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©Ofcom ERG views on continued development of roaming regulation March 2007
©Ofcom2 Commission aspiration for retail price reduction across Europe of 40-60%. How best to achieve this? ERG considers that… – price regulation is necessary, and in consumers interests but… – …regulation must be measured – allowing flexibility and innovation, and long lasting and sustainable competition Expert ERG analysis suggests that a number of important details need very careful consideration Price controls need to be specified: » to ensure utmost clarity and legal certainty » to promote development of competition and tariff innovation in practice Possible recognition of different national conditions Possible to deal with these concerns while attaining the desired retail price reduction
©Ofcom3 ERG expert analysis ERG role at this stage to provide expert commentary on proposals put forward in Council and EP, not to take formal position nor to propose new solutions ERG expert analysis based on regulatory objectives: reduction in currently high wholesale prices; consumer protection against high retail prices; prevention of unreasonably high retail profits; and protection of flexibility and incentives to innovate and compete very high levels of tariff awareness and transparency amongst consumers. Focus on retail analysis, as differences in approach to wholesale regulation largely around more detailed technical issues
©Ofcom4 Objective: Consumer protection How to ensure adequate consumer protection, whilst maintaining tariff differentiation and innovation? Expert analysis Issue A Standard tariff offered at regulated rates by all providers, with no registration or subscription charges or pre-conditions, can achieve this: –permits considerable flexibility to providers to design other innovative roaming tariffs – stimulating retail competition –regulated prices need to be reasonably attractive – but leave room for better deals (e.g. for frequent roamers) –maximum effect achieved if tariff very well-publicised – no need for any consumer to pay more –helps deal with the concern that everyone must benefit from regulation, not only large businesses –needs carefully-designed rules to prevent MNOs from neutralizing it
©Ofcom5 Objective: Prevention of unreasonably high prices A cap on average retail prices: –ensures real reductions in retail prices across the board –benefits all consumers, not just those paying the highest prices, especially when used in combination with standard tariff –maintains flexibility for tariff innovation – meeting consumer needs and requirements –standard technique applied by NRAs across Europe, tried and tested method of applying regulation –provides clear measure of overall progress –but more work for NRAs to monitor and enforce Issue Expert analysis A standard tariff provides consumer protection, but unlikely to guarantee that prices will reduce sufficiently overall – how might this be achieved?
©Ofcom6 Objective: Flexibility and innovation How to promote a flexible, innovative and competitive retail market, bearing in mind real cost differences across Europe All network operators and retail providers need to be able to recover legitimate costs In consumer interests for providers to offer a range of tariffs – aimed at different customer interests and usage patterns Price caps need to be set with these objectives in mind. Otherwise: –Lack of competition –Lack of tariff innovation –Uniformity of pricing –In some countries, market players may cease to offer roaming services if not profitable Expert analysis Issue
©Ofcom Objective – Very high tariff transparency Consumers deserve to have access to sufficient information to enable them to make an informed choice about their roaming service Consumers should therefore have access to clear and unbiased information about: – the various tariff options available to them; and – the charges under the specific tariff that they have chosen Roaming customers need easy access to tariff information while abroad: – automatic push SMS for headline tariff information – possibility for complimentary pull mechanism designed by operators – provided free of charge, subject to fair use policy Regulation could outline clear requirements to ensure providers make consumers aware of the availability of Euro Tariff, but in addition… …credible commitments from providers to promote awareness would be extremely helpful in building confidence
©Ofcom8 Summary ERG believes regulation to deal with persistently high roaming prices is necessary However effective and efficient regulation is a challenging task ERG thinks that any regulation should: – be quick to achieve substantial price reductions (and be withdrawn quickly, if it is clear that it is no longer needed) – require very high tariff transparency for roaming consumers – be fair and flexible, to promote the development of tariff innovation and long term and sustainable competition from which all European consumers benefit – maximise the incentives for compliance and minimise the enforcement burden ERG hopes its experience of which approaches work well in practice and which work less well add value to the debate
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