Mobile telephony: the roaming revolution

According to the European Commission, the basic rate charged by French operators is €4 per minute, and as much as €2.40 for receiving a call. Under pressure from consumer associations and their lobby, via Beuc (Bureau Européen des Unions de Consommateurs), the EU's industry and information society committees have been examining the charges for calls made and received abroad, also known as roaming.

After nearly two years of examination, interviews and study, the highly media-intensive Information Society Commissioner, Viviane Reding, has come to three conclusions. Tariffs are not transparent, they are "dissuasive" and differ depending on the country where the subscription is taken out. "For years, roaming has been charged at high rates for no apparent reason. We therefore want to break down one of the last bulwarks of the European internal market. And José Manuel Barroso, President of the Commission, added: "A company located in the south of France calling Italy is obliged to pay charges that an American does not pay between New York and California."

A draft law was adopted by the members of the Commission and submitted to Parliament on 7 June. It regulates roaming charges by imposing ceilings. "Operators were keeping rates abnormally high by artificially inflating the wholesale prices charged by one operator to another to carry a call", explains Joël Dufour, director of UFC-Que choisir, the French consumer association leading the way on this issue.

A reduction from 30 to 70 %

The first decision was to cap wholesale rates at 30 cents per minute. And, unusually, the margin applied to their resale is also capped. "Instead of rates three to seven times higher than those for a domestic call, the retail price is limited to a maximum of 49 euro cents per minute, excluding tax, for an outgoing call, and 24 for an incoming call", continues Joël Dufour. In other words, a reduction from 30 to 70 %, which will become law from August 2007. These ceilings will be further lowered to 43 and 19 euro cents respectively in 2009. We're not shying away from this," says Joël Dufour, "but it's still only a half measure. We were asking for the extra cost to be just a few centimes compared with a national call, in other words, closer to the reality of costs." The rate change will be applied automatically by all operators after the summer. Subscribers who have taken out package deals will have to make an express request to their provider to benefit from the new conditions.

Lobby against lobby

It has to be said that the battle was fierce, albeit hushed, as the rules of lobbying dictate. There was even some name-calling. Didier Lombard, chairman of the France Télécom group, went so far as to compare the Commission's approach to Communist-style planning. The operators fought the measure with all their might through the GSM Association, the mobile lobby led by the two heavyweights Orange and Vodaphone. "We take note of Brussels' decision, but why not regulate the price of bread or the price of a hotel room?" asks Christophe Naulleau, vice-president in charge of roaming at Orange. "It's true that roaming represents significant margins, but they offset incentives that are specific to France, such as free voicemail or one-euro handsets. This is consumerist demagoguery. Especially as operators have taken the initiative and are offering specific packages. "Consumer associations argue that lower prices will increase the volume of calls, but when we lowered our tariffs by 30 % in 2006, we didn't notice any increase in traffic. Demand is not price elastic", says Christophe Naulleau.

However, the two commissions in charge of the dossier share the same analysis of this market. This is a rare convergence of views, as industry and consumers have naturally antagonistic interests. The subject is particularly sensitive in France, where it represents between 5 and 8 % of operators' turnover. "France is Europe's leading tourist destination. Logically, there is more roaming here than elsewhere in Europe," explains Joël Dufour. "This is an unbalanced transfer of value from the south to the north of Europe, destroying the value of France, Spain or Italy", says Christophe Naulleau indignantly. In fact, the measure will benefit tourists who leave their own country, with Northern Europe in the lead.

The fact remains that the measure has been calibrated above all for individual consumers in a context of Euroscepticism. It will have less of an impact on companies that are strong against operators and negotiate their rates by the thousands. Above all, it applies only to voice calls.

Data rates unchanged

All data exchanges, including SMS, remain outside the scope of the regulations. This is a godsend for operators, whose e-mail, intranet and Internet traffic continues to grow with the introduction of mobile broadband services, especially 3G. And a lost opportunity for professionals on the move. One thing is certain: rates outside Europe are not about to fall," adds Christophe Naulleau. But we are continuing our programme of opening up partnerships, in Asia in particular."

Consumer associations have taken up a new battle horse: mobile number portability. Data tariffs will definitely have to wait for the market to do its work, if it is allowed to do so. In the meantime, UFC-Que Choisir estimates that MEPs' phone bills should fall by more than €900,000. Charity well ordered also serves the legislator.