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Roaming regulation The Consumers Perspective Dominique Forest Senior Economic Adviser EPP – ED Hearing 08/03/2007.

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Presentation on theme: "Roaming regulation The Consumers Perspective Dominique Forest Senior Economic Adviser EPP – ED Hearing 08/03/2007."— Presentation transcript:

1 Roaming regulation The Consumers Perspective Dominique Forest Senior Economic Adviser EPP – ED Hearing 08/03/2007

2 2 Consumers expectations What consumers want: –A simple regulation delivering clear, tangible benefits –Fairer prices, more transparency –Making the Single Market concrete (Citizens Agenda) What consumers do not want: –A regulation so complicated that it will not be implemented –A regulation that leaves extortionate tariffs untouched –A regulation consumers have difficulty benefiting from –Untransparent tariffs, offers difficult to compare –Adverse impact on other segments of the market

3 3 Why a retail regulation? Altex study: independent analysis of the effect of the regulation looking specifically at the claims of operators and focusing on overall welfare Lack of detailed information on international voice and data telecom services Consequence: opponents of price control can exaggerate the impact and/or argue for higher ceilings Contrary to industry claims, prices have not reduced recently Operators claim that price reductions will have limited effect on demand is not credible. Increased use of mobile phones while on holiday: North-South pattern in roaming Consumers switching off mobile phones

4 4 Eurostat: % of tourists going to main destination

5 5 Eurobarometer: using mobile phone more with lower prices

6 6 A retail regulation to the benefit of society The regulation will have a clear positive effect on welfare. (need to take into account the correct effect of price decreases on demand) The effect on overall profitability is low. The effect on investment is limited as well. Investment would be reduced at most by 1.5% yearly. The industry will remain profitable.

7 7 The risk of rebalancing Operators have threatened policy makers with the argument that the loss of roaming revenue would lead to an increase of the domestic prices The report looks at the claim. The MTR covers for the cost to have a national network. Roaming would not be free. The income of roaming will be more than enough to recover the costs of providing the roaming service.

8 8 Demand 1: Low retail caps BEUC calls for low retail prices in line with other international telecom services. To make international roamed calls: 33 cents on retail and 25 on wholesale level To make local roamed calls: 25 cents on retail and 18 cents on wholesale level To receive calls while roaming: 16 cents on retail and 12 cents on wholesale level

9 9 Demand 2: A simple regulation, to avoid that consumers are overcharged Averages complicate things. NRAs will have to calculate them, leading to differences within the Union, delay, legal uncertainty and most importantly, confusion for consumers. The discussion should be focused on the level of the caps The analysis of the operators offers shows that the packages and bundles are only beneficial to specific types of users. Consumers have been overcharged for many years. The regulation should therefore include every consumer automatically (opt out).

10 10 Key points Prices have not come down recently Volumes will go up when prices decrease Low Price caps: still the best way forward Averages: difficult to implement (complicates the debate, introduces legal uncertainty) Opt out is necessary - regulation has to benefit consumers Consumers need to be informed and operators need to be stimulated to publicise better offers. This will happen with a mechanism of opt out. Push system of information

11 The European Consumers Organisation Bureau Européen des Unions de Consommateurs Avenue de Tervueren, Bruxelles Tel: Fax:

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