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Neelie Kroes

European Commission Vice-President for the Digital Agenda

Towards a Single Market for mobile roaming

GSMA Europe's Mobile Day – Annual Reception

Brussels, 8 December 2010

Ladies and Gentlemen,

Mobile is an essential enabler for achieving much of the Digital Agenda. But the Digital Agenda is only a means to an end – the real value of your innovation and services is that you connect people – especially in remote areas – and foster a more competitive Europe. I am especially pleased that we agree on the value of the Radio Spectrum Policy Programme to the mobile sector. With that proposal our underlying goal is to help the sector successfully make the transition from business models focused on voice services to the new demands for data services. Such transformations are a challenge and a responsibility for us all – they are key to tapping the benefits of the EU's internal market. Perhaps then it is not surprising that I want to look more closely at another internal market issue – roaming solutions – in my speech today.

Allowing better cross-border services will help our fellow citizens to see that there is a point to European co-ordination. They see the value of Commission intervention today, for example in our efforts to address the problem of roaming prices. But this does not mean they share the understanding that the Single Market is the EU's crown jewel. So to build this Single Market and make its value clear, we all need to make compromises regarding how this market may operate.

Roaming charges stand out as a prime example of where open minds are needed. I am clearly looking for pragmatic solutions to give consumers benefits and allow you to innovate; I want you to know that. This is much like my approach to net neutrality and my overall approach to regulation in this field.

Ordinary citizens and businesses cannot understand why operators charge at today’s high levels. Even operators with a footprint across many EU countries still impose significant extra charges for roaming in the countries where they have a presence. This happens even though the customers actually remain on the intra-group network! It is even more difficult for consumers to understand data pricing. Less than 5 cents for downloading a MB of data at home can turn into €2.60 per MB when they cross an invisible, and mostly artificial, border! Don’t tell me that is all funding new investment in better networks; I can’t defend that to citizens. I can't defend it for the simple reason that it isn’t true.

That is not to say that we have not had some success. I think you would agree that the current price arrangements give you decent margins, but a much fairer experience for consumers who are making calls and sending texts. The cut-off limit and transparency measures have helped to ensure that consumers are avoiding bill shocks.

But it frustrates me to see that real price competition is not emerging in roaming services markets. Operators are generally setting roaming prices close to, or exactly at, the maximum allowable levels. I understand that the lack of incentives to compete may be due, for example, to customers choosing their mobile operator according to domestic prices. But this is not a reason for me or, more importantly, for European citizens to accept this situation.

You know that I am not a fan of regulation for the sake of it. I always favour remedies that allow or even encourage markets to function properly. If operators were actually competing with each other seriously then we could consider ending regulatory intervention. But I am afraid that that is not what we are seeing right now.

I do not see €0.05 SMS-prices, for example. I see only a cluster around the regulated cap of €0.11. And even though the wholesale price for data fell in 2010, significantly below the maximum, we have not seen equivalent reductions in the retail price. Despite recent developments, I still see an average retail price that makes consumers’ eyes water. Really.

Frankly this is a nightmare for business people, for tourists, for young people in particular. This holds back the roaming market. Tens of millions are simply not confident in using their mobiles, and even less their 3G smart-phones, across the Single Market. That is an embarrassing situation for all of us in this room. We have a duty to address it.

This leads me to our consultation on roaming. When I said I was keeping an open mind for a bit longer, I meant it. That is why the Commission has officially launched a consultation today, and you will see that we still consider all options.

But you need to know that we are getting strong feedback that more needs to be done to get fair prices in the market. And we are very determined to get such fair prices.

Indeed, as you know, one of the key performance targets set in the Digital Agenda is that the difference between roaming prices and national prices should approach zero by 2015.

Some have questioned whether we can reconcile achieving that ambitious target with market-oriented solutions. I would not be too quick to reach such a conclusion – and all of you here in this room, as the main players in the mobile industry, can help me to prove it wrong.

Let us first have a clear understanding of what the Digital Agenda target means, and let us also distinguish the target from the means of achieving it.

To my mind, the target will be achieved if competition in mobile markets gives consumers the rapid and easy choice of a roaming service at, or close to, a relevant competitive domestic price level. Because I focus on effective choice, the target does not impose in advance any specific mechanism.

On the contrary, if we conclude that further regulation is indeed required to achieve the target, there are still many design choices to be made. The goal would be to identify the most effective and proportionate means of reaching the target. The options range from purely structural approaches to pure price regulation, with various combinations of the two also possible. In particular, the target does not, in itself, impose a direct adaptation of the current regime, whereby all operators would be obliged to offer at all moments a default Eurotariff at close to domestic prices.

For example, competition may be spurred by allowing customers to easily purchase roaming services independently of other mobile services. The domestic bundle would no longer include roaming services by default in such an option. The level of retail competition could be further increased by mandating wholesale roaming access at cost-oriented prices to virtual network operators (MVNOs). This might allow the emergence of new pan-European roaming operators who compete by accepting smaller margins than traditional players.

But we should also consider other possibilities which, for instance, involve establishing direct links between retail roaming prices and competitive domestic prices.

We are also interested in hearing stakeholder views on the possibility of establishing a trading market for roaming services at wholesale level. Some argue that such an approach could lead to much lower wholesale prices, and feed into lower retail prices. I am eager to find out whether you think that is workable.

And of course, I am interested if you think it is best to build on the current model of regulation which has cut prices by up to 75% in just a few years.

In the end, it may be that no single approach will do the job on its own. And we should not only look at the 2015 target date. We should also explore whether in the longer term advances in technology may render the current problem obsolete.

We know WiFi is eating a bit into data roaming markets because it is so obviously preferable to current roaming prices. Will it ever be more than a band-aid solution to consumers’ problems? Could the Commission launch a wide-ranging strategy to foster WiFi development? What effect will the spread of smart phones and 4G mobile broadband have on the situation? Will the move to all-IP data networks radically alter the underlying cost structure for roaming services?

These are all open questions and they remind us of how important your contribution is to this consultation. Together we can do the job. You can count on me but the quid pro quo is that I need to be able to count on you.

In conclusion, I want to establish a strong partnership with you to tackle all the issues which are important for the industry. I want to work with you not only to solve the roaming problem, but also to help you launch new online services based on mobile devices, exploring more efficient pricing systems and developing new business models at all levels of the internet value chain.

But it is also clear that I will not take any position which will put consumer welfare or the building of the digital Single Market at risk.

So let’s get serious and work together to create a better set of services for everyone in Europe.

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