Brussels looks to soften Kroes’ hardline on EU roaming – report

Brussels looks to soften Kroes’ hardline approach on EU roaming – report

22 JUL 2013

European Commission (EC) officials, according to the Financial Times (FT), are thinking about amending EU roaming draft proposals put forward by Neelie Kroes – the EU digital commissioner – as operators raise alarm that a dramatic lowering of wholesale rates could heat up competition and hinder network investment.

Kroes’ draft regulations – which the FT has seen – propose to reduce wholesale caps by about 40 per cent for voice calls (to about €0.03 per minute), and 70 per cent for data (to €0.015 per megabyte).

According to industry estimates, however, the difference between the proposed wholesale tariff and retail rates could open up an enormous arbitrage opportunity – up to £7 billion a year, according to one telecoms executive – for opportunistic wholesalers.

“An operator based in any member state, however small, could access the entire EU at these rates, having committed virtually no capital of its own,” said Morgan Stanley analyst Nick Delfas, quoted by the FT.

He described the roaming proposal put forward by the EU digital chief as a “clear arbitrage risk” for operators, which could adversely affect network investment.

Analysts at Bernstein Research reckon Kroes’ proposals would allow small rivals to undercut network operators by between zero and 65 per cent, depending on prices in each country. The biggest potential impact, they say, would be in some of Europe’s biggest markets.

There is no suggestion, however, Brussels is looking to dilute Kroes’ proposals on eventually erasing roaming rates for consumers. A spokesperson for the EU digital chief nonetheless told the FT that “we will review possible wholesale price cap reductions in light of any credible evidence presented about possible arbitrage”.

Kroes does not have a strong track record of listening sympathetically to operators’ complaints. Only last week she hit back at operators critical of her plans to scrap roaming charges, with the EU digital commissioner claiming there is no truth in their argument that network investment will suffer as a result of her proposed cuts.

Chief executives of some of Europe’s biggest telecoms groups are due to meet Neelie Kroes today (22 July) to discuss the implication of her roaming proposals and her desire for a single EU telecoms market.

Author

Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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