Competition: Commission challenges international roaming rates for mobile phones in Germany

The European Commission has sent two separate ‘statements of objections’ to the German mobile network operators (MNOs) T-Mobile and Vodafone because the Commission believes the companies’ practices may be contrary to EC Treaty rules on abuse of monopoly power (Article 82). In particular, the Commission challenges the high rates that T-Mobile and Vodafone have charged other MNOs for international roaming services at wholesale level. Foreign MNOs pay Inter-Operator-Tariffs (IOTs) for the use of T-Mobile and Vodafone’s German networks when their own subscribers use their mobile phones when visiting Germany (so-called ‘roaming’). High IOTs hurt consumers because they are passed on in full to the MNO’s subscribers. The Commission sent two similar statements of objections to UK operators Vodafone and O2 in July 2004 (see IP/04/994).

The Commission action aims to ensure that European consumers are not overcharged when they use their mobile phones on their travels around the EU. It is thanks to the Commission’s action to coordinate technical standards for mobile phones that people are able to use their mobile phones in other EU countries. The Commission does not want that advantage to be neutralised by high ‘roaming’ prices, which contrast sharply with the much lower tariffs applied for domestic calls from mobile phones.

The Commission’s investigation suggests that T-Mobile, from 1997 until at least the end of 2003, abused a dominant position in the German market for the provision of international roaming services at wholesale level on its own network. The abuse consisted of charging unfair and excessive prices (IOTs) to European MNOs. The Commission’s inquiries have come to the same conclusions as regards the IOTs charged by Vodafone for the period beginning 2000 and at least until the end of 2003.

On the basis of the evidence gathered during inspections carried out in July 2001, the Commission considered that each individual German network constituted a separate market from 1997 until at least until the end of 2003. In this period both T-Mobile and Vodafone enjoyed a dominant position with regard to their respective networks. The investigation also revealed that roaming services yielded profits several times higher than other comparable services supplied by MNOs. In particular, the prices of roamed calls exceeded by far the prices that T-Mobile and Vodafone charge for the calls made by German subscribers of “Independent Service Providers” (ISPs) on their respective networks.

Both T-Mobile and Vodafone supply wholesale airtime access to Independent Service Providers. The provision of wholesale airtime access to German 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 Germany.

The Commission therefore questions the enormous price differentials between the two fundamentally comparable services.

The statements of objections set out the Commission’s preliminary position on the infringements of the competition rules (Article 82 of EC Treaty). Both T-Mobile and Vodafone 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.