators and will therefore not entail an increased burden.
- Review/revision/sunset clause
The proposal provides for a review of the Regulation after two years. This means that if at that time market developments show that the Regulation is no longer required, the Commission will consider proposing its repeal, in line with the principles of better regulation.
- European Economic Area
The proposed act concerns an EEA matter and should therefore extend to the European Economic Area.
- Detailed explanation of the proposal
Article 1 sets out the aim and scope of the Regulation: introduction of the European Home Market Approach for users of public mobile telephone networks for international roaming voice services when travelling within the Community. The European Home Market Approach aims to achieve a high level of protection for these users by setting a maximum limit on the wholesale and retail prices that may be levied by mobile operators for international roaming services provided within the Community.
Article 2 sets out the definitions for the Regulation. ‘Home provider’, ‘home network’, ‘international roaming’, ‘regulated roaming call’, ‘roaming customer’ and ‘visited network’ are the key new definitions.
Article 3 sets the maximum limits for the prices levied by mobile network operators for the provision of regulated roaming calls at wholesale level. The maximum wholesale charge applicable to regulated roaming calls made to the roaming customer's home country or a third country within the Community is three times the average mobile termination rate while the maximum wholesale charge for the provision of regulated roaming calls to a destination within the visited country is twice the average mobile termination rate.
Article 4 sets the maximum limits on the prices that can be charged at retail level by the home mobile provider for a regulated roaming call. This is 130% of the applicable maximum wholesale charge for that call (excluding VAT).
Article 5 provides that the retail price limits in Articles 4 will take effect after six months.
Article 6 sets the maximum limits on the retail price that the home mobile provider can charge its roaming customer for the receipt of calls while roaming within the Community. This is 130% of the average mobile termination rate published pursuant to Article 10 (excluding VAT).
Article 7 provides for improved transparency for retail roaming charges, by obliging the home provider to give its roaming customers information on these charges on request and free of charge, either by means of a Short Message Service (SMS) or orally. In addition, improved transparency is obtained by asking the home provider to furnish information on roaming charges when subscriptions are taken out, on a periodic basis and in case of substantial changes.
Article 8 sets out the powers and obligations of national regulatory authorities to supervise and enforce compliance with the Regulation within their territory.
Article 9 requires Member States to lay down rules on the penalties which should apply to breaches of the Regulation.
Article 10 sets out the rules governing the determination and publication of the average mobile termination rate used for calculating the maximum price limits in Articles 3 and 6.
Article 11 introduces the necessary amendment to the Framework Directive in order to ensure the coherent application of the directives making up the regulatory framework and the Regulation itself.
Article 12 sets the time-limit for review of the Regulation.
Article 13 provides that the Commission shall be assisted by the Communications Committee set up under the Framework Directive.
Article 14 requires Member States to notify to the Commission the identity of their national regulatory authorities charged with carrying out tasks under the Regulation.
Article 15 provides for measures needed to implement the Regulation to be adopted pursuant to the Committee procedure referred to in Article 13.
Article 16 provides that the Regulation will enter into force on the day following the date of its publication in the Official Journal of the European Union .