Kroes drops plan to slash wholesale roaming rates

Aug 30, 2013

According to Reuters, which claims to have seen a new draft document of her plans, there's now a new list of proposals due to be announced on September 10th, with wholesale roaming fee caps conspicuous by their absence.

This is a big deal because lower wholesale roaming rates were the key to one of Kraus's big ideas in pursuit of a single telecoms market in Europe - the enabling of independent roaming operators. These players are supposed to compete with the majors on providing European roaming, driving down roaming costs and eventually ridding Europe of its most obvious proof that a proper pan-European telecoms market doesn't exist - the persistence of Europe-wide bill-shock when ordinary citizens get back from their Summer holidays.

To make this possible, wholesale rates had to come down to give the new operators a chance to make a margin while still offering cheaper roaming prices.

So Kraus had previously decided to dive in, boots and all, and just slash the wholesale rate by as much as 90 per cent, presumably under the mistaken impression that since European roaming rates as they stood were indefensible the European operators would come quietly murmuring politely "It's a fair cop".

They didn't of course. They lobbied. And the complaint was that by slashing the wholesale rate so far, so fast the Commission would have opened up what the telecoms industry likes to call an 'arbitrage' opportunity. Of course, the operators accept that roaming charges must come down (they are unsustainable in face of WiFi anyway), what they want is for them to come down gracefully so that large holes don't suddenly appear in their accounts on the way.

So they presumably pointed out to Kroes that slashed roaming wholesale rates meant that any telco with little of its own customer roaming business to lose (say a small player in a small country), could now use roaming at very low wholesale rates as an opportunity to sell cut-price services in the roamed upon country, perhaps undermining the pricing of the players operating there.

To which you might respond with: Yes, and your problem is? That's what should happen in a single telecoms market - it is, after all, one sure way of helping to get roaming (and perhaps all) prices down. After all, if there is such an arbitrage opportunity it might be seen as a sure sign that incumbent retail prices are too high, not that wholesale prices are too low.

And you would have a point. We've already seen a similar tale play out over data pricing (see - Euro-muddle over competition in Europe) where again, competition and telecoms policy seemed to be going in opposite directions.

But on this occasion when it comes to roaming rates, the lobbyists pleas seemed to have worked. Kraus has apparently backtracked and the full extent of that will show up on September 10th.

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