Friday, July 8, 2011

EU Proposal attacks outrageous data roaming profit margins

Paul Rasmussen

Neelie Kroes, the European Union digital agenda commissioner, is preparing to do battle with European operators over their tariff structures by opening the market to other providers. New proposals from the EU look set to enable MVNOs to be able to offer roaming services across Europe and provide consumers with greater choice.

"This proposal tackles the root cause of the problem--the lack of competition on roaming markets--by giving customers more choice and by giving alternative operators easier access to the roaming market," Kroes said in a statement. "It would also immediately bring down prices for data roaming, where operators currently enjoy outrageous profit margins."

The EU proposal also covers data roaming, and includes, for the first time, a retail price cap on data usage by smartphones, tablets and other devices when customers are outside their home location. The cap calls for a limit of €0.50 per MB to be implemented by mid-2014 and to remain in place for two years.
Carrefour Mobile, the MVNO owned by the giant supermarket chain Carrefour, welcomed the Commission's proposals on MVNOs. "It's a very positive new development," Carrefour Mobile Italy CEO Antonio Cortina told Reuters.
Tesco Mobile, an MVNO subsidiary of Britain's largest retailer, is known to be anxious to expand its telecoms business across Europe, and has identified the sector as a key growth area.

Commenting on the proposals, Katja Ruud, a Sweden-based analyst with Gartner, told Bloomberg that European operator roaming revenue on average accounts for about 10 per cent of sales. Ruud said roaming revenue "will continue to decline, but there will also be an uptick in users who haven't enabled roaming before."
However, Vodafone seemed relaxed, and said the EU proposals would clarify the roaming framework for operators. "The Commission's proposal reflects a welcome recognition that permanent uncertainty and constant interventions are not conducive to long-term investment," Richard Feasey, Vodafone's public policy director, told Reuters.

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