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SPEECH/11/99

Neelie Kroes

Vice-President of the European Commission responsible for the Digital Agenda

Delivering solutions on roaming and radio spectrum

2011 Mobile World Congress

Barcelona, 14 February 2011

Ladies and Gentlemen,

It is always a pleasure to be here at the centre of the mobile world. I never fail to be impressed by the energy and ideas.

But the best ideas and action come from real debate - so I want to start one today. I want to be honest with you about the challenges I see in front of the sector and I want to hear your response, whether it is here in person, on Twitter or in later dialogue.

You know that in the Digital Agenda we have set ambitious targets for fast and super-fast broadband coverage and take-up in Europe. The roll-out of new and significantly improved broadband networks is key to achieve these important goals. But I am afraid and worried that the current rate of investment is not sufficient to deliver the first class Internet and Internet-based services that European citizens and business need and deserve. And we should not forget that these networks are the source of much of your future income.

I am afraid that there is not enough investment to drive the real competition that will keep the sector healthy. And Europe is increasingly lagging behind some of our international counterparts.

I am not here to start a blame game, there is a strong role for many actors in addressing these investment problems. But the solution starts with you, and if it isn't found soon this lack of investment will choke you too in the coming years and hurt Europe in general. Some people say that we will be crushed by the Far East on production and beaten by the Far West on content. I am not willing to write Europe off in either of those fields but we have to take measures to respond to these major challenges. And I am sure of one thing – the domain we can influence most directly is our networks, and if we do not get that right, the future for all digital business in Europe will be bleak!

So I urge you not to take the easy route of looking inwards and thinking only about tomorrow. Don't bury your head in the sand like some in the creative industries have done. Remember your long-term opportunities and responsibilities. Remember the power of your services to enable customers and make a better world, whether it be in day-to-day life or as a platform of democracy.

Having made this sincere and passionate call for action, let me now turn more specifically to two subjects which are at the heart of our mobile industry: spectrum policy and intra-EU roaming charges.

Spectrum policy

I think that spectrum management is an area where we have some strong shared views.

Our underlying goal is to help the sector move to the new world of high-value data services. My personal interest is two-fold: to grow mobile broadband to meet the Digital Agenda goal of 'broadband for all', and to help keep Europe's mobile industry in a global leadership position.

With the Commission's proposal for a Radio Spectrum Policy Programme now on the table, the mobile sector must play its role in conveying the importance of this policy to Member States and to the European Parliament. As you know, we are right in the middle of legislative negotiations with the EP and Council. The next weeks will be crucial for ensuring an effective final design for the Radio Spectrum Policy Programme for spectrum users, including your industry.

Just to recap what is at stake for you:

1) By 1 January 2012, the use of all spectrum already harmonised at EU level, which means almost 1 GHz, should be effectively authorised to meet market demand.

2) By 2013, the 800 MHz band resulting from the digital dividend should be made available to cope with the mounting scarcity of spectrum (with limited exceptions).

3) By 2020, wireless applications should help to guarantee access for all to broadband at a minimum speed of 30 Mbps.

4) Authorisation conditions conducive to the roll-out of broadband in a competitive environment should be applied in a coherent manner across Europe.

I will be looking for your support in explaining the benefits of these actions and also in explaining to the European Parliament and Council the benefits of our proposal for a spectrum inventory.

This pan-European inventory would:

  • reveal common trends;

  • show potential socio-economic impacts of policy changes;

  • identify bands where greater efficiency is possible, and

  • help to match future needs to the right frequencies.

It's the essential groundwork for a long-term spectrum policy, and I include global negotiations in that. For example, spectrum for broadband might get to the agenda of the 2016 World Radiocommunications Conference.

So, as you can see, I need your help to get things going in the right direction! We will work together for a long time I hope!

Roaming

Turning now to a more controversial issue, let me say a few words on roaming charges within the EU.

Our Roaming consultation has just closed last Friday and we are obviously still analysing the responses. First, the interest in roaming has not diminished. We have received an excellent response rate, more than 80 from all interested stakeholders. And I think I can share with you "hot off the press" some first indications of the main messages coming from the stakeholders.

Needless to say, there is a wide range of views on every question. But there is a remarkable degree of consensus in some areas. While there are many detailed questions in our consultation, essentially there are two major themes: first, we wanted to know if now, after some years of experience under the Roaming Regulation, the market for roaming services in Europe is becoming truly competitive. Second, if it is not, we wanted to hear the stakeholders' views on what further remedies are needed.

Let's start from the first question. Do people think that the EU roaming market is now competitive? There is a remarkable degree of consensus in our consultation responses on this question, and unfortunately the answer is no. I would love to be able to say to you today that the roaming market is competitive; that data roaming charges approach domestic prices; that bill shocks are a thing of the past; that prices for voice and SMS roaming are not clustered around the maximum levels permitted. Regrettably I cannot.

Most stakeholders believe that competition is not yet sufficiently strong; they advocate further intervention after 2012. This is certainly the view of consumer groups and all of the national regulatory authorities. But I think it is also important to point out that several mobile operators share these concerns when it comes to wholesale charges.

This is disappointing, but not surprising. Our June 2010 interim report revealed these problems already.

How bad is the situation?

Today voice roaming prices within Europe are still more than three times the level of domestic charges. Average charges for roaming offers other than the Euro-tariff are even higher. And for data roaming the position is even grimmer. The consumer often pays less than 5 cents for downloading a MB of data at home, but this may turn into 2.60 Euro per MB when the same consumer crosses an invisible border!

I want to be fair and accept progress where it has been made. Wholesale data roaming charges have fallen significantly. But, consumers aren't seeing that matched in lower retail prices - and that is the true measure of competition.

Of course incentives to compete on roaming prices are not as strong as the pressures on domestic prices. But that is not a justification for the current rip-offs.

So, while you know I would prefer to simply rely on competition to ensure that the market operates, rather than engage in further regulation, the fact is that the industry has not to date given me much hope that this would spontaneously happen.

This then brings us to the second big theme of our consultation. How to proceed from July 2012?

Our public consultation paper proposed a number of options to achieve the Digital Agenda goal of getting the difference between roaming and national prices to approach zero by 2015. These options ranged from pure price capping options to structural approaches aimed at tackling the roaming problem at its core.

Initial indications from our consultation suggest strong support for continuing price regulation.

A significant number of respondents seem to accept that, in such a scenario, some form of retail price regulation would also need to be introduced for data roaming. Proposals for price regulation vary from the current model of price capping to other approaches involving direct links between roaming tariffs and actual domestic prices.

Respondents expressed on the contrary some scepticism on the possibility to introduce more fundamental changes, probably also due to the general reluctance to move into uncharted territory.

One idea we put forward in our consultation was to tackle the underlying structural problem directly. For example, competition may be stimulated by allowing customers to easily purchase roaming services independently of other mobile services. That is, the domestic bundle would no longer include roaming services by default.

Another idea was to further increase the level of retail competition by mandating wholesale roaming access at cost-oriented prices also to virtual network operators (MVNOs). This could allow the emergence of new pan-European roaming operators whose business model is based on accepting smaller margins than traditional players.

Finally as you will know we were also interested in hearing stakeholder views on the possibility of establishing a trading market for roaming services at wholesale level.

Many respondents agreed with the goal of tackling the roaming problem at its core. However, many expressed concerns about the practical implementation, cost and time needed for solutions such as unbundling.

Most respondents also doubted the effectiveness of wholesale options such as exchange trading. They thought that, as with wholesale data price caps, the impact on retail roaming prices would not be sufficiently strong.

In the end, as I have said before, it may be that no single approach will do the job on its own. And we cannot exclude that different approaches may need to be implemented for the first years following the expiry of the current Regulation while laying the groundwork for more sustainable long term solutions. Because after all, while I doubt that time may in itself solve our problems, it seems difficult to think that we can maintain price regulation forever….

These are the difficult decisions that I and the College of Commissioners face in the coming weeks and months. And I am committed to take fully into account your views and to keep a close dialogue with the industry.

My message to you is many thanks for your involvement in the consultation and the ongoing debate. And my message to consumers and regulators is that I will not take any position that puts consumer welfare or the building of the digital Single Market at risk.


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