STUDY Policy Department Economic and Scientific Policy REVIEW OF THE ROAMING REGULATION IP/A/IMCO/FWC/2006-186/C1/SC3 IP/A/IMCO/ST/2008-17 PE 408.583 JANUARY 2004 This study was requested by the European Parliament's committee on Internal Market and Consumer Protection (IMCO) Only published in English. Authors: Mr Dermot Glynn Mr Gian Carlo Scarsi Mr Adam Paul Levine Europe Economics Chancery House 53-64 Chancery Lane London WC2A 1QU Tel: (+44) (0) 20 7831 4717 Fax: (+44) (0) 20 7831 4515 www.europe-economics.com Administrators: Mr Balazs Mellar Ms Karyn Hyldelund Ms Maya Gadzheva Policy Department Economy and Science DG Internal Policies European Parliament Rue Wiertz 60 B-1047 Brussels Tel: +32 (0)2 283 22 02 Fax: +32 (0)2 284 69 29 E-mail: [email protected] Manuscript completed in December 2008. The opinions expressed in this document do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised provided the source is acknowledged and the publisher is given prior notice and receives a copy. Rue Wiertz – B-1047 Bruxelles - 32/2.284.43.74 Fax: 32/2.284.68.05 Palais de l‘Europe – F-67000 Strasbourg - 33/3.88.17.25.56 Fax: 33/3.88.36.92.14 E-mail: [email protected] TABLE OF CONTENTS EXECUTIVE SUMMARY................................................................................................................i 1. INTRODUCTION ..........................................................................................................................1 Terms of reference ...............................................................................................................................1 2. OVERVIEW OF EU MOBILE TELEPHONY MARKET .....................................................2 The EU Mobile Phone Industry.........................................................................................................2 Roaming Services.................................................................................................................................3 Roaming Market Separability...........................................................................................................5 The effects of the Roaming Regulation 2007 ...................................................................................6 3. PROPOSED POLICY OPTIONS................................................................................................9 4. EXTENSION OF THE REGULATION’S DURATION........................................................17 What effects could be foreseen if the Regulation is not extended beyond 30 June 2010?.......17 Should the duration of the Regulation be extended? .................................................................. 20 To what level should the price caps for voice calls ideally decrease or increase in case of an extension of the Regulation beyond 2010?............................................................................... 23 5. EXTENSION OF THE REGULATION’S SCOPE.................................................................29 Should the scope of the Regulation be extended to cover SMS, MMS and other data roaming? .............................................................................................................................................29 Should the Regulation apply at the wholesale and/or the retail level?...................................... 33 What should be the basic characteristics of such Regulation? .................................................. 34 Is it feasible to introduce at this stage an exchange for trading wholesale traffic capacity between operators?........................................................................................................................... 34 6. CRITICAL INFORMATION ASSESSMENT.........................................................................36 Evaluation of background information..........................................................................................36 Stakeholder positions.........................................................................................................................37 Review of Academic Papers Considered ........................................................................................40 Case Studies from Other Countries ...............................................................................................42 7. CONCLUSIONS AND RECOMMENDATIONS .................................................................. 43 APPENDIX 1: OVERVIEW OF THE MOBILE TELEPHONY MARKET ........................ 47 Market Overview: the Mobile Phone Industry............................................................................ 47 Commercial Links between Operators ......................................................................................... 47 Price Trends: Voice ........................................................................................................................... 49 Price trends........................................................................................................................................ 51 Number of subscribers..................................................................................................................... 51 Volumes .............................................................................................................................................. 52 Revenues............................................................................................................................................. 53 Market shares.................................................................................................................................... 55 IP/A/IMCO/ST/2008-17 PE 408.583 Investment.......................................................................................................................................... 56 Mobile Roaming................................................................................................................................ 58 Elasticities .......................................................................................................................................... 65 Legal context...................................................................................................................................... 76 Summary of the Legal Situation..................................................................................................... 78 APPENDIX 2: STAKEHOLDER VIEWS................................................................................... 83 DG Infosoc ......................................................................................................................................... 83 GSM Association (with AT Kearney)............................................................................................. 85 Ofcom and ERG ............................................................................................................................... 88 Bureau Européen des Unions de Consommateurs (BEUC)....................................................... 90 Operator A......................................................................................................................................... 92 Operator B......................................................................................................................................... 93 Operator C......................................................................................................................................... 94 Operator D........................................................................................................................................ 96 Operator E........................................................................................................................................ 97 NITA – The Danish Telecoms Regulator...................................................................................... 98 Prof T. Valletti................................................................................................................................... 98 APPENDIX 3: CASE STUDIES.................................................................................................. 101 USA................................................................................................................................................... 101 Hong Kong....................................................................................................................................... 104 APPENDIX 4: EXPERIENCE FROM INDUSTRIES WITH SIMILAR CHARACTERISTICS ..................................................................................................... 120 Fixed Wholesale Access (Telecommunications).......................................................................... 120 Transparency in Industry.............................................................................................................. 122 APPENDIX 5: THE TECHNICAL AND CONTRACTUAL BASIS OF ROAMING ....... 127 What is roaming in technical terms? ........................................................................................... 127 What makes roaming possible?.................................................................................................... 128 How does roaming work?.............................................................................................................