On Monday we wrote a blog post looking at the EU roaming price cap from the mobile networks' standpoint and from the perspective of competition.
European Commission vice president Neelie Kroes' spokesperson Ryan Heath weighed in on the debate, commenting on our post and offering the EU's opinion on the matter and explaining where exactly they stand in regards to competition and a loss of income for the providers. Much of what Heath wrote reflects speeches made by Kroes in the past, but his thoughts succinctly sum up the EU's attitude towards roaming fees.
Heath said that the EU is interested in more than just the consumers, who will see 36 percent reductions in roaming charges in the EU, and maintained it was more about arbitrary charges which simply shouldn't exist:
"Roaming data still costs 45 times as much as domestic data- despite the 90 percent price cuts from EU regulation - I don't know any other business that gets to arbitrarily charge a 4500 percent mark-up for something that doesn't exist (the borders are 99.9 percent artificial), he wrote. "Companies need to charge for real value and they need to shift to data income."
"The only ways to avoid consumer disaster are to create a real single market where roaming doesn't exist as a concept (so the price caps are irrelevant) or have price caps," he continued.
He was willing to accept that there are some costs involved with creating agreements between carriers to service roaming customers, but he would not go as far to say that they account for extra roaming costs. "I have the sense that many companies like the idea of roaming charges because it allows them to either artificially reduce the prices of other services, or avoid tough internal reforms by padding their income," he wrote.
In September, the EU will outline several proposals for a digital single market, including an "EU passport" in which an EU-based carrier would be recognised in all other countries.
"We don't want to demonise the companies, but they can also assist in avoiding the impression of rip-offs by shifting to value-based pricing [such as charging extra for high-speed mobile broadband] and innovating with discounts to encourage people to use roaming services," Heath explained.
He said that having to intervene in this way is not ideal, but appears to be the only option: "We'd all prefer if the market just worked better on its own, but history shows that it doesn't," he said.
It will be fascinating to see how mobile operators respond to what could be seen as a hard reset on their pricing strategies; with potentially innovative new products competing for European consumers' cash.
Written by V3's Michael Passingham
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