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Brussels, 26 July 2004

Commission challenges UK international roaming rates

The Commission has sent two separate “statements of objections” to two UK mobile network operators (MNOs), O2 and Vodafone. The objections relate to the rates that both O2 and Vodafone charged other MNOs for international roaming at wholesale level. Other MNOs needed to roam on O2’s and Vodafone’s UK networks in order to enable their own subscribers to use their mobile phones while in the UK. This situation is known as international roaming. The high roaming fees were detrimental to consumers travelling to the UK.

The number of mobile subscribers in the EU is enormous and 81% of EU citizens now have a mobile telephone. In a number of Member States the mobile subscription rate is close to 90%. Also, Europeans are travelling more and more each year and mobile subscribers are using their phones abroad as frequently as they do in their own home country. But the high level of the international roaming prices has made this very expensive. This high level also contrasts sharply with the much lower tariffs applied for domestic calls. I hope that our action today makes a contribution to rectifying this state of affairs”, Competition Commissioner Mario Monti commented.

The Commission’s investigation has revealed that Vodafone, since 1997 through at least until the end of September 2003, exploited its dominant position in the UK market for the provision of international roaming services at wholesale level on its own network. The abuse consisted in charging unfair and excessive prices (otherwise known as IOTs or “Inter-operator tariffs”) to European MNOs.

The Commission has come to the same conclusions as regards the IOTs charged by O2 but for the period beginning 1998 and at least up until the end of September 2003.

On the basis of the evidence gathered during inspections carried out in July 2001, the Commission concluded that each individual UK network constituted, at least with regard to the period from 1997/1998 until the end of September 2003, a separate market. Both Vodafone and O2 enjoyed a dominant position with respect to their networks in the relevant time period. As far as the level of IOTs is concerned, the investigation revealed that the roaming services in question yielded profits several times higher than other comparable services supplied by MNOs. In particular, the pricing of roaming calls exceeded by far the prices that Vodafone and O2 had applied during the above mentioned period for similar calls made on their respective networks by UK subscribers of “Independent Service Providers” (ISPs) to whom both O2 and Vodafone had supplied wholesale airtime access.

The provision of wholesale airtime access to UK subscribers of ISPs bears considerable similarities to the provision of wholesale international roaming services to foreign MNOs, whose subscribers use their mobile phone when roaming in the UK. The Commission therefore questions the enormous price differentials between two fundamentally comparable services.

The statement of objections sets out the Commission’s preliminary position on the infringements of the competition rules. Both Vodafone and O2 will now have the opportunity to respond to the Commission’s preliminary findings in writing and in an oral hearing. But these preliminary findings do not in any way prejudice the outcome of the probe.

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