Semester: 4th semester

Title: Telecom operators Challenges within Europe Project Period: 18/10/2016 -05/01/2017 Semester Theme: Thesis Supervisor(s): Morten Falch Falch@cmi.aau.dk

Project group no.: 1 Members and signatures: Ali El-Jechy Aeljec14@student.aau.dk Copies: Pages: 81 Finished: 05.January.2017

In2007,EuropeanCommissionpresentedpricecapregulationonthetelecommarket.Itwasjustforthecallroaming.Afterfewyearslater,thenhaveintroducedpricecapsforSMSanddataroaming.AndnowEuropeanCommissionaimingtohaveasingleEuropeantelecommarket,sotheyhavementionedthattheywillimplementRoamLikeAtHomeRLAHconcept,whichwilltakeeffectinJune2017,telecomoperatorswillnotbeableanymoretochargeend-usersfortheirroaming,andsoenduserswillpaysamepricesasdomesticprices.Whiletelecomoperatorsstillhavetopayforeignoperatorsonthewholesalepricelevel.RLAHhavefewimpactsonthebusinessmodelofeachtelecomoperatorwhichishardtopredictasthedifferentnationsmarketsareheterogeneousandoperatorsfacelargediscrepanciesintermsofroamingusageduetodifferenttravelingpatternsbetweentheEuropeancountries.TheaimofthisthesisistoprovideapreviewintheeffectofRLAHfortheendusersandEuropeantelecomoperators.Thedatawillintroducehowroamingregulationshaverevisedanddevelopedfrom2007untilnowindetails.FinallythethesisrepresentssomesuggestionsandstrategiesthatcouldbeimplementedontheEuropeanmarkettotackletheissueofRLAH.ThethesiswillexplainthenegativeandpositivesideeffectsofthesesuggestionsandstrategiesthatwerepresentedbyTheBodyofEuropeanRegulatorsforElectronicCommunicationsBEREC.

Aalborg University Copenhagen A.C. Meyers Vænge 15 2450 København SV Semester Coordinator: Henning Olesen Secretary: Maiken Keller

By signing this document each group member confirms that all have participated equally in the project work and that they collectively are responsible for the content of the project report. Furthermore each group member is liable for that there is no plagiarism in the report.

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TelecomoperatorsChallengeswithinEurope

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1. TableofContents

1. Introduction................................................................................................................4Motivation....................................................................................................................................6Problemformulation................................................................................................................7Delimitation.................................................................................................................................8

2. Methodology...............................................................................................................9Diagram.........................................................................................................................................9Desktopresearch.....................................................................................................................10Primaryresearch.....................................................................................................................10Quantitativeresearch........................................................................................................10Qualitativeresearch(Interview)...................................................................................10

3. Theoreticalframework.........................................................................................113.1 MarketStructure...........................................................................................................113.1.1 PerfectCompetition.............................................................................................113.1.2 Oligopoly..................................................................................................................133.1.3 Monopoly.................................................................................................................143.1.4 RegulatedMonopolyandUnregulatedCompetition................................15

3.2 WaterbedtheorybyValetti&Genakos.................................................................174 Background&Findings..........................................................................................204.1 InternationalDataRoaming......................................................................................204.2 Europeanmarket..........................................................................................................214.2.1 Marketstructure...................................................................................................214.2.2 MVNOs......................................................................................................................234.2.3 Googleconcept.......................................................................................................264.2.4 Spanishmarket......................................................................................................27

4.3 Wholesaleroamingmarket.......................................................................................304.4 HistoryofroaminginEU............................................................................................364.5 PriceCap..........................................................................................................................414.6 Fairusepolicy................................................................................................................444.7 Transparency.................................................................................................................464.8 Economicimpactofcuttingroamingfees.............................................................474.9 ImpactsofRLAH(RoamLikeAtHome).................................................................504.10 Suggestionstoreducetheeconomicandbusinessimpactsofcuttingfees 514.10.1 Fairuselimits......................................................................................................514.10.2 Raisedomesticprices.......................................................................................514.10.3 Decreasewholesaleroamingprices............................................................52

4.11 Strategiesforthefuture...........................................................................................534.11.1 CarrierportabilityandAppleSIM................................................................534.11.2 Cross-borderandtrafficcompetition(forbigoperators)....................564.11.3 IMSI(InternationalMobileSubscriberIdentity)beyondnationalborders(forsmalloperators).........................................................................................574.11.4 RoamLikeLocalinsteadofRLAH.................................................................584.11.5 WIFIoffloading....................................................................................................59

5 Analysis.......................................................................................................................605.1 Europeanmarket......................................................................................................625.2 SpanishMarket.........................................................................................................645.3 Impactfortelecomoperators..............................................................................665.4 Suggestionsandstrategies....................................................................................71

6 DiscussionandConclusion....................................................................................77

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7 References..................................................................................................................788 Appendix.....................................................................................................................80

TableofFiguresFIGURE 1 - METHODOLOGY DIAGRAM ................................................................... 9 FIGURE 2 EQUILIBRIUM CURVE4 ......................................................................... 13 FIGURE 3 EUROPEAN MOBILE REVENUE 2007-202011 ........................................ 22 FIGURE 4 GLOBAL MVNOS13 ............................................................................. 24 FIGURE 5 MARKET SEGMENTATION14 ................................................................. 24 FIGURE 6 INCREASING NUMBER OF MVNOS IN EUROPE13 ................................... 25 FIGURE 7 EVOLUTION OF TOTAL REVENUES OF THE ROAMING SERVICE IN THE

SPANISH MARKET (MILLIONS OF EUROS)17 .................................................... 28 FIGURE 8 DATA SERVICE 17 ................................................................................ 28 FIGURE 9 AVERAGE WHOLESALE DATA PRICE PER MB IN 201419 ......................... 30 FIGURE 10 THE DIFFERENCE RATION OF TRAVELLERS BETWEEN THE EUROPEAN

COUNTRIES1 .............................................................................................. 35 FIGURE 11 THE MAXIMUM TARIFFS (EXCLUDING VAT) FOR CALLS, TEXTS AND DATA22

................................................................................................................ 41 FIGURE 12 WHOLESALE DATA COSTS INCLUDING TRANSIT COSTS (€ CENT/MB)

201624 ..................................................................................................... 43 FIGURE 13 CHATSIM PROVIDER IN ITALY34 ......................................................... 55 FIGURE 14 TELEFÓNICA STOCK VALUE40 ............................................................ 64 FIGURE 15 A SUGGESTION SOLUTION BY JAKOB WILLER (INTERVIEW) ................... 69

Acknowledgement

I would like to dedicate special thanks and my deep appreciation to my supervisor Morten Falch for his full and helpful guidance during this master thesis.

Hint:Allthedatacollectedinthisthesisareupdateduntilthe25thDecember.2016

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Chapter1Inthischapter,anIntroductionforinternationaldataroamingwillbeexplained

firstwiththechallengesthatitisfacing.

Second,aMotivationforchoosinginternationaldataroamingasatopicforthis

thesiswillbementioned.

Third,Researchquestionwillbeintroducedinordertoreformthethesisanddirect

ittoselectarelateddatatoanswerthesequestions.Answersforthesequestions

willbepresentedintheAnalysischapter.

Fourth,Delimitationpartusedtoframethethesisandgiveareaderanoverviewof

whatwillbeextendedfromthisthesis.

1. IntroductionGlobalizationhaschangedourneeds,behaviors,andlifestyleingeneral.IthasalsoincreasedtheintegrationbetweenEuropeancountriesaswellasincreasingtheprosperityoftheEUcitizens.Thishasinturnledtoanincreaseintheintra-Europeantravel.Peoplehavealwayshadaninterestinusingmobileserviceswhilebeingabroad,andsmartphonedevices’revolutionwithallofitsdiversesocialandprofessionalmediahaschangedthebehavioroftheendusersinusingtheirdevicestobealwaysconnectedwithotherswhilebeingabroad.1Whileendusersareabroadandusingtheirdevicesinthevisitedcountry,theirdomesticserviceprovidercannotrelyonitsnetworkfordataconnectivityunlessitisacross-boarderoperatorowningtheirnetworks’infrastructureinmultiplecountries.Inregardstothat,usershavenootherchoicethanusingthenetworkofthevisitedcountry.Also,whenauserusesthevisitednetworkoperator,usingaprocessreferredtoasinternationaldataroaming,thedomesticserviceproviderwillbechargedafeebythevisitedserviceproviderastheyareofferingtheirservicestoconnecttheusersonbehalfofthedomesticserviceprovider.Attheend,thedomesticserviceproviderwilladdthiscostontheretaillevelbychargingtheenduseraretailroamingcharge.EuropeanUnionhasbeenthefirstregiontointerfereintheinternationalroamingservicesmarket.In2007,thefirstregulationwasintroduced.Itincludedcallsandsmsandhassincethatyear,beingrevisedseveraltimesand

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developedtoreachitslatestversionwhichtookplaceinthesummerof2012(EuropeanCommission,Brussels2015).InternationalRoamingistheabilityofcustomerstousetheirphonesoutsidetheirgeographicalcountrycoverage,providedbytheirnationalnetworkoperator.Dataroamingreferstotheuseofmobiledataserviceswhilstabroad.Whiletravelling,itisimportantforthetravellertogetintouchwithfamilyandfriends.ThiskindofcommunicationrequiresInternetaccess,wherethetravellercanlogintoFacebook,shareimportantmomentsonSnapchat,andhaveavideocallonViber.CurrentlyitischeapenoughtogetacallwhiletravelinginEuropeancountries,ortosendanSMS,butthepricesforInternetaccessareveryhigh,whichmakesitdifficultforthetravellertouseInternetwhiletravellingintheEUcountries.Unfortunately,abroaduserswereafraidofreceivinghighbillsservices,whichresultingintravellersbeingdissentingtointernationaldataroamingservicesanymore.Thishasledtoanimpactonthetelecomoperatorsweretheadditionalrevenuehamperedduetothelimitedusageofmobileserviceswhileabroad.FurthermoreasNeelieKroes(Europeancommissionerforthedigitalagenda)indicated:”it’snotjustafightbetweenholidaymakersandtelecomoperators.Millionofbusinessesfaceextracostsbecauseofroaming,roamingmakesnosenseinaEuropeansinglemarket,itseconomicmadness”3.Inotherwords,theEuropeanroamingaffectsnotonlypeoplewhotravelforpleasurebutalsobusinesswhoseemployeetravelaroundtheEuropeancountries,whichtranslatesintosignificantroamingbills.Thenumberofintra-EUtravellershavebeenincreasedinthelastyearsandtheirinterestfocusesnowinusingtheirdomesticmobileservicesinaconvenientandtransparentwaywhilebeingabroad.3AsafactofthatEuropeanCommissioncameupwithanewmethodcalledRLAH(RoamLikeAtHome).ThismethodshalltakeplaceinJune2017,whichmeansthatenduserswillpaythesamepricesfortheircommunicationservicesusagewhilebeingabroadforthesamepriceasiftheywereintheirhomeland.ThismethodwillbringsomeeconomicandbusinesseffectstotheEuropeantelecomoperatorsbecausetheywillnotbeabletochargetheirsubscribersfortheirabroadroamingusageanymore.Inthesametime,thedomestictelecomoperatorsstillhavetopaytheforeigntelecomoperatoronthewholesalelevelforconnectingtheirsubscriberswhilebeingabroad.AlsoanotherchallengeisthedifferencesinthetravelingratiobetweenthecountriessuchasnorthcountriesandsouthcountrieswillmakeitverycomplicatedforEuropeanTelecomOperatorsandEuropeanregulators.

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Europeangoingthroughwhirlpoolinregardstohowtoimplementwholesaledataroamingregulationandhowtoletend-usersbesatisfiedwiththepricesofusingservicesabroad(Data),alsoanotherissuethatwhatEuropeancommissionpromisedcustomersthattheywillnotallowtelecomoperatorsanymoretochargethemforusingtheirdataabroadbuttheydidn’ttakeinacasewhatwillhappentothetelecomoperatorsbusinessinthecountrieswhichtheiroutgoingdataratiomuchmorehigherthantheingoingdata.ThisthesisgivesageneraloverviewoftheevolutionofinternationaldataroamingintheEUfrom2007untilnow.Additionally,abriefdetailsontheeconomicandbusinessimpactsforcustomersandtelecomoperators.Basedonboththetechnologicalpossibilitiesandeconomicimplications,numberofpossiblestrategiesandsolutionsforthefuturewillbepresentedanddiscussesindetailstogatherthemandcomeupfinallywithaconclusion.

MotivationTheauthorchoseinternationaldataroamingtopicbecauseitisahottopicinthe

Europeanmarketandstillunderdevelopment.Also,itwentthroughmany

discussionsanddevelopmentstoreachthelevelithasreachedtoday.

Onthehand,thistopiccoversthecoursesthattheauthorhaslearnedinthefieldof

ICTEAalborgUniversity.

Inadditiontothat,therearetwoincentivereasons,whichstandbehindtheauthor’sdecisionofchoosingInternationalDataRoamingastopicformymasterthesis.Thefirstreasonisthetechnologicalinnovation.Inotherwords,whatcananewtechnologydoinchangingpeople’slifeiftheyperceiveitwithattractiveness.Alsothe extendthatitcanimpactexistingalternativetechnologies,whichareadoptedbytheexistingfirms/organizationsforseveralyears.Thesecondreasonisanacademicone,sinceInternationalDataroamingisatopic,whichmatchestheauthor’sfieldofstudyandinvestigatingitwillhonetheauthor’sskillsintransformingtechnologicalcapabilitiesintobusinessvalue.Butoffcoursethosetworeasonswerenotenoughtofinalizetheprocessofselectinganappropriateandinterestingtopicforthemasterthesis,sodiscussionswereessentiallyneededinordertohaveaclearvision.

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TheauthorhasdiscussedthetopicwithhissupervisorMortenFalchseveraltimes.Theinformationhegainedthroughthosediscussionshasclearedthevisionandmotivatedhimmoretowriteaboutthistopic.

ProblemformulationInthissub-chapter,themainquestionswillbepointedandwillbeexplainedlater

inthethesis.themainquestionwillelaborateaboutthechallengesthattelecom

operatorsinEUarefacingandhowtheyhavepreparedforthenewregulationsin

awaythathaschangedtheirprices.ThisthesisfocusesonthetelecommarketoftheEuropeancountries,sincetheEUCommissionwillreleaseanewmethod,calledRLAH(RoamLikeAtHome).Thismeansthattelecomoperatorswillnotbeabletochargetheircustomersanyextrafeesanymorefortheirusageof(data,sms,call)whilebeingabroad.RLAHhasaneffectonthetelecomoperatorsbusinessthatishardtopredictintermsofroamingusageduetothedifferenttravellingrationbetweenthecountries.Thisimpliedthatinsomecasestelecomoperatorswouldnotbeabletocoverthecostoftheroamingcharges.Mainquestions:4.2.2 Howtelecomoperatorscangetafundtocoverthecostofinternational

dataroamingwholesalechargesininteractionwithRLAH?

4.2.2 Couldwholesalepriceregulationbeapartofthesolutionoftheproblemmentionedaboveinthefirstquestion?

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DelimitationInthissubchapter,delimitationusedtoframethethesiswithbordersbecausein

manyfieldsthereisalackofinformation,sotheauthorfocusedonapartswhere

thereareenoughdatatobecollectedandusedinthethesis.

Togetthepurposeofthisthesis,itisamusttosetborderstowhatintendedtobeachieved.Theselimitationsarenecessaryduetothelackofinformationinsomeareasoftheresearch,butitwillalsogivetothereaderagoodunderstandingregardingthescopeofthisthesis.Sointhisthesis,theauthorwillnotgodeeplywiththetechnicaldevelopmentbutthereaderswillgetenoughunderstandingaboutthetechnicalside.Delimitationslist:

• Thisthesiswillnotexplaindeeplythetechnicalaspectofinternationaldataroaming;mostlythefocuswillbeonthemarketside.

• Inthisthesis,thefocuswillbemostlyontheEuropeanunionmarket.

• TheobjectofthisThesisisintheEuropeanmarket,nevertheless,some

referencesmightbemadetoanothercountries,butnofurtheranalysisordeeplydetailswillbeelaborated.

• InthisthesisthecostanalysispartwillbeaboutfewScandinavians

countries.

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Chapter2

2. Methodology

Inthischapter,methodologypartwillbeintroduced,whichisaframetocreatea

flowforthethesisandawayinwhichdataarecollected.

Methodologypartalsodescribesthemethodsusedtoproducetheoutcomesforthis

thesisandansweringthequestionsoftheproblemformulation.

Therewillbeadrawingdiagramshowingthestructureofthethesis.

DiagramThemethodologydiagramseektoshowhowtheprocessdeveloped,showingdifferentpartswhichwereusedinthereport,thesepartsaretheresearchpart&thetheoreticalframeworktocomeupwithananalysisandconclusion.TheaccumulationofknowledgefromthemethodsusedwascompiledinaComprehensivemannerthroughadynamicprocess

Figure1-MethodologyDiagram

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DesktopresearchDesktopresearchwasusedinordertogetabriefknowledgeaboutthethesistopicthatincludedthestudyofalltheavailablematerialonthesubject(academicresearch,EUdataroamingregulationsandtelecomreports).ThatresearchwasneededtounderstandthemarketandtherelationwiththeEUdataroamingregulation.Also,itwasmeantthatthetechnologyusedinthisfieldtogetapurepictureofhoweachofthemcouldcreatechallengestochangethestrategyofthetelecomoperatorsbusiness.InordertogetthemostusefulandreliableinformationtheAalborgUniversityListofDatabasesandVendorswereusedtoselectresources:IEEEXploreDigitalLibrary,GoogleScholar,ElectronicsandcommunicationabstractsandDTUuniversitylibrary,BEREC.

PrimaryresearchTheprimaryresearchforaprojectisdividedinqualitativeandquantitativeresearch.However,forthecurrentprojectprimaryquantitativeresearchwillbeincludedsincetherearenumericaldatathatcouldaddvaliditytotheproject.

QuantitativeresearchForthequantitativeresearchamarketshareandotherusefuldata(ratiooftravelers,prices,etc..)wereconductedbygoingthroughsomewebsitereportssuchasBERECandothersourcestodiscoverthedifferentbetweenwholesalepricesindifferentcountriesinEurope.Thesedatawillgiveabetteroverviewtobeusedintheanalysischapterlaterinthethesis.

Qualitativeresearch(Interview)AninterviewwillbewiththeTelecomindustryassociationinDenmarkwiththedirectorJakobWiller,whichwearegoingtodiscusssomepoint’sregardthetopic.SinceJakobWillerhasadeepexperiencewiththeinternationaldataroaminginEurope,itwillbeagreatsteptohaveaninterviewandgainmuchmoreknowledgeregardsthetopic.AnotherinterviewweredonewithRikkeJohan(aPoliticalAdvisor-MEPJensRohde,EuropeanParliament),whichwehaddiscussionaboutthedifferentpricesofwholesalechargesindifferentcountriesinEuropeandtheupdateofFairUsePolicydraft(FUP).Allthedataregardstheinterviewswillbeincludedintheappendixpart.

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Chapter3Inthischapter,differenttheoriespresentedanddiscussedfromknownresource

suchasTommasoValletti&ChristosGenakostobeusedlaterintheanalysis

chapter.

3. Theoreticalframework

3.1 MarketStructureThissubchapterwillelaborateonmarketformationtheorybyKarenCollinsina

bookcalled“Exploringbusinesses”4.Thetheorywillbethebaseforunderstandingthemarketandindustryintheanalysischapter.

Therearefourtypesofcompetitioninafreemarketsystem:perfect

competition,monopolisticcompetition,oligopoly,andmonopoly.

3.1.1 PerfectCompetition

Perfectcompetitionexistswhentherearemanyconsumersbuyingastandardizedproductfromnumeroussmallbusinesses.Becausenosellerisbigenoughorinfluentialenoughtoaffectprice,sellersandbuyersacceptthegoingprice.Forexample,whenacommercialfisherbringshisfishtothelocalmarket,hehaslittlecontroloverthepricehegetsandmustacceptthegoingrate.4InthetelecomindustrymarketinEurope,itisclassifiedasacompetitivemarketbutstillhavefewbigoperatorsthattherehaveahugepoweronamarket(cross-borderoperators),butmainlyitisacompetitivemarket.Supply&demandTocheckhowperfectcompetitionworks,weneedtounderstandhowbuyersandsellersinteractinamarkettosetprices.Inamarketcharacterizedbyperfectcompetition,priceisdeterminedthroughthemechanismsofsupplyanddemand.Pricesareinfluencedbothbythesupplyofproductsfromsellersandbythedemandforproductsbybuyers.4

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Inordertoillustratethisconcept,asupplyanddemandschedulewillbecreatedforoneparticulargoodsoldatonepointintime.Thendefiningdemandandcreateademandcurve,anddefinesupplyandcreateasupplycurve.Soitshowshowsupplyanddemandinteractstocreateanequilibriumprice,thepriceatwhichbuyersarewillingtopurchasetheamountthatsellersarewillingtosell.DemandDemandisthequantityofaproductthatbuyersarewillingtopurchaseatvariousprices.Thequantityofaproductthatpeoplearewillingtobuydependsonitsprice.Customersnormallyarewillingtobuylessofaproductwhenpricesriseandmoreofaproductwhenpricesfall.KarenCollinssaid“wefindproductsmoreattractiveatlowerprices,andwebuymoreatlowerpricesbecauseourincomegoesfurther”.Thesamewiththetelecommarket,whenEuropeanCommissionreducedthepricesforinternationaldataroaming,thenthedemandondatahaveincreasedwidelyandcustomersstartedtousedatamuchmorethanbefore. SupplyIsthequantityofaproductthatsellersarewillingtosellatvariousprices.Thequantityofaproductthatabusinessiswillingtoselldependsonitsprice. Businessesaremorewillingtosellaproductwhenthepricerisesandlesswillingtosellitwhenpricesfall,alsobusinessesaresetuptomakeprofits,andtherearelargerprofitstobemadewhenpricesarehigh.EquilibriumPrice Wecannowseehowthemarketmechanismworksunderperfectcompetition.Wedothisbyplottingboththesupplycurveandthedemandcurveononegraph,thepointatwhichthetwocurvesintersectistheequilibriumprice.Atthispoint,buyers’demandforapplesandsellers’supplyofapplesisinequilibrium.

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Figure2EquilibriumCurve4

Whenthemarketischaracterizedbyperfectcompetition,manysmallcompaniessellidenticalproducts,becausenocompanyislargeenoughtocontrolprices,eachsimplyacceptsthemarketprice,sothepriceisdeterminedbysupplyanddemandmethodsasdescribedabove.Inthisfigureabove,iswhatexactlyEuropeanCommissioniswillingtoachieve.Theyhavedevelopedtheregulationsofinternationaldataroamingseveraltimesandreducedthewholesalepricescap,buttheystillstudyingallthecircumstancesfromdifferentsidestopredicttheequilibriumpriceforwholesalecap.ThemainproblemisthatsouthEuropeancountriesnegotiatingtoraisewholesalepricecapstobenefitasmuchtheycan,becausetheyareclassifiedastouristcountries(whichmeanstheyhaveveryhighincomingtraffic),whilenorthcountries“suchasDenmark,Sweden”arenegotiatingtolowerwholesalecaps,becausetheirincomingtrafficisverylow.

3.1.2 OligopolyOligopolymeansfewsellers.Inanoligopolisticmarket,eachsellersuppliesalargeportionofalltheproductssoldinthemarketplace.Inaddition,becausethecostofstartingabusinessinanoligopolisticindustryisusuallyhigh,thenumberoffirmsenteringitislow.Companiesinoligopolisticindustriesincludesuchlarge-scaleenterprisesasautomobilecompaniesandairlines.Aslargefirmssupplyingasizableportionofamarket,thesecompanieshavesomecontroloverthepricestheycharge.Butthere’sacatch:becauseproductsarefairlysimilar,whenonecompanylowers

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prices,othersareoftenforcedtofollowsuittoremaincompetitive.Youseethispracticeallthetimeintheairlineindustry:WhenAmericanAirlinesannouncesafaredecrease,Continental,UnitedAirlines,andothersdolikewise.Whenoneautomakeroffersaspecialdeal,itscompetitorsusuallycomeupwithsimilarpromotions. 4 AnotherexampleisbetweenthebigmobilenetworkoperatorsMNOsinDenmark(TelenorandYouSee)bothofthemhavetheirowninfrastructureandweknowtoenterthismarketwithyourowninfrastructureitsveryhighcostly.Thosetwocompanieshavesomecontroloverthepricestheycharge,buttheirproductsaresimilar,sowhenoneofthemlowersprices,theotheroperatorforcedtofollowtoremaininthecompetitivemarket.

3.1.3 MonopolyIntermsofthenumberofsellersanddegreeofcompetition,monopolieslieattheoppositeendofthespectrumfromperfectcompetition.Inperfectcompetition,therearemanysmallcompanies,noneofwhichcancontrolprices.Theysimplyacceptthemarketpricedeterminedbysupplyanddemand.Inamonopoly,however,there’sonlyonesellerinthemarket.Themarketcouldbeageographicalarea,suchasacityoraregionalarea,anddoesn’tnecessarilyhavetobeanentirecountry.Atthebeginningoftelecommunicationsector,therewerefewoperatorsinEuropewiththeirowninfrastructureandtheyhadapowerofcontrollingpricesbecauseitwashardtoentertothismarketduetothehighcostlyinfrastructure,sothemarketwereclassifiedasmonopolisticmarket.Sothesetelecomoperatorshadapowertocontrolthepricesandchargehighprices.Naturalmonopoliesincludepublicutilities,suchaselectricityandgassuppliers.Suchenterprisesrequirehugeinvestments,anditwouldbeinefficienttoduplicatetheproductsthattheyprovide.Theyinhibitcompetition,butthey’relegalbecausethey’reimportanttosociety.Inexchangefortherighttoconductbusinesswithoutcompetition,they’reregulated.Forinstance,theycan’tchargewhateverpricestheywant,buttheymustadheretogovernment-controlledprices.Asarule,they’rerequiredtoserveallcustomers,evenifdoingsoisn’tcostefficient.Alegalmonopolyariseswhenacompanyreceivesapatentgivingitexclusiveuseofaninventedproductorprocess.Patentsareissuedforalimitedtimegenerallytwentyyears.Duringthisperiodothercompaniescannotusetheinventedproductorprocesswithoutpermissionfromthepatentholder.Patentsallow

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companiesacertainperiodtorecovertheheavycostsofresearchinganddevelopingproductsandtechnologies. 4

3.1.4 RegulatedMonopolyandUnregulatedCompetitionMarkArmstronghasdefinedandexplainedwellhowthedifferencebetweentheoryandarealworldmarket“Inaneconomicparadise,wherearegulatorisomniscient,benevolent,andabletofulfillanypromisehemakes,competitioncannotimproveuponregulatedmonopoly.Theregulatorwillensurethefirmproducestheidealrangeofservicesatthelowestpossiblecostandwillsetwelfaremaximizingpricesfortheseservices”.5While,therealworldmarketdiffersfromthetheoreticalside.Regulatorsinvariablylackimportantinformationaboutthemarketstheyoverseesuchasregulatorscannothavefullaccesstothewholedataofthecostandrevenuesfromthetelecomoperatorsandintheotherhand,Regulatorscannotfullytrustthedatareceivingfromthetelecomoperatorssincetheywillalwaysplayacharactertoincreasetheirrevenue,andsowillnotbeabletodirectandcontrolperfectlytheactivitiesofamonopolyproducer.Becauseofitsdailyoperationintheindustryanditsdirectcontactwithconsumers,theregulatedfirmwillbebetterinformedthantheregulatoraboutthedemandfortheregulatedservicesitsupplies,theminimumpossiblecurrentcostofdeliveringtheservices,andthepotentialforlesscostlyfutureprovision.Thisinformationasymmetrygenerallygivesrisetoanunavoidabletrade-offbetweenrentandefficiency:thefirmcanbemotivatedtooperateefficiently,butonlyifitisawardedsubstantialrentfordoingso.Inparticular,thefirmwilloperateatminimumcostandattempttosatisfytheneedsanddesiresofcustomersonlyifitisawardedthefullsurplusthatitsactivitiesgenerate.However,suchagenerousawardtotheregulatedfirmtypicallywillprovideitwithsignificantrent,andtherebyreducethenetbenefitsenjoyedbyconsumers.Tolimittherentthataccruestotheregulatedfirm,someinefficiencytypicallyistolerated. IntheEuropeantelecommarket,EuropeanCommissionwouldregulatethemonopolisticmarketinregardsnottoallowtelecomoperatorstoofferhighpricesandcontrolthemarket.Inaregulatedmonopolymarket,regulatorsimplementfewstrategiestocontroltelecomoperatorssuchasPricecaps,qualityofservice.AlsoRegulatorsinthetelecommarketraisedarulethatforcedMNOstoletnewcomers(MVNOs)inthemarkettorentMNOsinfrastructure.

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Inunregulatedcompetitionmarket,telecomoperatorswillbeforcedbythemarkettolowertheirpricesandinnovateonthetechnologicalandmarketsidetoreducetheircostsandattractmuchmorecustomers.Sotoreflectunregulatedcompetitionontheinternationaldataroaming,telecomoperatorswillcomeupwithnewstrategiesandstartingtooffer“RoamLikeAtHome“servicewithcompetitivepackagespricesintheearlyedgetostayinfrontonthemarketandcompeteotheroperatorstoattractmuchmoresubscribers.Inthiscasetherewillbenoneedforregulationstobeimplemented,becauseinacompetitivemarket,themarketisforcingtelecomoperatortolowertheirpricesasmuchastheycanfortheend-users.

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3.2 WaterbedtheorybyValetti&GenakosStatementinJanuary2010byTommasoValletti,ChristosGenakos“Governmentshavecometoregulatethefeesmobilenetworkschargeothersfor

callingtheircustomers.Thiscolumnwarnsaboutthe“waterbedeffect”–pressing

downthese“calltermination”feescouldcauseanothersetofpricestorise.Any

welfareanalysisofregulationcannotignorethepresenceofthiseffect.”6

Theeffectwherebyregulationofoneofthepricesofamultiproductfirmcausesoneormoreofitsotherunregulatedpricestochangeasaresultofthefirm’sprofit-maximizingbehavior.Themagnitudeofthechangedependsonanumberoffactorssuchasintensityofcompetition,marketdynamics,marketposition,elasticityofdemand7.Anexampleofthat:imagineyouplungeintoapooloryousitinthemiddleofawaterbed,thewaterlevelsimplyrisesattheedges.

TheoverallideabehindWaterbedEffectthatwereexplainedby“TommasoValletti,ProfessorofEconomicsatImperialCollegeBusinessSchool”6,thatmobileoperatorscanbeseenasaplatformthatsuppliesservicessuchas"voice,sms,data"totheendusersandtheycansetdifferentpricesfortheusersofthatplatform.Mobileoperatorisabottleneckforreceivedservicesandmoneycanbemadeovertheirterminationandtheycantaketheseterminationrevenuesintothecompanyaccount.Thehighertheserevenues,thelowerpriceanoperatorwouldchargeitscustomers,manyoperatorspassthroughsomeofitsrevenuetotheirconsumerstoattractmuchmorecustomerssubscriberandbeinfrontonthecompetitionwithothers,whichwillincreasestheterminationrevenuesearned.Whileifregulationreducesterminationchargesandhencerevenues,mobileoperatorswillnotbeabletoofferlowpricesubscriptionsfortheircustomers,theywillhavetoraisetheirprices.Theideapresentedabovecalled"WaterbedEffect"whichyoupressingdownpricesinonesidecausesanothersidetorisetheprices.Inatelecommarket,mobileoperatorswillcompetebyofferingattractivepricesforend-users.Indoingso,theywillconsideralltherevenuesthatwillaccruefromacquiringacustomerandallthecostsofservicingthatcustomer.Whentherevenuestreamofthetelecomoperatorsincreases,thentheywillofferlowerpricesfortheirend-users,it’sageneralstrategyforthetelecomoperatorstopass-throughsomeoftheirrevenuetotheend-userstocompeteinamarket,becausebyloweringtheirpricestheywillincreasethenumberofsubscriberswhichitresultsanincreaseintheterminationrevenuesearned.Andtheoppositewayit’strue,whentherevenueoftelecomoperatordecreases,then

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theywillraisetheirpricestocoverthecost,these2situationsaredefinedunderamethodcalled“waterbedeffect”.Indifferentmarketstructure,waterbedeffectcouldbestrongorweak:ifthetelecommarketisunderaperfectcompetitionmarket,thentelecomoperatorswouldexpecttomakezeroexcesseconomicprofits,consideringthatthetelecomoperatorsrevenuereduced,operatorswillnotraisethepricesbecausethereareunderaperfectcompetitionmarket,sotheystillofferlowerpricestocompeteinthemarketbutnotunderthecost,andinthissituation,“waterbedeffect”willbeveryweak.8 Waterbed effect tested in mobile telephony by Christos Genakos and Tommaso Valletti Theyhavetestedwaterbedover20countriesforfixed-to-mobilemarketandtheirempiricalanalysisresultsrevealsthatbothcompetitionandmarketsaturation,butmostimportantlytheirinteractionaffecttheoverallimpactofthewaterbedeffectonprices(thewaterbedeffectisstrongerthemoreintensecompetitionisinmarketswithhighlevelsofmarketpenetrationandhighterminationrates).Inthetesttheyhavemade,theyprovidedthatthefirsteconometricevidencethattheintroductionofregulationthatcut10%ofthetelecomindustryrevenueresultedtoa10%waterbedeffectonaverage,althoughthewaterbedeffectishighalsoprovidesevidencethatitisnotfull:accountingmeasuresofprofitsarepositivelyrelatedtomobileterminationrate"MTR",thusmobilefirmssufferfromcutsinterminationrates.Anywelfareanalysisofregulationofterminationratescannotignorethepresencesideofthewaterbedeffecttheory.Inacaseifthedemandformobilesubscriptionwereveryinelastic,thesociallyoptimalMTRwouldbethecostoftermination(thoughtheregulationofMTRwouldimpactonthedistributionofconsumersurplusamongfixedandmobilesubscribers).Ifinstead,themobilemarketwasnotsaturatedandstillgrowingtherewouldbeagreatneedtocalibratecarefullytheoptimalMTR.Intheiranalysisontheexistenceandmagnitudeofthewaterbedeffectisalsorelevantinthecurrentdebateofregulationofinternationalroamingcharges.TheEuropeanCommissionhasvotedin2007tocaproamingchargesofmakingandreceivingphonecallswithintheEU.8Theiraimistoreducethecostofmakingamobilephonecallswhileabroadforendusers.Hence,areductioninroamingchargesmaycauseasimilarwaterbedphenomenon,wherebypricesofdomesticcallsmayincreaseasoperatorsseek

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tocompensatefortheirlostrevenueelsewhere.Whilethemagnitudeofthewaterbedeffectcausedbythisnewlegislationisdebatable,theirresultsdemonstratethatregulatorshavetoacknowledgeitsexistenceandcarefullyaccountforitintheirwelfarecalculations.Theyhavementionedthathavingpricedataonalargernumberofmobileoperatorswithincountries,wouldallowforjointcountry-timefixedeffectstobeproperlycontrolledforintheempiricalspecification.Furthermore,toinvestigatethemarginalconsumer’sbehaviorbeforeandaftertheintroductionofregulationandtheirelasticityregardingthewaterbedeffect,moredetailedconsumerlevelinformationisrequired.Ontheotherhand,giventhenon-linearretailpriceschedulesandthecomplexincentivesschemes(handsets,personalvs.businessbuyers’contracts)providedbymobileoperators,moredetailedcustomerinformationatacountrylevelwouldallowthemtomodelmoresatisfactorilytheeffectofcompetitionandmarketpenetrationonthewaterbedeffect.Suchastructuralmodelwouldalsoenablethemtoquantifytheeffectsofvariousregulatoryinterventionsandtheirwelfareimplications.

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Chapter4

4 Background&Findings

Inthischapter,Allthedatawerecollectedinregardstohaveabriefoverviewon

internationaldataroaminginEuropetobeusedlaterintheanalysischapter,and

theEuropeanregulationsprocesswillbeintroducedfrom2007untilnow,toshow

thedevelopmentofregulations.

4.1 InternationalDataRoaming

DefinitionTheinternationalroamingregulationisdifferentfromotherkindsoftelecomregulation,astheregulationcoverstheentireEUmarket,withoutanyconsiderationstonationaldifferencesinlevelsofpricingandcompetitionstructures.Roamingistheabilityofsubscribertoaparticularnetworktousethemobilephoneonanotheroperator'snetworkwhileabroad,thisrequirearoamingagreementbetweenthenetworksandanexchangeofinformationbetweenthesenetworksforauthenticationandbillingpurposes. Network operators exchange billing information for roaming customers: ThevisitednetworkcapturesthedetailsofeverysessionofdataservicesandvoicecallsinaCallDetailRecord(CDR)andthisrecordinformationonthe(location,sendingparty,receivingparty,timeofconnection,sessiondurationandsizemeasuredinMBorKB).Afterthatthevisitednetworkoperatorthenusesthesedetailstocalculatethewholesaleroamingchargepayablebyyourhomenetwork.Thedatarecords,includingtheapplicablewholesalecharges,willbesavedinaTAPfile(TransferredAccountProcedure).9ServicessuchasDataclearinghouseareusedtosendTAPfilesfromthevisitednetworktoyourhomenetwork.DataclearinghouseactsasahubforthedistributionofTAPfilesandprovidesthehomenetworkwithservicessuchasreportingtoassistthehomenetworkinrunningitsroamingbusiness.Yourhomenetworkthenpaysthevisitednetworktheappropriatewholesalecharges.9

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4.2 Europeanmarket

4.2.1 MarketstructureInternationalserviceroamingisbasedofwholesaleroamingservicesforaccessandcapacityofferedbymobilenetworkoperatortoforeignmobilenetworkoperatorsinanothercountry,sothenationalnetworkoperatorpaystoconnecttheircustomerwiththevisitednetworkoperatorintheothercountry.Roamingservicescostsconsistofmobileorigination,internationaltransit,billingandaccountingcosts.Thesecostsimplythatthecostforinternationalroamingishigherthanthecostsofprovidingtheservicewithinonesnetwork,roamingchargeshavealwaysbeencharacterizedasunreasonablyhighcomparedtotheactualcostsforprovidingthem.10BeforetheEUregulationwasimplementedin2007,theroamingmarketpresentedverylowcompetitionlevelduetoinelasticdemandfortheservices,veryfewornon-existentalternativesthatsubstitutedfortheservice,lackoftransparencyregardingchargesandnaturaloligopolieswithlowcompetition.Additionally,anotherreasonforthehighinternationalroamingpricescanbethelowcustomerawarenessregardingroamingtariffsasthisisinprinciple,notacriterionbasedonwhichcustomerspicktheirmobileoperator,whichremainsanissuetoday.ThesituationistoacertainextentreversedduetotheproliferationofmobilenetworkoperatorsandMVNOs,technologicaladvancements,roamingsubstitutessuchasVoIPservices,globalSIMcards,Wi-Fiaccess,hardernegotiationsandalliancesatthewholesalelevel,increasedtransparencyduetoEUregulation.10Pricecapmethodhasbeenimplementedwiththefirstregulationon2007,thatreducesthepricesinbothretailandwholesaleroamingannuallyandtheaimofthisprocessistolowerthepricesforend-usersandreachthegoalofhavingsinglemarketoftelecommunicationinEurope.InternationalroaminginEuropepresentsdifferencesbetweencountries,suchasthetourismscale,therevenuestreamthatroamingfeesproduceisrelativelysignificantinSpain.InSpain,themarkethasseenchangesintherevenuestreaminthemobiletelecommunicationsectorfrom2007untilthesedays,roamingrevenuehasdecreasedduetothepricecapsregulation.10

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IntheTouristicEuropeancountries,roamingrevenuesfortelecomshasanimportantvalueinregardsfortherevenuesthatcanbeachieved.Andwiththecountrieswithmuchlowertourismratio(ingoingtrafficaremuchlowerthentheoutgoingtraffic)suchasDenmarkwillnotgeneratethatmuchrevenueastouristcountries.Providedthatthewholesaleandretailpricesareaalsokeptbalanced.DifferentconditionsandparametersoftheroamingmarketineachcountryinEuropemakeitimpossibleforEuropeanregulatorstoeliminateofroamingchargestobeimplemented.10

Figure3EuropeanMobileRevenue2007-202011

Inthatfigureabove,itshowshowmobiledatausagehasbeengrowinganditsexpectedtoincreaseingrowingasmuchaspeoplearemoreattractedtousesmartdevices.Alsohighlightthatthebehaviorofcustomerswasmovedfromusingcallsandsmstousingdataservices.TheestimateofAT.Kearnay,isthatmobilerevenueswilldeclinefrom€164billionin2011toaround€137billionin2020,ifnothinginthemarketchanges,thedeclineinrevenuesassociatedwithvoicecallscouldbeashighas57percent,droppingfrom€108billionin2011to€46billionin2020,asbothrevenuesandunitpricesfall.Thisreflectsmobileterminationratereductions,butalsomoregenerousbundlesandincreasinglyunlimitedvoicetariffs.Revenuesfromtextmessagingarealreadydeclining,andifSMSsarestillinuseatallin2020andcontinuetobechargedonapermessagebasis,therevenueattributedtothemislikelytobelow.Theestimateof€14billionisbasedonthecurrentattributionofrevenues.11

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Thiscase,itssimilartotheSpanishmarketwerewillbeexplainedlater,thattheSpanishthatshuffleoffaround15%ontheannualbasis.AlsoanothercasefromtheSpanishstudythough,canbethatdespitetheincreaseinusageofroamingservices,therewasadecreaseintotalrevenue,meaningthatthedeclineduetothepricecapswashigherthantheinfluxofrevenuesfromtheincreaseinusage. Fromthatperspective,Europeanunionstressesretailandwholesaleregulationprices,asregulatingonlyretailpriceswouldnotbeenoughtocontrolthemarketandcreateacompetitivemarkettoachieveasingletelecommunicationmarket,plusitwouldleavethinmarginforprofittothewholesalebuyers(MVNO)thatdon’towninfrastructuretoconnecttheircustomers.Meanwhile,reducingwholesalepricesitwasnotpassedontotheretaillevelwherechargesremainedclosetothepricecaps.Intheotherhand,forthosetelecomoperatorsthataredefinedascross-borderoperatorstoprovideroamingservicesindifferentcountriesusingtheirowninfrastructurehavenotveryinterestinginbringingdownwholesaleandretailprices.(M.FalchandTadayoni2014)

4.2.2 MVNOsThereareMobileNetworkOperatorsthathost943MobileVirtualNetworkOperators(MVNOs)with255ofthembeingMNOsub-brands,asofMay2014.Thisrepresentsatotalofalmost1,200mobileserviceprovidersworldwidehostedbyMNOs,anumberthatwasdownto1,036in2012,accordingtoGSMAIntelligence.ThestrategyofMobileVirtualNetworkOperatorswaswellknown,butuntiltheEUimplementedthewholesaleregulation,thesevirtualnetworkswouldhavetonegotiateandgetwholesaledealsdirectlyfromtelecomoperators.ThisregulationwasverysuccessfulinhelpingtheproliferationoftheseoperationsespeciallyinEurope.GSMAIntelligencereporthasidentified8separatecategoriesofMVNOs,namelydiscount,telecom,media/entertainment,migrant,retail,business,roamingandM2M.Asin2012,‘discount’and‘telecom’MVNOsarethemostprominenttypesofoperation,accountingfor46%oftheglobalMVNOmarket,while19%areownedbycompaniesthatcomefromadjacentindustries(forexampleretailers,banks,TVormediaorganizations),leaving34%ofthemarkettospecializedprovidersfocusedonsegmentssuchasbusiness,migrant,M2Mandroamers.13Allthevaluesareavailableinthefiguresdown:

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Figure4globalMVNOs13

Figure5MarketSegmentation14

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ManyMVNOswentoutofthemarketduetothehighcompetitionintheEuropeanmarketandlowmarginsontopofthecappedwholesaleprices,duetothefactthatmobilevirtualnetworkoperatorsoperatewithlowmarginshasbroughtthepricesandprofitmargindownfornetworkoperatorsalso.

WhyMVNOsareimportant:

IntheEuropeanmarket,regulatorshavebeenparticularlyactive,whichishometo2/3ofdomesticMVNOs.TheyhaveencouragedMVNOstoenterthemarketbecauseitisawaystoincreasecompetitionandreduceprices.Soaswecanseeinthefiguredown,thenumberofMVNOsincreasedwidelysinceEChaveintroducedthefirstregulationsonthetelecommarketon2007.

Figure6IncreasingnumberofMVNOSinEurope13

EuropeanCommissionhaveusedMVNOsdirectlyasaregulatoryinstrument,EChaveappliedconditionsrelatedtoMVNOaccessbeforeapprovingmergersbetweenMNOstopreservecompetitionintheEuropeantelecommarket.Forexample,beforemergers3withTelefónicainIreland,3wasrequiredtocommittoseeingupto30%ofthemergedcompany’snetworkcapacitytotwoMVNOs.Theconventionalwisdomamongmanyregulators,politicians,andpolicymakersisthatthemoreoperatorsorMVNOsinagivenmarket,thebetterthecompetitionwillwork.IfEuropeanCommissionraiseRLAHconceptwithouttakingincasethatretailandwholesalepricesmeasuresareconnected,thenitwillforcesMVNOsthatarenotabletonegotiatewholesaleroamingaccessat

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lowerpricestoofferroamingservicestotheirsubscriberswithnegativemargins.AndsuchthesesituationswillleadtheseMVNOstorunoutofthemarketbecausetheywillnotbeabletocoverthecostsofroaming.Additionallytothat,ithastobementionedthat,MVNOsdonothaveanyincomeofthedataroamingsincetheydonotownanyinfrastructure,sotheirbusinessmodelsinthiswaywillbeunbalancedtosurviveandcompeteinthemarket.IfMVNOsrunsoutofthemarket,thenthelevelofcompetitionwillbereducedandagainwewillhavefewbigoperators(MNOs)controllingthepricesovertheEuropeanmarketwhichmeansmonopolymarketwillappearagaininEurope.13

4.2.3 GoogleconceptGoogleaimstocreateaglobalnetworkthatwillcostthesametouseforcalls,textsanddatanomatterwhereacustomerislocated.GoogleisintalkstowardsadealwithHutchisonWhampoa,theownerofthemobileoperator3,thatwillallowAmericanstousetheirphonesabroadatnoextracost,industrysourceshavedisclosed.15Thereplanstolinkwith“3”telecomoperatortogetanaccesstothewholesalemobileserviceindifferentcountriessuchasUK,Italyandanothercountries.ThisisanevenmoreambitiousplanthanthatoftheEuropeanDigitalSingleMarketandlookingatthetrackrecordofEuropeandGoogle,GooglewillpossiblymakethisarealitysoonerthantheEU,althoughtheregulatorybarriersallovertheworldtoovercomewillcreatemanyobstaclesforthem.15

ThewayGoogleplanstoachievethisisnottobuildanentirenewnetworkbutinsteadrelyonthewholesalemarket.TheideafortheanalystsisthatGooglewill“useitsnetworktoputpressureonthepricingofAmerica’sbiggestmobileoperators,AT&TandVerizon,whoenjoyhigherprofitmarginsthantheirEuropeancounterparts“.15

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4.2.4 Spanishmarket

ThereasonofchoosingSpanishmarket,becausetheirtourismmarketincomeis

veryhigh.

In2011theEuropeanCommissionVicePresidentNeelieKroes,“pleadedforanendtomobileroamingfeeswithintheEuropeanUnion.“Theex-commissionerNeelieKroeshadaverynobleprincipletoreducethe“mobileroamingfeeswithinEuropewhichwouldbegreatnewsforthemillionsofSpanishresidentswhoregularlytravelforworkandpleasure.In2011,Spain'smobilephonecompaniesnotcheduproamingrevenueofover€700million,accordingtothenationalTelecommunicationsagencytheCMT.”16Additionally,Inherpointofview,thetelecomsectorisanexceptiontotheEuropeanstandardofacommonmarketandassuchduringherspeechshementions"ThereisnoothersectorofourincompleteEuropeansinglemarketwherethebarriersaresounneeded,andyetsohigh".Kroesalsosaid"pan-Europeanoperatorshelpingconsumerstakeadvantageofaborderlessmarket"aswellas"increasedinvestmentinqualitynetworksandcontent".16TheEUCouncilrealizingthemarketmightnotbereadyfortheregulationsofendingroamingfessbecausetherevenueofthetelecomshasbeendecreasesinthelastyears,inthatcase,itwillbeasensitivemeasurementenvironmenttostudytheSpanishmarkettopreformtheanalysissinceSpainisaleadingcountryintermoftourism"theingoingtrafficlevelisveryhigh"andithasoneofthelargesttelecomoperatorsinEurope"Telefónica".TheSpanishmarkethasbeenhitintherecentyears,arecessionspreadingalloverthewesternworld,andtheEuropeancountriesthatreliesonservicessuchastourism,anditresultedthatin2012therevenueoftheSpanishtelecommarketdeclinedby15.19%.17Inthisfiguredown,itshowstheEvolutionoftotalrevenuesoftheroamingserviceinthemarketSpanish(millionsofeuros)Note:Redcolormeans=Wholesaleservicerevenue&Bluecolormean=Final

servicerevenue

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Figure7EvolutionoftotalrevenuesoftheroamingserviceintheSpanishmarket(millionsofeuros)17

Thefigurerevealsthedecliningtrendinincomelinkedtotheseservicesinrecentyears.ThisdecreasehasbeenproducedmainlybythereductionofthepriceinthecommunicationsbetweenmembercountriesoftheEuropeanUnion.Finally,thefigureshowshowtherelativeweightofthewholesalesegmenthasremainedconstantinrecentyears,representingonaveragecloseto40%ofthetotalrevenuesofthefinalinternationalroamingservices.17

Figure8Dataservice17

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Fordataservices,thedeclineinpriceshasbroughtaboutaconsiderableincreaseoftheconsumptionofdataservicebytheend-users.Ascanbeseenintheabovegraph,whilethatthepriceperMBofferedbySpanishoperatorstotheirusershasdecreasedfrom€4.91in2008to€0.48in2013,dataserviceconsumptionhasgrownexponentially,havingincreasedbyabouttentimessince2008andalmostdoubledinjustthelastyear.WhataretheimpactsofroamingregulationsandRLAHontheSpanishmarket:Afterintroducingtheregulationsonthetelecommarketon2007,theyimplementingpricecapsonCallsandSMSs,sotelecomoperatorshadtodecreasethepricestonotbeoverthepricecaps.Afterthaton2012theregulationsincludedDatapricecapsthatagainreducedthepricesfordatausage.Asaresultofthat,therevenueoftheSpanishtelecomoperatorswerereducedasshowninfigure7,therevenuedecreasedslightlyfrom2008until2013.FewimpactscouldRoamLikeAtHomeRLAHbringtotheSpanishmarket,firstitwillcutofrevenueofthetelecomoperatorssinceregulatorswillreducepricecapsthatSpanishtelecomoperatorswillchargeotheroperatorsonthewholesalelevel.Andthat’swilleffectonreductiononinnovationanddevelopmentoftheSpanishmarket,becausetheywillnothaveenoughrevenuetoinnovateanddeveloptheirinfrastructure.Second,duetoSpanishitisatouristiccountry,sotheingoingtrafficisveryhigh,whichmeanstheyneedtohaveaverypowerfulinfrastructuretoofferagoodqualityofservicecoverage.AndinacaseofimplementingRLAH,thevolumeofincomingdatatrafficwillbehighwhichwillhaveapressureonthetelecomoperatorsinfrastructuretoconnectallofthesetraffics.IfSpanishtelecomoperatorswillhaveapressureontheirinfrastructureandgettechnicalissuestonotbeabletoconnectorofferQualityofService,thenitwillendupthatcustomerswillnotenjoytheirroamingwhileabroadinSpain,whichwillbringarealimpactontheSpanishtelecommarket.ThatiswhySpanishoperatorsandothertouristiccountriesarenegotiatingwiththeEuropeancommissiontoraisethelevelofwholesalepricecaps,tobeabletoofferagoodqualityofserviceandhaveapowertoconnectalltheingoingtrafficswithoutanydoubt.Otherwise,theywillbeunabletoconnectalltheingoingtraffics,whichthegoaloftheRLAHtohaveasingledigitalmarketandtheirmaingoalistoletusersbeconnectedinanycountryinEuropewithsamepricesashomeandwiththesamequalityofservice.

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4.3 WholesaleroamingmarketWholesalepricesarethecoststhatoperatorschargeeachotherwhiletheircustomersuseanotheroperator’sinfrastructuretoconnectandusetheirmobileservicessuchasCalls,SMSandDatawhileabroad.

Wholesalepricesforoperators:

ThepriceforwholesaledatatakenfromJakobwiller(Danishtelecomindustry)

TheCommissionproposedwholesaledataroamingcapof€8.5/GB(around63Danishkroner),appearstobecarefullycalibratedtoprotecttheveryhighdomesticretailpriceschargedbyoperatorsintightoligopolymarkets(Germany,Spain)whilepenalizingoperatorswithcompetitivemuchlowerdomesticretailprices(Finland,Denmark,Poland).(Moniter2016,Wholesaleprice)

Figure9AverageWholesaledatapriceperMBin201419

InthistableitshowshowwholesalepricesperMbdroppeddownduringthetimefrom2012untiltheendof2014.ButuntilnowEuropeanCommissiondidn’t

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finalizedthelastversionofregulationregardswholesalepricesbecauseit’sacomplexprocessduetothedifferenceratiooftravelersforeachcountryandtheamountofingoingdatatrafficinthenorthcountriesaremuchlowerthantheamountofingoingdatatrafficinthesouthcountriessuchasSpainandPortugal.Howwholesaleagreementsworkingbetweentelecomoperators:Operatorssign2typesofwholesaleagreements:Firstagreementcalled“InternationalRoamingAgreementsorStandardInternationalroaming”,whichspecifytheoperationalandtechnicalaspectsoftheroamingrelationship,standardroamingarevaliduntilfurthernoticewiththepossibilitytoterminatethemafteraperiodofnoticeof6months.Whilethesecondare“RoamingDiscountAgreements”annexestotheinternationalroamingagreementsandspecifythecommercialaspectsoftheagreementincludingthepricesthathavetobepaid,thediscountagreementstypicallyhavedurationof12months.(BEREC2016,wholesalemarket)Thereasongivenbyoperatorsfortheannualrenegotiationofdiscountsistheunpredictablenatureofthemarketwithahighdegreeofregulatoryuncertainly,unpredictabletrafficratio,frequentmergesandotherchangesofownership.Theseneedtobebalancedbythetransactioncostofnegotiatingagreements,inadditionsomediscountsagreementsareautomaticallyrenewedeveryyearunlessonepartyobjects.ThestrategythatoperatorsapplytohaveabettercoverageisthattheymakemorethanoneagreementwithanotheroperatorsineachEuropeancountry,andalsointhiswaytheygetmoreinboundroamingrevenueandloweroutboundcost.Mostoperatorshaveonepreferrednetworkineachcountrytowhichtheytrytosteertheirtraffic.Whenmobilenetworkoperatorsnegotiatenationalandinternationalroamingagreementstheyareforthemostpartbilateraleachoperatorgetsroamingaccesstotheotheroperator’snetwork.Someofadvantagesofbilateralagreements:operatorsbuildpartnershipsagreementstoaddavalueofservicesforendusers,enlargeroamingcoveragetothebenefitofcustomersandsecureinboundroamingtrafficandrevenuethatcanpartlyoffsettheoutboundroamingcost.Eachoperatorappliesanumberofdiscountpricemodelsandthesedifferentmodelsarecombinedinmanycasessuchas(balanced/unbalancedagreement

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mightincludeamin.volume/revenuecommitment).Alsotherecanbealsodifferentmodelsfordifferentservicesinthesamediscountagreement(oneforvoiceandtheotherfordataservices).Themostcommonpricemodelswillbeintroducedshortly“FixedrateandBalanced/unbalanced:(BEREC2016,Wholesalemarket)FixedrateitmeansadiscountrateperunitperserviceorpercentageoftheregulationcapandBalanced/unbalancedit’sapricingmethodinbilateraldiscountagreements,eachpartyexchangestrafficandthenetsenderoftrafficgetsanadditionaldiscountontheamountoftrafficthatexceedstheamountoftrafficreceivedfromtheroamingpartner.Inthiswaywhenoperatorssendmoretrafficitresultsareductioninthenetsendersaveragecost.Butinmanycasesthismodelnotusedwhenthesituationoftrafficishighlyimbalanced.Whileoperatorscomeintochoosingapricingmodeltheygothroughsomespecificelementstoeachindividualnegotiationandthediscountslevelnegotiated.Thesespecificelementsaretrafficvolumesandtheratioofimbalancesininboundandoutboundvolumes.Higheroutboundvolumesgiveanoperatormorebargainingpower,buthighlyimbalancedtrafficflowscomplicatenegotiations.Therearealsosomeotherimportantelementsthathavetobementionedarenationalmarketshare,mobileterminationratiocostandnetworkquality,soanoperatorwithahighnationalmarketshareandgreatnetworkqualityofservicewillsecurebetterdiscountagreementsregardstheirnationalpowerinthemarket.Someoperatorsreportthatahighlevelofoutboundtrafficgivesoperatorsbargainingpowerthatcanresultinhigherdiscountsforthenetbuyerofroamingservicesthantheyhavetogivetothenetreceivingparty.Otheroperatorsreportthatthenetsellerofroamingserviceshastheadvantagesinceitisusuallythesellerwhohasthegeographicaladvantage,thebestnetworkinapopularroamingcountry(BEREC2016,wholesalemarket).Inaddition,someoperatorsalsohighlightthatoperatorswithapan-Europeanpresenceorassociatedwithlargermarketshaveastrongerbargainingpowercomparedwithoperatorswithsmallerfootprints,namelytheonesthatonlyoperateinoneEEAcountry.Manyoperatorssaythattheyareagnosticaboutthepricemodelandthatthechoicedependsonthewishesoftheotherpartyandwhatmodelwillbenefittheirnetpositioninaparticularcase.Someoperatorsreportthatiftheycompeteinthedomesticmarketwithanoperatorthatispartofapan-Europeangroup,theyarenotabletonegotiatereasonableroamingdiscountswithothermembersofthisgroupinvisited

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marketsandthushavetorelyonagreementswithsmalleroperatorsinthosecountries.(BEREC2016,wholesalemarket)Intheotherhand,mostgroupoperatorstheyareapplyinginternaltransferpricingthatisbasedonanarm’slengthprinciple,theinternalrateisbasedonthemarketratesofferedtoexternalpartners.Onegroupreportsthatthismarketrateiscalculatedastheaverageratechargedtothemaintradingpartners.Onegroupappliesbillandkeepwhileanothergroupuseszeropricingbetweensubsidiaries.(BEREC2016,wholesalemarket)PermanentroamingandM2Mcommunication:MobileoperatorsdescribedpermanentroamingasanarbitrageserviceandasanimplementationforM2Mservices.Permanentroamingcausedbyanarbitrageservicecouldresultifwholesalecapsaresettoolowandtherearenosufficientmeasuresintheregulation.But,currentlytheRoamingRegulationallowsoperatorstoincludeconditionsintheirreferenceofferforwholesaleroamingaccesstopreventpermanentroamingorabusiveuseofwholesaleroamingaccess.DifferentpointofviewswereexplainedaboutM2M,someoperatorsarguethatnationalnetworksaredimensionedandbuilttohostdomesticSIMcards.TheyseetheriskthatifahighlyincreasedvolumeofforeignSIMsusedforM2Mcommunicationgetslocatedonapermanentbasis,thiscancreateproblemsofcapacitymanagementandpossiblenetworkcongestioninthevisitednetworks.Intheonehand,alsothiscouldbeaconsequenceifRLAH"RoamLikeAtHome"getsintroducedwithoutproperstrategysafeguardsandforeignusersstayforalongtimeinavisitednetworkwithextendedusage.Additionallyforthatcase,BEREChasrequestedinformationonwhethertheMNOsapplyanymechanismstocontrolthelevelofpermanentroamingintheirnetworks.MNOswerealsoaskediftheyhadseparateM2Mroamingagreementscontainingspecialconditionsforsimilarkindsoftraffic.(BEREC2016,wholesalemarket)MostoftheMNOshaverespondedthatinthepresenttime,notimplementedanymeasurestodiscouragepermanentroaming.Someofthemexplainedthatitisnotnecessarysinceallusageischargedandothersevenhighlightthattheyencourageusagebyusingmechanismslikevolumecommitments,revenuecommitmentsintheirwholesaleroamingagreements.

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Somementionedthattheymightintroducemechanismsinthefuturetopreventpermanentroaming,ifwholesaleroamingcapsfallbelowtherelevantcosts.VeryfewMNOsansweredthatthereareexplicitconsumptionlimitsintheirwholesaleroamingagreements.JustonemobilenetworkoperatorhighlightedthattheyhaveastrategysuchasfairuselimitthatisbasedonamaximumnumberofdaysperSIMperyeartopreventpermanentroamingbyretailconsumers.Andonlyaround20%ofrespondingMNOshavesomekindofmechanismintheirwholesaleroamingagreementtodiscouragepermanentroaming.Suchmechanismsseemtobeintheshapeofpricedifferentiation.Permanentroamingcanforexamplebeexcludedfromanydiscounts,andtheratiodifferencebetweendiscountedandnon-discountedratesseemstobeacrucialelementforMNOstocontrolpermanentroaming.(BEREC2016,Wholesalemarket)

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RatiooftravellersbetweentheEuropeancountries:

Figure10thedifferencerationoftravellersbetweentheEuropeancountries1

Thelightturquoiseshadedisshowingtherangeofthehighesttolowerregionforeachcountrywhilethebluebarshowsthenationalaverage.Thebluecircleshowsthecapitalcityregion.ThisfigurehasbeenusedheretoshowthedifferenceratiooftravellersbetweenthenorthandsouthEuropeancountries,whichmeansthatthereisavastgapbetweentheoutgoingandingoingdatatrafficaswecanseeinthefigureabove(DenmarkismuchlowerthanSpainregardsthenumberoftravellersthatcomestothecountry)

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4.4 HistoryofroaminginEUAnoverviewofthedevelopmentofinternationalroaminginEuropewillbe

presentedfrom2007until2012.Theinformationcombinedwiththetheorywillbe

usefulintheanalysischapter.

2007regulation:ThefirstRegulationoninternationalroamingserviceswaspublishedon29June2007,theprimaryprovisionscappedwholesaleandretailchargesvoicecallsfortheEurotariffandsetanumberoftransparencyprovisionstohelptoensurethatconsumerswerewellinformed.TheprovisionsoftheRegulationenteredintoforceatdifferenttimes,withretailandtransparencyprovisionstakingfulleffectbytheendofSeptember2007andwholesaleprovisionscalculatedannuallyfromtheendofAugust2007.21RoamingIintroducedcapsforvoicewholesaleandretailprices,forcingtheoperatorstouseEurotariffbydefault.Telecomoperatorsstillallowedtochargeotherpricingtariffsbutonlytothosecustomerswhowouldchooseforsuchalternativesubscriptionsvoluntarily.2009regulation:On7May2008,theCommissionlaunchedapublicconsultationonthefunctioningofthe2007Regulation.TheEuropeancommissiondecidedtocontinueonitspricescapsstrategyforvoiceandloweringtheminordertoreducethegapbetweenwholesaleandretailprices.Billshockcasewasintroducedtoprotectcustomers,soifacertainbillingamountofdataservicesreached50€excl.VAT,thentheoperatorhastonotifytheuser,thenusersarefreelyallowedtodecidetospendmoremoneyonthedataservicesortostopit.TheyviewsexpressedinresponsetotheconsultationweresubstantiallyreflectedintheCommission’slegislativeproposals,publishedon23September2008,toextendthe2007Regulationindurationandscope.On22April2009,theEuropeanParliamentadoptedRegulation(EC)No544/2009atfirstreading,withaviewtoamendingRegulation(EC)No717/2007.21Subsequently,on8June2009theCouncilofEUTelecomsMinistersformallyadoptedthenewEUroamingrulesapprovedbytheEuropeanParliament.ThedefinitivetextofRegulation(EC)No544/2009waspublishedintheOfficialJournaloftheEuropeanUnionon29June2009.Inparticular,theRegulationintroducedthefollowingmeasuresrelatedtopricecontrol,applicablefrom1July2009to30June2012:

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•Anextensionofwholesaleandretailpriceregulationforvoice,withayearlydecreaseinthelevelofthecaps.•PriceregulationofSMSroamingservicesatboththewholesaleandretaillevels.•Priceregulationofdataroamingservicesatthewholesalelevel.AndfromJuly2010toJune2012:•Retailtransparencymeasurestoprotectconsumersfrom“billshock”whendataroaming.

2012regulation:On29June2010,theCommissionpublishedaninterimReportonthefunctioningofthe2009Regulation.TheCommission’sDigitalAgendaforEurope8alsoincludedatargetforroaming,where‘thedifferencebetweenroamingandnationaltariffsshouldapproachzeroby2015.21Inaccordancewiththe2009Regulation,BEREC(BodyofEuropeanRegulatorsforElectronicCommunications)providedadvicetotheCommissiononthefunctioningoftheRegulationandfutureregulatoryoptionsinitsDecember2010Report,supplementedbyitsFebruary2011responsetotheCommission’spublicconsultation,theCommissionthenpublishedafull reviewofthefunctioningoftheRegulationandlegislativeproposalsforanewRegulationinJuly2011.On30May2012theCounciloftheEuropeanUnionapprovedtheInternationalRoamingRegulationIII,whichenteredintoforceon1July2012.TheRegulationintroducedthefollowingmeasuresapplicablefrom1July2012:•Anextensionofwholesaleandretailpriceregulationforvoice,SMSwithayearlydecreaseinthelevelofthecapstobeinforceuntilJuly2022forwholesaleservicesanduntilJuly2017fortheeurotariffs.•PriceregulationofdataroamingservicesattheretailleveltobeinforceuntilJuly2017.•TheobligationforMNOstomeetallreasonablerequestsforwholesaleroamingaccess,whichcomprisesdirectwholesaleroamingaccessandwholesaleroamingresaleaccessundertherulessetoutintheRoamingRegulation.

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Theregulationdoesalsoincludeprovisionsontheseparatesaleofroamingservicesthatwillenterintoforceon1July2014.In2013,EuropeancommissionintroducedRLAHstrategy,beingthemostambitiousplanin26yearsoftelecomsmarketreformations.WithRLAHstrategyitallowsenduserstousetheirmobiledeviceabroadintheEEAcountrieswithoutanysurcharges.Thispointoutthatalltheunderlyingcosts,transitcostsandfixedcoststhatarerelatedtoroamingwouldbecomecompletelyinvisibletotheenduser.In2014,EuropeanParliamentvotedtofinallyabolishretailroamingsurchargesinordertoallowcustomerstobeabletoroamlikeathome,andfromthatpointonwards,legislatorswerechargedwithworkingoutdetailsofhowthiscouldbemadepossible,reachinganagreementacrossalltheEUmemberstates.TheImpactonthebusinesscaseforthedifferentoperatorsisnotcomparable,ontheonehandduetothedifferencesbetweenMNO&MVNO,butontheotherhandduetothesignificantdifferencesbetweenthememberstatessuchasthelevelofretailtariffs,costsandtheratiooftravellingandconsumptionofservices.WithRLAH,thenumberofconsumersusingroamingserviceswillincreasewhichwillmeanlessrevenueandbiggerwholesalebillsfortheoperatorsandinadditiontheywillhavetofacetheincreasingdemandontheirnetworks.In2015:EuropeancommissionstatedthatthereductiontozerostrategyisplannedtobefinishedbyJune2017,thismeansthataftermorethan10yearsofregulationsandpricecapswillbeabolishedentirelyandEuropeanswillbeabletotravelandusetheirmobiledeviceservicesjustlikeathomewithnoextracost.Inordertocompletelybuilduptothepointwherenoadditionalroamingfessareallowed,anintermediateRLAHregulationhasbeenintroducedwhichisreferredtoastheRLAH+phase,asoperatorscannowonlychargethedomesticpriceperunitplusasmallsurchargewhichequalstotheirmaximumwholesalecost.On26November2015,2yearsafterthefirstdrafttextwasintroducedbytheEuropeanCommission,theRegulation(EU)No.2015/2120oftheEuropeanParliamentandoftheCouncillayingdownmeasuresconcerningopeninternetaccessandamendingDirective2002/22/EConuniversalserviceandusersrightsrelatingtoelectroniccommunicationsnetworksandservicesandRegulation(EU)No531/2012onroamingonpublicmobilecommunications

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networkswithintheUnionwaspublished.ThisamendmenttotheRegulation(EU)No531/2012setsouttheprincipleof(RLAH)where,from15June2017,telecomoperatorswerenotbeableanymoretosurchargesforregulatedretailroamingservicesuntilayettobedefinedminimumfairuselimit(FUP)hasbeenreachedprovidedthattheissuesidentifiedatwholesalelevelhavebeenaddressedandtheproposedsolutionsareapplicablebythen.SpecificallyregardingtotheBenchmarkReport“BEREC”,theapplicableprovisionsontheRoamingRegulation(EU)No531/2012werekeptunchangedandthereforethebasisforthisdatacollectionismaintained.19RLAH(RoamLikeAtHome)TheconceptbehindRLAHimpliesthatmobilesubscriberswhenvisitinganothercountrycanusetheirmobilephoneasiftheywereintheirhomecountrywithoutincurringanyextrachargesonthebill.So,theycanmakealocalcallinthevisitedcountry,callbackhome,callathirdcountry,accessmobiledataastheirhomemobilesubscriptionincurringnoextracharges,ifanychargeswereinvolvedtheywouldoccurifusagewhenroamingwentbeyondtheirallocationofminutesand/ordataoftheirmonthlysubscriptionandthesechargeswouldbeatthesamelevelasifthesubscriberswereintheirhomecountry.RLAHhavefewimpactsregardsthetelecommunicationmarketandcompetitionsincemanyoperatorswithhighoutgoingtrafficwillnotbeabletocoverthecostsiftheirusersusetheirdataservicesabroadforalongterm,sointermtoimplementRLAHthereshouldbefairusepolicyattheretaillevelapproachtobeimplementedinordertopreventanyanomaloususage.Inthesedays,someoperatorsstartedtoofferdifferentpackages,thataresimilarprocesstotheRLAH,thesepackagescouldbejustforvoiceandsomeotherpackagescouldbejustforusingdata,whilesomeofthemwererestrictedtoaspecificgeographicalareas,forexample:customersfromDenmarkgetoffersfromthereoperatorstoroaminSwedenandNorwegianforfree,withoutanyextrachargebutiftheyusetheirdatainanothercountrytheywillhavetopayextra.ManyoperatorsareofferingRLAHwithfairusepolicy,forexampleusageof3GBpermothor6GBperyearor90daysabroad.FranceandPolandwereoneofthe

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firstcountriesthatappliedFUP,operatorsinthesecountriesofferingroamingwithinarangeof10to60daysperyearregardstothevolumeofFUP.20Manyoperatorswerenotabletopredicttheexactvolumeofusageofservices(voice,sms,data)beforeandafterofferingRLAHpackages,whilefewoperatorsmanagedtoanalyzeitandtheyreportedthattheaverageincreaseofdatausageisaround90%-200%afterofferingRLAH,intheresultofthatoperatorswillfaceahugeincreaseindemandofroamingservicesfromtheend-usersandthoseuserslaterafterimplementingtheregulationtheywillnotpayanymorehighpricesforroaming.20

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4.5 PriceCapHereinthispoint,itshowstheimprovementoftheregulationshowreducedprice

capsfortheinternationalroaming(Voicecalls,SMS,Data).Thisinformationwill

beusefultocollaborateintheanalysischapter.

Inthistable,themaximumtariffspricesareexplainedandshownhowthepricesdecreasedfrom2014until2016.AndwiththenewregulationstherewillbenomoreextraroamingfeewhicharegivenbytheEuropeancommission:

Figure11Themaximumtariffs(excludingVAT)forcalls,textsanddata22

Thesepricecapsarethemaximumpermissibleprices.Operatorsarefreetooffercheaperrates,sotobeonthelookoutforbetterdeals.Customerswereworryingaboutthedomesticpricesifitisgoingtoincreasesinceuserswillbeabletousetheirphoneabroadwithsamepriceashome,butsinceEUregulationshavebeenintroducedtoreduceinternationalroamingcharges,domesticmobilepriceshavebeendecreasingaswellbythetimeandatransitionperiodhasbeenagreedtomaketheabolitionofroamingchargessustainablethroughoutEuropewithoutanincreaseindomesticprices.23 ThistransitionperiodwillensurethatwhentheenddatecomesonJune2017,thewholesalecostsofoperatorswhentheyoffermobilecommunicationsservicesoutsideoftheircountrywillsufficientlyhavedecreasedbymarket

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forcesorthroughanotherregulatoryinterventionforroamingwithoutchargestobesustainable.Inadditionforwhatmentionedabove,regulationincludessafeguardsrulestrategy,whichthatcanbeusedbymobileoperatorstopreventa necessaryabusiveuseofroamingservices,suchaspermanentroamingwhichotherwisecouldbethesourceofdistortionsondomesticmarkets.Insomespecificandexceptionalcircumstanceswheretheprovisionofroamingservicesatdomesticpricesisprovedtomakethedomesticchargingmodelofanoperatorunsustainable,theRegulationforesees,asanexception,thepossibilityforthatoperatortostillapplyasurchargetoitsroamingcustomers,onlyifthenationalregulatoryauthorityagreesinordertoavoidanincreaseinthedomesticpricesofthatoperator.2TheEuropeanCommissionestablishesthepricecapofwholesaleroamingchargesthatoperatorswillchargeeachotherforusingtheirnetworkfrom15June2017,forcalls,SMSanddata.IneffecttheCommissionproposestoreducecurrentwholesaleroamingchargescapsto€0.04/minuteofcallmade,€0.01/SMSand€0.0085perMBofdatatransmitted.Comparingthesepriceswiththepreviouscaps,thereductionofcapsare-20%,-50%,-83%respectively.TheCommissionproposesthepricecapsvaluesremainunchangedfrom15June2017until30June2022(withareviewin2019).24Italsomentionedthepossibilityfortelecomoperatorstoconcludeawholesaleagreementtooptoutofapplyingthesewholesalecapsandnegotiatebetterdeals.TheEuropeanParliamentcommitteeresponsible,theCommitteeonIndustry,ResearchandEnergy(ITRE),publishedthedraftreporton16September2016.Thecommitteeadoptedthison29November2016.ThereportcallsforareductionintheCommission'sproposedwholesaleroamingcapsforcallsfrom€0.04perminuteto€0.03andfordata,themainpointofdiscrepancy.WhereastheCommissionproposedasinglewholesalepricecapfordata(€8.5/GB)for5yearsperiod,theindustrycommitteeisproposingadepartingwholesaledatacapthatislower(€4/GB,€1lowerthantherapporteur'spristineproposal).Thispricewoulddroponayearlysubstructure,totakeaccountofthefallingunitpriceofdata.Thereportarguesthattoremaininlinewithconsumerutilizationinthelongrun,datacapsshoulddecrementovertheyearsandthattheCommission'sproposedwholesaledataroamingcapof€8.5/GBismuchhigherthanbothdomesticretaildatapricesandwholesaleauthenticcostsacrossallEU

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MemberStates,asillustratedinthefigurebelow:

Figure12Wholesaledatacostsincludingtransitcosts(€cent/MB)201624

ThesituationhasbeendiscussedattheCouncil,whereageneralapproachwasconcurredon2December2016:theCouncilisproposingtodepartfromhigherdatacapsthanthoseproposedbytheCommissionandITRE:startingat€0.01/MBinmid-June2017butdecrementinggraduallyto€0.005/MBinmid-2021.Thegeneralapproachincludesanincipientmechanismatwholesaleleveltoascertainsustainabilityinexceptionalcircumstances.Operatorsunabletorecuperatetheircostscouldasktheirnationalregulatorforsanctiontoapplyasurcharge.However,evenwhenexceptionallyapplyingasurcharge,thetotalwholesalechargefordatawouldnotbesanctionedtoexceed€0.0085/MB.Inthefigure,itshowshowthewholesalepricesaredifferentineachcountryandthereisahugegapbetweennorthandsouthcountriessuchasDenmark(0.29€)andSpain(0.41€)

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4.6 FairusepolicyTheconceptbehindthispolicyistolimittheamountofconsumer’sdatausageabroadtonotriskthetelecomoperatorsofreceivingahighwholesalebill.Firstdraftofafairuselimitpolicyhasbeenpublishedon05.09.2016.Itwouldhavelimitedtheamountoffreeroamingtoninetydaysinayearandamaximumofthirtyconsecutivedays,afterwhichregulatedroamingchargeswouldapply.Theproposalalsostatedthat"thecustomershouldneverthelessbeabletoconsumevolumesofsuchservicesequivalenttoatleasttheaveragevolumeconsumeddomesticallybythecustomersofthetariffplaninquestion",preventingoperatorsfromsettinglowdatalimits.(GSMA2016,Fairusepolicy)However,theproposalwashastilywithdrawnjustafewdaysafterbeingpublishedbecauseconsumerswereunhappywiththispolicy.OnlyanoteontheCommission'swebsiteremained:"Aninitialdraftwaspublishedon5.9.2016.TheCommissionserviceshave,ontheinstructionofPresidentJuncker,withdrawnthedraftandareworkingonanewversion".Thetelecomoperatorsslammedthepolicyalso,theywereclaimingthatitwouldbetoocomplextoimplementandit’sunclearforconsumers.Furthermore,30consecutivedaysgrantedtoeachconsumerwouldhavealreadycovered100%oftheneedsoftheEuropeancitizens,alsoalegalconcernsinDenmark,themaximumlengthofcontractis6monthssocustomerswouldhavebeenabletoresettheirroamingsubscriptiontwiceayear.(GSMA2016,Fairusepolicy)On15/12/2016,EuropeanCommissionreleasedalatestdraftofFairUsePolicy“FUP”,and2mainpointsfromthelastdraftwerenotchangedbecausetheyexplainedifFairUsePolicyrulesareentirelylefttothechoiceoftheoperator:ThenusersdonotfullyenjoythebenefitsofRLAHandcontinuetopayaroamingsurchargeinadditiontothedomesticpriceduringatleastpartoftheirtravellingtimeabroadintheEU.Ontheotherhand,ifFUPrulesareinadequatelydefinedatEUlevel:Thepermanentuseofdomestictariffswhileroamingmayleadtowholesalelevelconsequencesforthehomeoperatorandultimatelymayaffectitsabilitytoserveitsdomesticcustomerswithcompetitiveroamingserviceswhentheyperiodicallytravel.26The2mainpointsthatwereunchangedfromthepreviousdraftare:26

v AFUPmaybeappliedinordertopreventabusiveoranomaloususageofregulatedroamingservicessuchastheuseofsuchservicesbyroaming

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customersinaMemberStateotherthanthatoftheirdomesticproviderforpurposesotherthanperiodictravel.

v AnyFUPshallenabletheroamingprovider'scustomerstoconsumevolumesofregulatedretailroamingservicesattheapplicabledomesticretailpricethatareconsistentwiththeirrespectivetariffplans.

Additionallytotherulesmentionedabove,telecomoperatorsshouldnotimposealimitonthevolumesofmobileservicesavailabletotheroamingcustomerotherthanthedomesticlevel,whilethecustomerabroadintheEuropeancountries,alsothesedomesticlimitsshouldincludeanyapplicableFUPasregardsdomesticusageofthetariffplan.AfewrulesofthelastversionofFUPregulationwillbepresented:27

v Inaspecificsituation,telecomoperatorsmayapplytoitsnationalregulatoryforanauthorizationtoapplyasurchargeonitsroamingcustomers.Anyoftheseapplications,requiredallthenecessaryinformationtodemonstratethat,intheabsenceofanyretailroamingsurcharges,theproviderisunabletorecoveritscostsofprovidingroamingservices.

v Inordertoenablecustomerstoconsumevolumesofregulatedretailroamingservicesattheapplicabledomesticretailpricethatareconsistentwiththeirrespectivedomestictariffplans,theroamingprovidershouldasageneralrulenotimposealimitonthevolumesofmobileservicesavailabletotheroamingcustomerotherthanthedomesticlimit,whenthatcustomerisperiodicallytravellingintheUnion.Suchdomesticlimitsshouldincludeanyapplicablefairusepolicyasregardsdomesticusageofthetariffplan.

v Inordertoaddresstheriskthatpre-paidsubscriptions,whichdonotentailalong-termcommitment,areusedforpermanentroamingpurposesonly,theroamingprovidershouldbeentitled,inthealternativetorequiringtheprovisionofevidenceofresidenceorofstablelinksentailingfrequentandsubstantialpresenceontheterritoryoftheMemberStateofthatroamingprovidertolimittheusageofregulatedretailroamingdataservicesattheapplicabledomesticretailpricewithapre-paidsubscriptiontothevolumesthatcanbeboughtatthewholesaleroamingdatacapbytheremainingmonetaryamount,excludingVAT,availableonthatpre-paidsubscriptionatthetimeoftheroamingconsumption.

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4.7 TransparencyWhenaroamingserviceproviderappliesafairusepolicy,itshallincludeincontractswithroamingcustomersallthetermsandconditionsassociatedwiththatpolicy,includinganycontrolmechanismapplied.Aspartofthefairusepolicy,theprovidershallputinplacetransparent,simpleandefficientprocedurestoaddresscomplaintsofcustomersrelatingtotheapplicationofafairusepolicy.Thisiswithoutprejudicetotherightsoftheroamingcustomer,toavailof(transparent,simple,fair)andpromptout-of-courtdisputeresolutionproceduresestablishedintheMemberStateoftheroamingprovider.(ECn.d.,regulatoryframework)WherethereisobjectiveandsubstantiatedevidenceindicatingariskofabusiveoranomaloususeofaspecificregulatedroamingretailservicewithintheUnionatthedomesticretailpricebyagivencustomertheroamingprovidermayapplyasurchargefortheprovisionofthatspecificservice,afteralertingthecustomeraboutthedetectedbehaviorpatternindicatingsuchariskandaboutthepossibilityofsuchasurchargeforanyfurtheruseofregulatedretailroamingservicesbythatcustomer.Furthermore,theroamingprovidershallceasetoapplythesurchargeassoonasthecustomer'susagenolongerindicatesariskofabusiveoranomaloususeoftheregulatedretailroamingserviceinquestion.WherearoamingproviderestablishesthatSIMcardshavebeentheobjectsorganizedresaletopersonswhoneithernormallyresidesinnorhavestablelinksentailingfrequentandsubstantialpresenceintheMemberStateoftheretailroamingprovidertoenableconsumptionofregulatedretailroamingservicesotherthanforthepurposeofperiodictraveloutsidethatMemberStateinaccordancewithanarticlefromtheEuropeancommissionregulatoryframework("Wheretheroamingproviderestablishes,withobjectiveandsubstantiatedevidence,thatanumberofSIMcardshavebeentheobjectof

organizedresaletopersonsnoteffectivelyresidinginorhavingstablelinks

entailingfrequentandsubstantialpresenceintheMemberStateofthatretail

roamingproviderinordertoenableconsumptionofregulatedretailroaming

servicesprovidedattheapplicabledomesticretailpriceotherthanforthepurpose

ofperiodictravel,theroamingprovidermaytakeimmediateproportionate

measuresinordertoensurecompliancewithallconditionsoftheunderlying

contract"(ECn.d.,regulatoryframework)),theoperatorshallnotifytothenationalregulatoryauthoritytheevidencecharacterizingthesystematicabuseinquestionandthemeasuretakentoensurecompliancewithallconditionsoftheunderlyingcontractatthelatestatthesametimeassuchmeasureistaken.

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4.8 EconomicimpactofcuttingroamingfeesThestrategyofcuttingroamingfeeshasabeneficialphasefortheendcustomerswhichtheywillnotpayanymoreextramoneyforusingtheirdeviceswhileabroad,buttheimpactwillbeontheoperatorsboth(MNOandMVNO),operatorswillnotbeableanymoretochargeroamingfeestocustomersontheretaillevel,meaningtheywillbeonlybecompensatedwiththesamepricetheychargetheircustomersfordomesticprices,whiletheirroamingexpensesremain.Theimpactwilldependonthetypeofoperatoranditsgeographicalcoverageandlocation.ImpactfortelecomoperatorsGeographicallocationTheimpactofdataroamingregulationon2017issignificallydifferentdependingonthecountrytheoperatorsisactivein,mainlybecauseofthedifferenttravelingratioofendusers,makingoperatorsfaceeitherincomingroamingtrafficoroutgoingroamingtraffic.AnexampleofthatDenmarkhasmuchmoreoutgoingroamingtrafficbecausepeopleinDenmarktravelalottothesouthofEurope.Soasadirectresult,wholesalecostsfortheseoperatorswillbeveryhighandbyabolishingtheretailroamingfees,theywillsuffersignificantrevenuelosses.Asaresultoftheselosses,mobileoperatorswillincreasedomesticpricesinordertocompensateforthesewholesalelossesthatiscalled“waterbedeffect”,WaterbedeffectwillbeintroducedandusedinthethesisthathasbeentestedbyTommasoValletti.Ontheotherhand,GuntherH.Oettinger(Europeancommissionerfordigitaleconomyandsociety)said:“Thecommissiondoesnotbelievethatthereisariskofariseinmobileservicepricesasaresultoftheprogressiveeliminationofroaming.Theeliminationofroamingsurchargeisalong-standinggoalforwhichtheagreementwasreachedbytheEuropeanParliamentandtheCouncilontheCommissionsproposal.Theagreementforeseesacleartimelinewithallnecessarystepstobeundertaken.Toabolishroamingchargesaseriesoftechnicalconditionshavetobefulfilled.Inparticular,thewholesaleroamingmarketneedstoevolve,eitherthroughmarketforcesoranotherregulatoryintervention,toalevelthatmakestheendofretailroamingsurchargessustainablethroughouttheEUasof15June2017.Meanwhile,alreadyfrom30April2016,roamingpriceswillfurtherdecreasesubstantially.Roamingproviderswillonlybeabletochargeasmall

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amountinadditiontodomesticprices.Thatadditionalamountwillbeatmost25%ofcurrentretailroamingcapsforcallsmadeanddataand33%ofcurrentretailroamingcapsfortextmessages.NowtheagreedtextwillhavetobetranslatedandlegallycheckedtobeformallyapprovesbytheCouncil.ItwillthenbetransmittedtotheEuropeanParliamentforitssecondreadingvoteandadoption,afterwhichitwillbepublishedintheOfficialJournalandwillofficially,enterintoforce.”29Inordertomitigateanwaterbedeffectcausedbyroamers,theEuropeancommissionwillproposeaFairUselimitthatoperatorscanapplyonceRLAHisintoeffect(Fairuselimitsetamaximumamountofroamingusagepercustomerpertimeperiod).Also,inthespecificcasewhenanoperatorisnotabletorecoveritsoverallcostsofprovidingroamingservices,theseoperatorscanbeexemptedfromtheobligationtoprovideRLAHandwillbeabletoapplyasurchargeforroamingservices,inordertoensureitsbusinesscase.TheseexemptionscaseswillbedeterminedindetailsbytheEuropeanCommissionandpublishedattheendofDecember2016.23ImpactofgeographicalCoverageOnespecificcategoryoftelecomoperatorsinEuropeisthosecoverageregionextendsbeyondnationalborders,called“cross-country”operators.Operatorswhoarepartofacross-countrygroupwillbeabletogetcheapwholesaleroamingpricesbyusingtheirownnetworkinfrastructure,theycansteertheirroamingtrafficandinternalizetheircosts.

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ImpactsforMVNOsMVNOs,thosewhodon’townaphysicalnetworkinfrastructure,theyresellcapacitytheyrentfromanMNOandhencechallengetheincumbentoperators,thoughoftentakeuponlyasmallpartofthedomesticmarket.Inasituationasroaming,MVNOsincurincostswhentheircustomersaretravellingbuttheydon’thavewholesaleincomesastheycannothostanyroamersontheirnetworkssincetheydon’towntheinfrastructure.Theyexperienceabsolutetrafficimbalancesandtheydon’thavethebargainingpowertonegotiatewholesaleroamingfeesthatarelowerthantheceilingcapsimposedbytheEuropeanCommission.ForthemtheriskofwaterbedeffectisevenmorepertinentthanforMNOswithhighoutgoingroamingtraffic.Ifthisissueinnottackledaccordingly,theimplementationofRLAHstrategymighthaveanegativesideeffectonthelevelofcompetitionwithinthenationalmarket.(MVNOEurope2015)InJune2016theEuropeanCommissionhasproposedasignificantreductionofthewholesalecapsfordata,voiceandSMS.MVNOsarelookingforwardforlowercapswhilefromtheothersidesoutherncountriesareadvocatesofhighercapes.Thedebateiscomplex,asnobodycanexactlypredictthespotinordertoofferRLAHonasustainablewaytofitwiththesituation.AsBEREChaspointedout,thesituationiscomplexbecauseofthedifferencesbetweenoperatorsandthestrongvariationsintravelpatternsofconsumersfromindividualmemberstates.Inthenextmonths,legislatorsattheEU-levelarechargedwiththedifficulttasktomaketrade-offsbetweenthepolicyobjectivesofpromotinggreateruseofroamingservices,protectingthebusinesscaseofmobileoperatorsandprotectingEuropeanconsumers.31

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4.9 ImpactsofRLAH(RoamLikeAtHome)Europeissufferingtheworstidentitycrisissincetheunionwascreated,becausepoliticiansandbureaucratsaredesperatetodemonstratedoingsomethinggoodfortheEuropeancitizen.Theythoughtcheaproamingwasasurethingtowinsatisfaction,butnoitwillnotbringapositiveimpactforthecustomers.AswhatJohnStrandfromtheStrandconsultantcompanyinDenmarksaid“unfortunately,theypolicymakerswhomakethesesimplecalculationsdonotseewhatwillhappeninrelationtochangingconsumptionbehavior,thedevelopmentofnationalprices,theavailabilityofservices,thesupplyofmobileplans,pricinginthenationalwholesalemarket,thechangedthedistributionterms,andhowto"roamlikehome"willaffectmanyMVNOsinEurope”32.RLAHhavemanyimpactsontheeconomicandmarketofthetelecomindustries,sincethisprocesswillreducethepricesandresultsincuttingtelecomindustriesrevenuesointhiscasetheywillnothavebusinesscasestobuildnewnetworksorinfrastructure,sotheinnovationprocesswillbedroppeddown.Someoftheimpactswillbeintroduceddown:IntheScandinaviacountrieslikeDenmarkwithalowingoingtraffic,thattheyareofferinglowpriceswillbeforcedtoraisepricestoeliminatethegapbetweennationalpricesandthedifferentroamingfeesoutsideDenmark.WhilecountrieswithhighpricessuchasGermanywillhavetoreducetheirpricestocounterthearbitragethatthismodelcreatesspeciallyforthesmalloperatorsandMVNOstheywilllookatthearbitrageopportunitiesbymovingtrafficfromawholesalemodelagreementtoaroamingmodel.Forexample:somenetworkoperatorswithMVNOsclientsandwithcorporateclientsacrossanumberofcountrieswiththeyservebyusingacombinationoftheirownnetworksandMVNOagreements,inthiscasetheycansavetechnicalcosts,timeandpaperworkassociatedwithbeingindialoguewithregulatoryauthorities.Numberofsubscriptionswillbereducedwithanarrowerrange,andforthemobileoperatorswithmobilebroadbandproductswillbetryingtocompeteinthemarketwithfixedbroadbandprovidersmaywithdrawfromtheInternetserviceprovidermarketwhichwillresultinahugeeconomicconsequencesiftheircustomerstaketheproductabroadandconsumelargeamountsofdataservice.

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4.10 SuggestionstoreducetheeconomicandbusinessimpactsofcuttingfeesInthispart,thesuggestionshavebeenmadebythe“TheBodyofEuropeanRegulatorsforElectronicCommunications”BEREC.

4.10.1 FairuselimitsWhencustomersdonotneedtopayroamingsurcharges,theymightbetemptedtopurchaseaSIMcardofaforeignoperatorthatofferslowerpricingthananydomesticoperator,henceenjoycheaperpricinganduseroamingalsowhenbeingathome.Thisscenario,knownaspermanentroaming,willleadtohigherwholesaleroamingchargesfortheforeignoperator,leadingagaintothewaterbedeffect.Onalargescale,permanentroamingwillalsodetrimentthetelecomsectorinthosecountrieswithonaveragemoreexpensivemobileprices.Fairuselimitareawaytocounterthisproblem,theysetamaximumamountofroamingpercustomerpertimeperiod.Whenthecustomerexceedsthislimit,hewillneedtopayasurcharge.FULcanbeimplementedindifferentways,thelimitcanbesettoaspecificamountofroamingperday,perweek,permonthorevenperyear.WhentheFULisexceeded,afairsurchargeperusageordaily/weeklyflatfeecouldbelevied.TherewillbeaneedofsomecapsfortheFairuselimit.

4.10.2 RaisedomesticpricesWhenretail-roamingpricesdecreaseononeside,thedomesticpriceswillincreaseontheotherside,thismethodcalledwaterbedeffectthathasbeenmentionaboveearlier.Thissituationisunfavorableaseveryone,alsothecustomerswhoneverroam,willneedtopayhigherdomesticpricestocoverthelossesmadebythecustomerswhodoroamandthat’sunfair.Thismeansthatonlythepeoplewhoroamfrequentlywillbenefitfromthissituation.TheaverageamountofcitizensintheEEAwhotravelatleastonceayearis35%andtheaveragedaysabroadwithinEEAis5.7dayshasbeenprovenbyaresearchofBEREC31.Lookingatthesenumbers,wecansaythatalargegroupofcustomerswillneedtopaymoresothatasmallgroupofcustomerswhofrequentlyroamwillpayless(businesspeople).Thisisanundesiredoutcome,howmuchdomesticpricesshouldincreasetocoverthelosseswillstronglydependonthecountryinwhichthemobileoperatorisactive.Additionallyoperatorsincompetitivemarketmightbe

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reluctanttoincreasetheirdomesticprices,protectingtheirmarketshare.Hence,thedegreeofpossibilitytoraisedomesticpricesalsodependsonthecompetitiveenvironmentwithinacountry.

4.10.3 DecreasewholesaleroamingpricesInthispart,thefocusisonthecostside,thebestsolutionforoperatorsmightbetoreducewholesalecharges(speciallyforthecountriesweretheiroutgoingtrafficaremuchhigherthantheingoingtraffic).Inthepast,thesewholesalepriceswerehigh,allowingtheForeignServiceprovidertotakesignificantmarginsonhisowncost.Thoughnationalcompetitionhasdecreaseddomestictariffs,thelackofcompetitionontheinternationalroamingmarkethasleftthewholesaleroamingpricesunchanged.Asuntilrecently,thesehighwholesalepricescouldbechargeddirectlytotheendcustomersasapartoftheirroamingfess,therewasnopressingneedforsharpreductionofthesewholesalecharges.Aspartoftheirpolicy,theEuropeancommissionhassetwholesalecapsforroaming.Findingacorrectlevelofthesecapsisnoteasy.Settingthecapstoolowbelowthecostwillputpressureontheforeignserviceproviderprovidingroamingtocustomersofforeignproviders(riskingaraiseindomesticpricesofthisforeignserviceprovider).31Iftheysetcapstoohigh,theywillnotbeveryeffective,ifitstoohighthentherewillbeapressureonthedomesticserviceproviderswhichtheywillhavetopaythewholesalechargesfortheforeignprovidersandiftheoutgoingtrafficaremuchmorehighertheingoingtraffic,thentheywillendinasituationloosingrevenue(insteadofearningmoneyfromtheendusers,theywillpayextraortheywillagainincreasethedomesticpricestocoverthecost).Hence,thebestoptionistosetthewholesalecapsjustabovethecostoftheFSP,sothereissmallmarginthatcanbeusedtoimprovethequalityofthevisitednetworkandthecostforthedomesticserviceproviderarenottoohigh.

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4.11 Strategiesforthefuture

4.11.1 CarrierportabilityandAppleSIM

ThissolutionisanalternativesolutionforRLAH.Ifthissolutionwasimplemented

thentherewillbenoreasontoimplementRLAH,becausecustomerswillapplythe

othersolution.

TechnicalregulationintheformofnumberportabilityenablinguserstoswitchdomesticnetworkprovidersislegallyguaranteedintheEuropeanregulatoryframeworkforfixednetworksaswellasformobilenetworks.Aproperextensionofnumberportabilitytotheconceptofcarrierportabilitycanprovideasolutionforstimulatingcompetitiononthemarketsforinternationalroamingfromthecustomer’sperspective.Inordertoimplementcarrierportability,customersshouldhavetherighttoswitchmobilecommunicationsprovidersatanytime.Theswitchshouldbecarriedoutwithoutunduedelaywithintheshortestpossibleperiodoftime.33Thefollowingrequirementsforcarrierportabilityaremade33:

• UsersmusthavetheoptiontobuyaSIM-unlockedhandsetenablingtheuseofalternativeSIMcardsofdifferentproviders.Thisisapreconditionforchangingcarriersforoutgoingtrafficininternationalroaming.ThechosenFSPwouldprovidethevisitingcustomerwithanidentityinitsnetworkbymeansofanewSIMcard.

• Temporarynumberportabilityisanessentialpreconditionfor

competitionintheinternationalmobilecommunicationsmarket.Itallowsmobileservicecustomerstoreceiveincomingdataroamingserviceonavisitednetworkundertheirhomemobilenumberwhenswitchingtoadifferentprovideronlyforalimitedperiodoftimeoronlyforroamingservice.Currently,thisisratherdifficultsincetheDSPhasfillcontrolovertheE.164numbers(E.164setsthegeneralformatforinternationaltelephonenumbersandisapartoftheinternationalpublictelecommunicationnumberingplan)ofitscustomersbothfordomesticandroamingservices.

• TheDSPshouldnotberegulatoryenforcedtocarryouttheincasso

functionforinternationalroamingservicesbecausetheFSPalsohasthepossibilitytohandlethebillingforhisroamingservice.TheDSPhowevershouldberegulatoryobligedtoprovidetherelevantsourcedataontheidentityandcreditworthinessofitshomecustomersiftheDSPisnothandingthebilling.

Additionally,KniepsandZenhausernfromthe”InstituteofTransportScienceandRegionalPolicy”33suggestthatthecurrentpriceaswellasdecoupling

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regulationsshouldbeabandonedandthattheEuropeanregulatorsshouldinsteadimplementtheconceptofcarrierportability.Inaddition,measuresofconsumerprotectionsuchasinformationpoliciestoavoidbillshocksshouldbeobligatoryforallmobileoperators.Thisapproachtacklesthediscriminationbetweenhomeandvisitingcustomers.Assoonasconsumersarefreetochooseanycontractformobilecommunicationsoriginatingorreceivedinthevisitedcountry,theyarenolongerforcedintocontractualrelationswiththehomecarrieroralternative-roamingproviders.AvariationonthiscarrierportabilityisthenewSIMtechnologyreleasedbyApplewhichwillallowcustomerstotakeoutshort-termdataplanswithdifferentmobilephoneproviderswhenneededanditalsoallowstravelertousealocalnetworkfordataconnectionswithouttheneedtoobtainanewSIMcardfromalocalprovider.ThisapplicationofcarrierportabilityisonestepclosertoanentirelysoftwarebasedSIMforanycountry,whichwouldgivecustomershugefreedominchoosingtheirmobilesuppliers.ChatSimService(ItsanalternativesolutionbeforeRLAH)ItsasolutionforuserstobuySims-cardsanduseitinsteadofroaming,becauseroamingpricesareexpensiveanduserswereafraidtouseitbecauseofthe“BillShock”,SoChatSimserviceallowinguserstousefewappstoconnectandcommunicatewhileabroadforastandardpriceasitsshowninthefigure(36€/year)andthenausercanusethisserviceunlimitedduringayeartocommunicateover(Facebookmessenger,Whatsappandsomeotherapplications.ButtheideanowhowthesebusinessescouldsurviveafterimplementingRLAH,whichwillsettheroamingfeesonzeroandnotallowoperatorstochargetheirsubscribers.

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Figure13ChatSimProviderinItaly34

WhatwillhappentoserviceslikethisafterimplementingRLAH?AfterimplementingRoamLikeAtHomeonJune2017,oneoptionfortheChatSimbusinessandothersimilarbusinessesinEuropecouldbepossibletosurviveafterimplementingRLAHconceptisthatifthetheoryofVallettihappenedonatelecommarket“whentheregulatorsdecreasethepricesonthewholesalelevelandnotallowoperatorstochargetheircustomersthenontheothersidethepricesofdomesticpricewillraise“,sowhendomesticpricesraisesandbecomesexpensiveandthencustomerswillsearchforanothersolutionsandservicesthatletthemsavethecostofroaming,sotheymovetosubscribewithChatSimserviceorsimilarserviceslikethattosavethecostofroamingandcontinueconnectedwhileabroadtocommunicateovertheapps.

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4.11.2 Cross-borderandtrafficcompetition(forbigoperators)Cross-borderoperatorshavehugeadvantagesovernationaloperatorswhenitcomestoroamingcostandfees.Inordertokeepwholesalecostsundercontrol,itisessentialtodirectroamerstopreferrednetworks.Byusingthisprocessoftrafficsteering,theDSPcanmakesurethecustomer’strafficissteeredovertheforeignnetworkoftheDSPschoosing.Before2003,trafficsteeringwasnotpossible:whenabroad,thecustomeritselfwasgivenalistofFSPstoconnectto,leadingtoanincontrollablewholesalemarket.Theintroductionoftrafficsteeringmadeitpossibletodirectcustomer’straffic,whichisespeciallyadvantageousforlargeroperatorswithhighnegotiatingpower.Furthermore,cross-bordercountryoperatorscaninternalizeroamingcostsbysteeringofthecustomer’straffictooneofitssubsidiariesthatisoperatinginthetraveldestination.Thistypeofcross-bordercompetitionresultsinmoreaffordableaccessandpan-Europeannetworksimplyingcostreductionsforbothnetworkdeploymentandoperatingexpenditureseffectivelybenefitingfromeconomicsofscale,thoughthiswouldnotnecessarilyimplythatauniformtariffforallEUusersshouldemergeinsuchamarket,orthatCommissionshouldimposesuchaprice.Thereisasignificantincreaseintheamountofoperator’smergersinthemobiletelecommarketsuchasGermany(Telefónica&E-plus).Duetotheboundariessetbyspectrumauctionsandthecountry–specificIMSI(InternationalMobileSubscriberIdentity)codes,theEuropeantelecomsectorremainsheavilyfragmented:accessavailability,qualityandpricesvarysignificantlyacrossthecontinentwithtelecommarketsdefinedbynationalborders.Tostimulatecross-bordercompetition,theCommission,theEuropeanParliamentandtheCounciloftheEUcouldusetheirregulatorypowerstomakeitrelativelymoreattractivetooperatecross-bordernetworksinsteadoffocusingondomesticprices.(PhilippeAghion,NickBloom,RichardBlundell,CompetitionandInnovation2014)Apossiblepolicyisintroducingsupra-nationalallocationofradiospectrum,nowtheallocationintheEUisdonebymemberstatewithinaframeworkofinternationalcoordinationandharmonization,designedtocountercross-borderinterference.Auctionsindifferentcountriesarerunatdifferenttimes,eachassignmentprocedurehasitsownparticipationcost,biddersthatwanttooperateinmultiplecountriesarelikelytocalculatetheirbidsforindividuallotsandfacetheriskofpayingtoomuchinearlyauctionsiftheyfailtosecurecomplementinglicensesinlaterauctions.ThisnotonlyhindersthecreationofoperatorswithalargeEuropeanfootprint,butalsohasanegativeeffecton

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networkcoverageandpenetration.ToreducecostsforoperatorsandincentivizethedeploymentofnetworkswithalargerEuropeanfootprint,thereshouldbeamovetowardsEU-levelassignmentsofspectrum.36Attheend,itsimportanttobementioned,stimulatingthisstrategygiveslargeMNOsanadvantageoversmalleronesorMVNOsandmayresultinonlylargecross-countryoperatorsremaining,henceleadingtolesscompetitionandhigherpricesforcustomers.Thistrade-offbetweenlargemergingoperatorshavingmorewholesalenegotiatingpowerandprotectingsmallercompaniescurrentlywillremainadifficultbalancingprocess.

4.11.3 IMSI(InternationalMobileSubscriberIdentity)beyondnationalborders(forsmalloperators)IMSIhavebedonebytheBelgianandLuxemburgtelecomregulatorsandtheymadeitpossibletocombineaLuxemburgIMSItoaBelgianmobilenumberandtheotherwayaround.ThisisaninterestingstrategysinceIMSIs,arenormallyboundbynationalborders.Theagreementmakesitpossibleforoperatorsoffertheirservicestocustomersinboththeirowncountryofoperationandtheothercountryandusingeitheralocation-basedorauniformpricing.Bysigningbilateralagreementswithoperatorsfromothercountriesforakindof“usage-basednetworklease”,domesticoperatorscanprovidetheirusersatransparentexperienceandthemselvesbereducedofhighwholesalefees.Forsmalleroperators,thispresentsamoreattractiveoptionthanapurewholesalenegotiationprocess,aslargeoperatorspreferareciprocalagreementwithotherlargeoperatorsbasedon“exchangingtraffic”andbecausetheyoftenrenouncestartingthecostlyadtimeconsumingnegotiationprocessforlowvolumesoftraffic.Hence,theoptionofsigningbilateralagreementsbasedonpan-nationalIMSImaybetheonlyoptionforsmalleroperatorstosecuretheirbusinesscaseagainsthighroamingfees.TheEuropeanCommissioncouldstimulatethisbysettingaunifiedmobilecountrycodeforthewholeofEurope.Traditionaloperatorshoweverrenouncethisevolution,astheyfeartheincreaseincompetitionandthelossofroamingrevenues.

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4.11.4 RoamLikeLocalinsteadofRLAHWhenuserswillnolongerpayroamingfees,theymightbetemptedtobuyaSIM-cardfromacheaperforeignoperatorandthusconstantlyroam,alsointheirdomesticcountry.Asacountermeasure,theECislookingintofairuselimitstocounterthisso-calledpermanentroaming.Alternatively,insteadof“roaminglikeathome”,onecouldsuggest“roamlikealocal”whichhasbeenintroducedin2011byBEREC(BERECResponsetotheEuropeanCommissionPublicConsultation,2011)TheideabehindRoamLikeaLocal“RLAL”issimpleenoughprocess.PricingstructurescanbeimplementedsothatroaminguserscanbechargedbytheirDSP,approximatelythesamepricesasthecurrentaveragepricesofthecountryinwhichtheyarevisiting.Thiswouldclearlytackletheissueofpermanent,aschoosingaforeignoperatorwillnolongerresultincheaperpricescomparedtowhenchoosingforalocaloperator.However,thisapproachlacksconsumertransparencyandsimplicityasretailroamingchargesarenolongeruniformandmayeitherbehigherorlowerthaninthedomesticcountry,whichisexactlythestrongsuitofRLAH.Additionally,thisapproachrequiresECtoprovideregularupdatesoftheaveragepricesforeachcountryandrequiresmobileoperatorstoadjusttheirpricingaccordingly,whichwillnodoubtleadtoadditionaloverheadandmoredifficultbilling.

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4.11.5 WIFIoffloadingWi-FihasmorethanoncebeenproposedasaviablesolutionforoffloadingmobiledataasitofferscheapaccesstotheInternet.InEuropeanumberofexamplescanbefoundofmobileoperatorsofferingsocalleddualwirelessaccessnetwork.Ifsufficientaccesspointsareinstalled,Wi-Fiaccessisavailableinallpublicplaces,allowinguserstoeffectivelyswitchbetweenmobiledataandWi-Fiservice.(AijazandAmani,surveyonmobiledataoffloading2013)Whenabroad,userstypicallyuseWi-Fionlywhenstationarysuchascoffeeshop,restaurants,andhotelsastheseoffersfreeWi-Fiaccess,asaresult,Wi-Fiseemsanunlikelysolutionforoffloadingdatawhenroaming.However,mobileoperatorshavestartedtoteamup,sharingtheirWi-Finetworkswithotheroperators,resultinginusersalsohavingaccesstoWi-Fiservicewhenroaming.ThebestexampleforthisinEuropestheFON-netowrk.FONjoinsasetofnationalandinternationalWi-Finetworksintoonesinglenetwork.OperatorschoosetoopenuptheirWi-FinetworkviaFON,inreturnthisallowsthemandtheiruserstoaccessotherFONnetworks.39UsingWi-Fioffloadingseemsagoodsolutionintheory,butmayresultinunbalancedrelationshipsiftheexchangedtrafficinbetweendifferentparticipatingoperatorsisnotcomparable.

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Chapter5

5 AnalysisInthischapter,allthetheories,datacollectedthatarerelatedtointernational

dataroamingwillbereflectedinthischapterforanalyzingandcomingoutwitha

conclusion.

InternationaldataroamingisoneofthepopulartopicsinEurope.Regulatorshavepromisedthaton15,June2017willimplementRLAH,whichmeansthatoperatorswillnotbeableanymoretochargetheirsubscribersfortheirroamingusageabroad,buttheystillhavetopayeachotheronthewholesalelevel,thatmakeitverycomplicatedfortheregulatorssincemanyoperatorshavementionedthattheregulationswillcuttheirrevenueandinmanycasestheywillnotbeabletocoverthecostofroaming,speciallyoperatorsthatarenotcross-borders.InternationaldataroaminghaveseveralimpactsonthetelecomoperatorsinEuropeashasbeenmentionedearlierinthethesis,fewstrategiesandsolutionshavebeenhighlightedandexplained.InthischapterbothsideswillbeexplainedfromdifferentpointofviewswithrespecttotheEuropeanCommission,Telecomoperatorsandtheinterviews.Internationaldataroamingwentthroughalongnegotiationandstillnotcompletelydone,becauseofthecomplexityofcollectingrelatedinformationfromtheTelecomoperatorsabouttheirrealrevenueandcostofdataroaming.Manyoperatorswillnotgivetheirrealdatatotheregulators,sincetheywouldgenerateasmuchastheycanrevenueandtheywouldnotliketohaveacutintheirrevenue.Also,thenewregulatorymethodRLAHwillpreventtelecomoperatorstochargecustomers,butinthesametimetheywillhavetopayforotherforeigntelecomoperatorsforconnectingtheircustomerswhileabroad.Anothercomplexityofregulatingdataroaming,it’sthedifferentpricesandcostsofdataroamingbetweentheEuropeancountriesasitshowninFigure9,therearedifferencesbetweenthecountriessuchasinDenmarkthewholesaledataroamingpriceis0.032€/MBwhileinSwitzerlandis0.083€/MB,andthedifferencesbetweenpricesonthewholesalelevelmakeitdifficultfortheregulatorstofindawaytoregulatethesepricesandreachSingleDigitalEuropeanMarket,sincemanytelecomoperatorsspeciallyintheScandinaviacountries(Denmark,Sweden)explainedthat,iftheregulatorswillregulateInternationaldataroamingwithimplementingRLAH,thentheywillnotbeable

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tochargetheircustomersanymoreandtheiringoingandoutgoingtrafficarenotbalanced,itwillresultedthatthesetelecomoperatorswillhaveaveryweakpositiononthemarketandspeciallythoseMVNOs(thosethathavenoinfrastructure),becauseitwillcometoapointthattheywillnotbeabletocoverthecostofdataroamingservices.AnotherchallengeisthetourismratiodifferencesbetweentheEuropeancountries,thatmeansthatinmanycountriestheirhaveahugegapbetweentheingoingandoutgoingtraffic.AshavebeenshowninFigure8,thereisahugedifferenceinthetravellersrationbetweenthenorthandsouthcountries(likeDenmarkhavemuchlowerratiothantheSpain)whichmeansthatSpainwillbenefitfromtheingoingtraffictotheircountryandwillchargeDanishtelecomoperatorstoconnecttheircustomerswhileabroadinSpain.That’swillputtheDanishtelecomoperatorsinariskiftheirusersstayforalongtimeinSpainandconsumehighdataroamingservicestonotbeabletocoverthecostofthewholesalechargesandinthissituationDanishoperatorswillhavejustanoptionistoraisetheirdomesticpricestocoverthecostandthiscalled“waterbedeffect”thathavebeenintroducedbyValletti.

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5.1 EuropeanmarketCustomersbehaviorinEuropehavechangedinlastfewyears.TheconsumptionofdatahaveincreasedwidelywhichmeanstherevenuefortelecomoperatorsonthedatahaveincreasedwhiletheconsumptionforvoiceandSMSshavedecreasedashavebeenshowninfigure3.ThecostofprovidingdataroamingservicesvariessignificallyacrossEurope,differencesinthespectrumcost,labourandpropertycost,andspeciallytheingoingandoutgoingtrafficisunbalancedinmanycountries.Thesedifferencesincosthavebeenshowninfigure12(inDenmarkitis0.29€cent/MBwhileinRomania0.59€cent/MB).Alsoinsomecountries(touristic)roamingservicesmightbethemaindriverofdemandfornetworkcapacity.InEurope,EuropeanCommissionaimingtoachieveasingledigitalEuropeanmarket,butitshardtobeachieved,becausetherearemanydifferencesinthecostsofofferingroaming,differenttaxesanddifferentlabour,spectrumcostandsoon.Roamingmarketwereclassifiedonaverylowcompetitionlevelduetoinelasticdemandfortheservicesandveryfewoperatorswereinthemarketbecauseofthehighcostlypricestoenterthemarketbeforeimplementingregulationson2007.Afterimplementingaregulationson2007,pricecapwereimplementedwhichleadstoreducethepricesandlimitit,sooperatorscantchargecustomersoverthelevelofpricecap.Animpactofthepricecapscouldbeshowninfigure3(Europeanmobilerevenue)whichshowshowtherevenuedeclinedfrom174billion€theraiseofregulationsin2007andhowitwillcontinuedecreasingtoreach140billion€in2016,becausetheseregulationsforcedtelecomoperatorstodecreasetheprices.Intheanotherhand,Regulatorsaimsofimplementingsuchregulationsistoprotectthemarketandkeepitcompetitive,sincetheyhave579MVNOs(figure4)intheEuropeanmarket,andwithouttheseregulations,MVNOSwillbesetinarisksituationthatwillnotbeabletocompeteinthemarketbecausethepricesofroamingareveryhighandtheywillnotbeabletocoverthecosts.ButregulatorshavetotakeinfocusthatMVNOswillhavethebiggestimpactsofimplementingRLAHregulationbecausetheywillnotbenefitfromingoingtraffic,sincetheydonotownaninfrastructuretoconnectingoingtraffics,butintheonehand,theyhavetopaywholesalechargesforotherforeignoperatorsbecausetheywillconnecttheirsubscribers.ThatiswhyMVNOsarenegotiatingwithEuropeanCommissiontodecreasewholesalepricetothelowestleveltobeabletocoverthecostsandstayinthemarket.

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TheroleofMVNOsisveryimportantintheEuropeantelecommarket,becausetheyarethewaytoincreasecompetitioninthemarketandledbigoperatorstodecreasetheprices.SoEuropeanregulatorshaveencouragedMVNOsandimplementedsomeregulationstoincreasethenumberofMVNOs,andwecanseethatinfigure6,whichthenumbersofMVNOshaveincreasedrapidlybetween2007and2001.EuropeanCommissionhaveusedMVNOsdirectlyasaregulatoryinstrument,EuropeanCommissionhaveappliedconditionsrelatedtoMVNOaccessbeforeapprovingmergersbetweenMNOstopreservecompetitionintheEuropeantelecommarket.Forexample,beforemergers3telecomoperatorwithTelefónicainIreland,3wasrequiredtocommittoseeingupto30%ofthemergedcompany’snetworkcapacitytotwoMVNOs.Theconventionalwisdomamongmanyregulators,politicians,andpolicymakersisthatthemoreoperatorsorMVNOsinagivenmarket,thebetterthecompetitionwillwork.

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5.2 SpanishMarketRoamingshareintheSpanishtelecommarketwerebetween9%and6%from2007to2011ofthetotalmarketshare,itshardtogetdatafromtheirrevenuestream,becausemostofthesetelecomoperatorsarelistedinthestockmarketandassuchtheymightinterestedinshowingthatsuchsubstantialpartoftheirrevenueunderthreat.ToforceRegulatorsnottoimplementanyregulationsthatcanharmorcuttheirrevenuestream.AnexamplecanbepresentedisTelefónicastock,whichhasbeenitshighestrevenueon2007,thistelecomoperatordefinedascross-borderoperatorbecausehaveinfrastructureindifferentEuropeancountries.

Figure14TelefónicaStockValue40

Theusageofroaminghasincreasedaftertheimplementationofregulationon2007,butitwasn’tenoughtocompensateforthereductionsinprices.EChaveshowedontheirsurveystudythat72%ofEuropeansstilllimitedtheirusageofdeviceswhileabroad.ThismightreducethenumberofEuropeanusersthatlimitedtheirusageandachieveevenbiggergrowthinusage.

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Spanishroamingmarketshareandconsumption:datawerecollectedfrompreviousfiguresinthereport(figuresnumber:7and8)Year Wholesale

Revenue(Millions)

TotalRevenue(Millions)

%OfWholesaleRevenue

PricesforMB(€)

ConsumptionofMB(Million)

2008 380 1200 31.6% 4.91 14

2009 220 900 24.4% 3.23 27

2010 200 800 25% 2.38 33

2011 190 730 27.3% 1.30 50

2012 180 590 30.5% 0.89 702013 160 500 32% 0.48 106

Table1–RoamingmarketshareinSpainandconsumptionfrom2008-2013Basedonthecalculationsintheabovetable,wecanconcludethattherevenuedroppedrapidlyfrom2008until2010,butafter2010itshowsthereductionsonrevenuewasslightlyslowbutonthesametimetheconsumptionofdataincreasedveryhighuntilitreached106MB(million).Thatmeanstheregulationofpricecapsofreducingpriceswashigherthanusageofdataservicesthatleadstolooseinthewholesalerevenueandtotalrevenueandalsoamarketcompetitioncouldhaveanimpactonoperatorstocompeteonthemarketbyloweringtheirprices.Butthetablealsoshowsthatthepercentageofwholesalerevenuehadabigchartfromthetotalrevenue.WhatwecanunderstandfromtheSpanishmarketthatthereductionofpricecapshadanimpactontherevenuefortelecomoperatorsasshowninthetableabove,soEuropeanCommissionhavetotakeincasethatSpainhasahighincomingtrafficwithhighconsumptionbutstilltherevenuedecreasingyearbyyear,sothat’swhytheyarenegotiatingwiththeEuropeancommissiontoincreasethewholesalecapprices,sotheycanchargeoperatorsmorehighertoraisetheirrevenue,whileinsomecountrieslikeDenmarktheywillhavereallyabigimpactontheirmarketssincetheyarenotspecifiedasarealtouristcountryasSpain,sotheywillnotbenefitifthewholesalepricecapraisedup,butincontrarytheywillbeforcedtopaytheothertelecomoperatorswholesalechargesandbeingabletochargetheircustomerswhichwillleadthattheywillcovertheircosts,andattheend,whoisresponsibletocoverthegapofthesecosts.Ofcourseitwillbetheend-users,sointheDanishmarket,operatorswillhavejustanoptiontoraisethedomesticpricestocoverthecostandherewe

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comebacktothetheorythatVallettiexplainedandtestedonthetelephonemarket,whichcalled"Waterbedeffect".

5.3 ImpactfortelecomoperatorsGeographicallocationThedifferenttravellingrationofendusersbetweentheEuropeancountries,makingoperatorstofaceeitherincomingoroutgoingroamingtraffic,andthat’sinsuchcaseslikeDenmarktheyarefacingalowrationoftravellerswhichmeansverylowingoingtrafficbutinthesametimeveryhighoutgoingtrafficwhichasbeenshowninfigure(8)andthatmeansthatoperatorsinDenmarkwillhaveaveryhighwholesalechargestopaytheforeignoperatorstoconnecttheircustomersandtheriskisiftheirmarginalrevenuewillbedecreasedtobeunderthemarginalcostsooperatorswillhavetofindawaytocovertheirlooses,inthiscasetheywillnotbeabletocoverthecostsandthentheywillbeforcedtoraisetheirdomesticpricesandthesephenomenacalled“waterbedeffect”orimplementFUPtolimittheirsubscribersforroamingusagewhileabroad.Additionallytothataswhat"JakobWiller"mentionedintheinterview,thestrategyofoperatorscouldbechangedandtheywilloffernewsubscriptionpackagessuchasanexpensivepackageifuserswouldchosetoroamwhileabroadandotherpackagesjusttouseitinDenmark.Intheotherhand,thecommissiondoesnotbelievethatthereisariskofariseinmobiledomesticpricesasaresultoftheprogressiveeliminationofroaming.Theeliminationofroamingsurchargeisalong-standinggoalforwhichtheagreementwasreachedbytheEuropeanParliamentandtheCouncilontheCommissionsproposal.Additionallytothat,inordertomitigatewaterbedeffect,theyhaveproposedFUP,sointhiswayoperatorscanlimitthedatausageabroadtonotrisktheirbusinessestolooseandtheyhavementionedthatifanoperatorcouldcomewithevidencereportsthattheycannotcoverthecostsofroaming,thentheywillhaveapermissiontoaddsurchargestotheirsubscribersinordertocoverthecostsadsafetheirbusiness.

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2ndimpactonthetelecomoperatorsisgeographicalCoverageItsaboutthosestrongpowertelecomoperatorswhichtheyhavebranchesindifferentcountriesthosecoverageregionextendsbeyondnationalborders.Thoseoperatorswhoareparofacross-countrygroupwillbeabletogetcheapwholesaleroamingpricesbyusingtheirownnetworkinfrastructure,theycanbalancetheircostsbytheoutgoingandingoingtraffic,alsotheircustomerswillnotdropofftoanothernetworkswhiletheyabroad,theywillstillbeconnectedwiththesameoperatorandinthiswayoperatorswillsavethecostofwholesalechargestopaytoanothertelecomoperators.Nationaloperators,smalloperatorsthatdon’thavetheirowninfrastructure,andoperatorsinNordiccountries(Denmark,Norway,Sweden)wantlowerwholesaledatacapsbecausetheiroutgoingtrafficisverymuchhigherthantheingoingtraffic,additionallysomelargeoperators,wanttoascertainthatthecapsarehighenoughtorecuperateallwholesalecosts.TheassociationofMNVOsEuropeworriedaboutalacksituationofcoherencebetweentheregulatoryobligationsatretaillevel(aFUPwithoutdurationperiodorvolumeconstraint)andtheunderlyingeconomicsforoperatorsatthewholesalelevel(theCommissionproposedwholesaleroamingdatacaps).Itwantstobulwarkalternativeoperatorsofferingthemostcompetitivedealsfrom'marginsqueeze'situationsandasksforthewholesalemarketdatacapstobefurtherreduced.24Whileotheroperators,includinglargeoperatorswhichcalledcross-borderoperatorsthathavecoverageinmorethanoneEuropeancountry,wanttoascertainthatthecapsarehighenoughtorecuperateallcostsandwithalsanctionforinvestmentintheirnetworks.Countrieswithaplethoraofincomingtrafficfromtouristsarguethattheyrequireinvestingincapacitytosanctionforthesupplementalroamingtrafficontheirnetworks.Additionally,theEuropeanTelecommunicationsNetworkOperators'Association(ETNO)andGSMA,havepublishedajointstatement,settingouttheirconcerns"thatfairuselimitsintermsofvolumearerequiredtofightagainstabusesoranomaloususe.Simplevolume-basedfairuselimitswouldhelpaddressproblemsofabuseandanomalousbehavior,whilealsoimprovingsustainabilityforsomeoperatorsandclarityforcustomers”.41

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ImpactsforMVNOsMVNOsincurincostswhentheirsubscribersareabroadinEuropeancountries,becausetheydon’thavetheirowninfrastructuresotheywillnothaveanybusinessmodelabouttheingoingtraffic,sotheyjusthaveonewaytrafficthatistheoutgoingtrafficandinthiswaytheywillendinariskysituationthattheywillnotbeabletocovertheircostsandtheydon’thavethepowertonegotiatewiththeregulators.Furthermore,aspresentedinfigure(4),thenumberofMVNOshasdecreasedinEuropeto579MVNOssincethestartofregulationin2007,becausetheycantcompetewiththebigtelecomoperatorsandtheyareworriedwhatwillhappentotheirbusinessiftheEuropeanCommissionapplyRLAHregulation,becauseinthisscenariotheywillbeunabletochargetheirsubscribersfortheroamingservicesabroad,buttheystillhavetopayotheroperatorsinthewholesalelevel.SotheyarearguingwiththeregulatorstolowerthewholesalecapsasmuchastheycanandapplyFairUsePolicyFUPtoprotecttheirbusinessfromanypermanenttravellersabroadusage.SoRegulatorshavetotakeincasewhilestudyingthemarketoftelecomoperatorsthatthereisabigimpactontheMVNOsmarketandhavetoprotecttheminawaytostillbeabletocompeteinamarketandnotrunoutofthemarket.ImpactsofRLAH(RoamLikeAtHome)TheconceptbehindRLAHit’storeducethepricesfortheend-usersbynotallowingoperatorstochargethemforthedataroamingwhileabroad,butthisconceptwillhavefewimpactsorconsequencesonthetelecomsidewhichwillcutapartoftheirrevenueandmanytelecomoperatorsmentionedthattheywillnotbeabletoinnovateordeveloptheirinfrastructureanymore.TelecomoperatorsfromdifferentEuropeancountrieshavedifferentpointofview,countriessuchasSpainandGreecewouldliketoincreasethewholesalecapsotheywillbeabletodeveloptheirinfrastructureandbeablecoverthehighingoingdatatrafficwhileotheroperatorssuchasinDenmarkwouldliketolowerthewholesalecapasmuchtheycanbecausetheiroutgoingtrafficisveryhighandtheyareofferingacheapdomesticprices.

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Additionallytothat,JakobWiller“adirectorattheTelecomassociationindustryinCopenhagen,Denmark”suggestedthatregulatorscouldimplementFUPwithavolumeconceptnotaperiodlimits,asshowninthefiguredown:

Figure15AsuggestionsolutionbyJakobWiller(interview)

Inthisfigure,hepresentedthatregulatorscancreateaprocessonatimetable,forexampleinthefirstyearwholesalepricesare0.085€/GBandthedataallowanceabroadare2GBperuserandafterawhile(1or2years)theycanlowerthepricesforwholesaletobeapproximately0.076andtoincreasethedataallowance1GBmoretobe3GBatallandsoonkeepingdoingthatprocesstoendwithasuitablewholesalepricesanddatavolume.TheEChashadadreamofcreatingaDigitalSingleMarketbuttheauthenticityisthatthereare27differentcountriesinEuropeeachwiththeirowncurrencyandgovernment.Importantly,coststodelivermobiletrafficdiffersignificantlyacrossthestates.BuildinganetworkinLuxembourgisconsiderablylessexpensivethanSweden,acountry36timesaslarge.Notonlydoeseachstatehasauniquesetofincumbentsandchallengers,butalsotherearedifferentmobileregulations,spectrumrules,VATandcontractrequirements.It’sunderstandablethattheEUwantsmobilepricestobethesameacross27countries,butthenitshouldallowpricestoevolvewiththemarketforcesofconsolidationandefficiency.32

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SomeofthemostimportantimpactsofRLAHarethesewillaffectthenationalpricesinsomecountrieslikeDenmark(asshowninfigure8,thepercentageofincomingtravelersareverylow),becausetheyhavelowpricestheywillbeforcedtoraisethedomesticpricestocoverthegapbetweenthenationalpricesandcostsofroamingfeesfromotheroperators(speciallybecausetheiringoingtrafficismuchlowerthantheoutgoingtraffic)sotheywillnotreallybenefitfromthewholesalechargesenoughtobalancetheirprices,WhileanothercountrieslikeSpainthathavehighdomesticpriceswillhavetoreducetheirpricestocounterthearbitragethatthismodelcreates,speciallywithMVNOstheywillmovetheirtrafficfromawholesalemodelagreementtoaroamingmodel.

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5.4 SuggestionsandstrategiesSuggestionbyBEREC:FairuselimitsInthepresenttime,FUPit’saperfectsolutiontoprotecttelecomoperatorsfromanyabuseusagefromtheirsubscribersandtoreducethebusiness&economicimpactsofcuttingfess.EuropeanCommissionhasreleasedafirstdraftofFUP,whichimpliesalimitationfortravelerstobemax.90daysayearbutcustomerswereunhappyandtheyregrettedthisregulation,soECcancelledthisdraftandreleasedanewfinaldrafton15/DEC/2016.Thefinaldraftincludes2typesofcontracts:thepre-paid&competitivecontractandbothwillbeexplaineddownwithexamples.Withthepre-paidcontract,whilecustomersareabroadtheycanbenefitfromRLAHuptheamountoftheircreditremainingforthatmonththeyare,andfordatatheycanuseavolumeequivalenttothevalueoftheirremainingmonthlycreditatthewholesaleroamingdatapricecap.AnexampleofthatletssaySarahhasa25europay/monthandshehas15euroremainingonheraccount,thenshecanusethevalueofherremainingcreditforthetimesheisabroadwithavolumeofdataequivalenttothevalueofhercredit,bycalculatingthatwiththewholesaleroamingdatapricecap(wholesaledatapricecapis0.85/MB)soshegetsinroamingthevolumeofshepaidforintermsofwholesaledatacap.Withthecompetitivecontractsthatofferdataatverylowdomesticpricesbelowthewholesalecap,customerswillbeabletobenefitafullallowanceofcallsandtextswhilefordata,theywillhavetwicethevolumeofdataequivalenttothevalueoftheirmonthlycontractsinwholesaleroamingdatapricecaps.Anexampleofthat:Sarahpays70€monthlycontract,andthesubscriptionpackageincludesunlimitedusageofdata,callsandtexts,thenwhensheisabroadshewillhaveunlimitedcalls&textsbutforthedata,shewillgettwicetheequivalentof70€worthofdataatthewholesaleroamingdatapricecap,forexample0.85cent/MBmeansmorethan16GB.TheplanthatEuropeanCommissionaimedtoprotectconsumersandthetelecomEuropeanmarket:OperatorswillbeabletoasktheconsumerstoprovethattheyliveorhaveastablelinktoaspecificcountrybeforebenefitingfromRLAHinthecontractandoperatorscanonlyusetheinformationtheygatherforbillingpurposetochecktowhatextentcustomersaresuingdataservicesabroadcomparedotheirconsumptionathome.Andiftheusageextentmorethan4months,billingdatasuggeststhataconsumerhasbeenabroadmorethanhome,thentheycansenda

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warningmessage.Thismessagewillwarntheconsumersthattheyhave2weekstoinformtheirtelecomoperatorabouttheirroamingcharge.RaisedomesticpricesThissolutionisunfavorablebecausethepriceswillriseforallsubscribersalsoforthosewhoneverroamwhileabroad,becausethosecustomerswillhavetopayhighdomesticpricestocoverthelossesmadebythecustomerswhodoroamandthissituationisunfair.BylookingontheaverageamountofcitizensinEuropewhotravelwecanseethatasmallgroupofpeoplejust35%whofrequentlyroam,soalargegroupofpeoplewillbeforcedtopayhighdomesticpricestoletthesmallgroupofpeoplebenefitfromroaming.Furthermore,itshardtopredicthowmuchshouldregulatorsincreasepricestocoverthelossesbecauseitwilldependsonthecountryinwhichthemobileoperatorisactive,andmanyoperatorswillafraidofraisingthepricesbecausetheywouldprefertostillbecompetitiveinthemarketandprotecttheirmarketshare.Decreasewholesaleroamingprices Beforeimplementingwholesalepricecaps,telecomoperatorswerecharginghighpricesandtheseextrachargeswereaddedtotheend-usersbill.Butafterimplementingpricecaps,telecomoperatorshavereducedthelevelofprices,butregulatorsstillcannotfindthecorrectlevelofthesecapsanditsnoteasysincewehavementionedthatbefore,therearemanydifferencesinthecostsofofferingwholesaleroamingintheEuropeancountriesandtheratiooftravellersisnotthesamebetweentheEuropeancountries.Regulatorshavediscussediftheysetwholesalecapstoobelowthecost,thentheywillputpressureontheforeignserviceprovidersandtheysetittoohigh,thentherewillbeapressureonthedomesticserviceproviders,andinsomecasestheywillnotbeabletocoverthecostsofroamingsinceafterimplementingRLAH,theywillnotbeableanymoretoaddtheseextrachargestotheendusers.Thebestsolutiononthattime,istosetthewholesalecapsjustablethecostoftheFSP,sothereisasmallmarginthatcanbesuedtoimprovethequalityofserviceofthevisitedcountryandthecostforthedomesticserviceprovidersarenottoohigh.Butstillthissolutionisnotafavorablesolutionforthetelecomoperatorsbecausetheywillstillhaveacutintheirrevenue.

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Inthispart,strategiesthatcouldbeimplementedforthecross-borderoperatorsandsmalloperatorsinthefuturewillbepresented:AllthestrategieshavebeenmadebyBERECCarrierportabilityandAppleSIMThissolutionisanalternativesolutionforRLAH.IfthissolutionwasimplementedthentherewillbenoreasontoimplementRLAH,becausecustomerswillapplytheothersolution.Inordertoimplementcarrierportability,customersshouldhavetherighttoswitchmobilecommunicationsprovidersatanytime.Theswitchshouldbecarriedoutwithoutunduedelaywithintheshortestpossibleperiodoftime.Andinordertodoit,usersmusthavetheoptiontobuyunlocked-SIMhandsetenablingtheuseofalternativeSIMcardsofdifferentproviders.Thisisapreconditionforchangingcarriersforoutgoingtrafficininternationalroaming.ThechosenForeignServiceproviderwouldprovidethevisitingcustomerwithanidentityinitsnetworkbymeansofanewSIMcard.ApplycompanyhavereleasedanewSIMcardthatwouldgivecustomersahefreedominchoosingtheirmobilesuppliers,whichallowscustomerstotakeoutshort-turndataplanswithdifferentmobileproviderswhenneededanditalsoallowstravelertousealocalnetworkfordataconnectionswithouttheneedtoobtainanewSIMcardfromalocalprovider.InItaly,ChatSimProviderhavereleasedaservicewhichwillallowcustomerstosubscribearound36€/yearlywithoutanyextrachargesandbenefitfromroamingonaverycheapprices.Buttheseroamingarelimitedonfewapplicationssuchas(Facebookmessenger,Whatsapp)andifEuropeanCommissionimplementRLAHconcept,thentherewillbenomoreneedforserviceslikethis,becausealreadytelecomoperatorswillnotbeabletochargecustomersforroaming,butifthedomesticpricesincreasesinEurope,thencustomerswilltendtouseserviceslikeChatSimtosavesomemoney.IfthedomesticpriceswillbedecreasedasECpromised,thenChatSimservicewillrunoutofthemarket,becausethentherewillbenomoreneedforserviceslikethis,sincethepricesofroamingofferedfromthetelecomoperatorswillbethesameorlowerasECpromised.Alsoasdiscussedearlierinsection4.2.3(Googleconcept)Googleaimstocreateaglobalnetworkthatwillcostthesametouseforcalls,textsanddatanomatterwhereacustomerislocatedThereplanstolinkwith“3”telecomoperatortogetanaccesstothewholesalemobileserviceindifferentcountriessuchasUK,Italyandanothercountries.ThisisanevenmoreambitiousplanthanthatoftheEuropeanDigitalSingleMarket.

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TheirconceptwillbetestedinAmerica,andtheiraimistoputapressureonthepricingofthebiggesttelecomoperatorsinUSA.Steering(asolutionforbigoperators)Astrategythatcouldbebeneficialforcross-borderoperatorsissteering,whichwillallowlargeoperatorstodirecttheircustomertraffictotheiroperatorsinthevisitedcountry.Inthiswaytheseoperatorswillsavealotofroamingcosts.Furthermore,wecanseethereisanincreaseinoperator’smergersinthemobilemarketsuchasinGermany(TelefónicaandE-Plus).Sobothtelecomoperatorswillhaveaconnectiontosteertheirsubscribersbetweeneachother’s.ButthisstrategywillharmsmalloperatorsandMVNOs,andmayresultthosejustlargeoperatorstoremaininthemarket.Thatmean,monopolymarketwillappearagaininthemarket,andjustpowerfuloperatorswillstayinthemarketandcontrolpricesandoffcourseincreasethepricestogenerateextrarevenue.IMSI(asolutionforsmalloperatorstoremainintheEuropeantelecommarket)Internationalmobilesubscriberidentity,makeitpossibleforoperatorsoffertheirservicestocustomersinboththeirowncountryofoperationandtheothercountrybyusingeitheralocation-basedorauniformpricing.ThisissuehasbeenimplementedbetweenBelgianandLuxembourgtelecomregulators.Thisstrategymaybetheonlyoptionforsmalloperatorstoremaininthemarketandcompeteanotheroperators,somayEuropeancommissionstimulatethisbyapplyingaunifiedmobilecountrycodeforthewholeEurope.RoamLikeLocalIn2011,BEREChavesuggestedaconceptcalledRoamLikeaLocalRLAL,whichmeanspricingstructurescanbeimplementedsouserscanbechargedbytheirdomesticserviceprovidersthesamepricesasthecurrentaveragepricesofthecountrythattheyarevisiting.BEREChavementionedthisconceptbecausetheywereworriedafterapplyingRLAH,customerswillbuySIMcardsfromacheaperforeigncountries“permanentroaming”.SotheprocessofRLALwilltackletheissueofpermanentroaming,becauseforeignoperatorswillbenolongercheapercomparedtothelocaloperator.Butthisapproachwillbedifficulttobeimplementedsinceithasfewchallenges.

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EuropeanCommissionhavetoprovideregularupdatesoftheaveragepricesforeachcountryandrequiresmobileoperatorstoadjusttheirpricingaccordingly,whichwillbesocomplextobedone.Wi-FioffloadingWi-Fihasbeenproposedasasolution,andthereisanumberofexamplescanbefoundofmobileoperatorsofferingdualwirelessaccessnetwork.AnexampleofthatFONnetwork.FONnetworkjoinssetofnationalandinternationalWi-Finetworkintoonesinglenetwork,butthissolutionmayresultsinunbalancedrelationshipsiftheexchangetrafficinbetweendifferentparticipatingoperatorsisnotcomparable(someoperatorswillhaveapressureontheirWi-Fipoints,butothersmaybewillhaveaslightlylowtraffic).Answeringthemainquestions:HowtelecomoperatorscangetafundtocoverthecostofinternationaldataroamingwholesalechargesininteractionwithRLAH?

TelecomoperatorshavefewoptionstogetafundtocoverthecostofinternationaldataroamingwholesalechargesbyapplyingFairUsePolicy“FUP”.Thissolutionisbeneficialforalloperators(bigMNOs,smallMNOS,andMVNOs),whichmeanstheycanstoptheabuseusageofroamingbytheircustomersbysitingacapforthevolumeofdataallowanceabroadorasmentionedearlierofthelastversionofFUP,2optionswereannounced:

§ Withthepre-paidcontract,whilecustomersareabroadtheycanbenefitfromRLAHuptheamountoftheircreditremainingforthatmonththeyare,andfordatatheycanuseavolumeequivalenttothevalueoftheirremainingmonthlycreditatthewholesaleroamingdatapricecap.

§ Thecompetitivecontractsthatofferdataatverylowdomesticprices

belowthewholesalecap,customerswillbeabletobenefitafullallowanceofcallsandtextswhilefordata,theywillhavetwicethevolumeofdataequivalenttothevalueoftheirmonthlycontractsinwholesaleroamingdatapricecaps.

Fewstrategieswerementionedearlier,buteachhasadvantagesanddisadvantages(anadvantageofalargeroperatorcaneasilyprovetobeadisadvantagesforasmalleroperatororMVNOs).Forlargeoperators(cross-borders)coulduseSteeringsolutiontocovertheircosts.

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ForSmalloperatorscoulduseInternationalmobilesubscriberidentityIMSItocovertheircostsandremaininthemarket.Butattheend,itshardfortheEuropeanCommissiontopredicttheimpactsofRLAHontheearlystage,ishardtopredictastheoutcomewilldifferperoperatoranddependsonalotoffactors(geographiclocation,thenumberofcountriesinwhichtheoperatorisactive“cross-borderoperator”,andiftheoperatorisaMNOorMVNO)

Couldwholesalepriceregulationbeapartofthesolutionoftheproblemmentionedaboveinthefirstquestion?

Wholesalepriceregulationcouldbeasolutionbutin2differentsituations.First,IfEuropeancommissionraisethewholesalecap,telecomoperators(especiallyinthetouristcountrieslikeSpain,Portugal,Italy)willbenefitfromrisingthepricesandtheycouldcoverthecostsandgeneratemorerevenue,hencetheiringoingtrafficwillbemuchmorehigherthantheoutgoingtraffic).Whileintheotherhand,raisingthewholesalecapswillaffectnegativelyonthetelecomoperatorsincountriessuchasDenmark,Norway(whicharenotclassifiedastouristcountries)andtheiroutgoingtrafficismuchmorehighertheiringoingtraffic.Itwillputthesetelecomoperatorsinarisknotbeingabletocoverthecostsofroaming,ifthereisnoFairUsePolicyapplied.AlsoMVNOswillhavenopowertocompeteinthemarketandtheywillrunoutoftheEuropeanmarket,hencetheycannotgenerateanyrevenuefromtheingoingtraffic,becausetheydonnotowntheinfrastructure.Whiletheystillhavetopaywholesalechargestotheforeignoperatorsfortheoutgoingtrafficoftheirsubscribers.TheSecondsuggestion,ifEuropeanCommissiondecreasewholesalepricecaptoomuch,thentelecomoperatorsinthetouristcountrieswillnegotiatethattheirrevenuehavedecreasedandtheycouldnotbeabletoconnectallthesubscribersandinthesametimetheywillnothaveacapitalfornewinvestmentsandinnovations.WhilethissuggestionwillhelpoperatorsinthenontouristcountriesandMVNOstocoverthecostsofwholesalechargesandstillbeabletocompeteintheEuropeanmarket.Sowhatwecanunderstandfromthese2suggestions,thatwholesalecapregulationcouldbeasolutionbutEuropeanregulatorshavetofindawaytobalancethelevelofcaps.Wholesalepricecapregulationislikedouble-edgedsword.

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6 DiscussionandConclusionThisThesisaimedatgivinganoverviewofthedataroamingregulationprocessinEurope,lookingbothatthepastandthefuture.RoaminginEuropehasgonethroughmultipleprocessesofregulationsince2007,firstimposingwholesaleandretailpricesforcalls,thenforSMSandfinallyfordata.Thenextstepisloweringroamingpricestothelevelofdomesticretailprices,whichinotherwordswillpermituserstoroamlikeathome“RLAH”.However,thereareseveralaspectsthattheEuropeanCommissionstillhastoclarify,especiallyforthetelecomoperators,astherearedoubtsabouthowtheyaregoingtosustainthistransaction:whilethefeeenduserspayforroamingwillbereducedtozero,thefeedomesticmobileoperatorpaystheforeignoperatorwillnotbereducedtozero.Topreventabuseand“permanentroaming“,theECmighthavetointroduceFairUseLimitspolicy“FUP”.WhilethegoalofRLAHisforenduserstoroamlikeathomeanywhereinEurope,thegoalisnottochooseforthecheapestforeignmobileoperatorandthusconstantlyroamathome.Asoperatorswillseeadeclineinrevenue,theywillneedtolookfornewpossibilitiesorstrategiestocovertheircosts.Theimpactforthecustomersoftheseapproacheswillstronglydependonhowtheproviderscopewiththeseregulations:increasedthenationalprices“Waterbedeffect”mayprovetobetheunwantedoutcomesasthiswillhavenegativeimpactontheoperatorscustomersbase.OtherapproachesmayincludethefurtherdecreaseofwholesaleroamingpricesortheimplementationoftheFUP.TheroamingregulationsimposedbytheEUwillpushoperatorstoexplorenewopportunitiesintheSingleEuropeanMarket.Somemayhelpcustomerstoquicklyswitchbetweenoperatorsandpickaplansuitedfortheirneeds,whereasotherstrategiesmayhelpmaximizeprofitsoroptimizecostsfortheoperators.TherealimpactofthelatestroaminginitiativeoftheEC,RoamingLikeAtHome,ishardtopredictastheoutcomewilldifferperoperatoranddependsonalotoffactors:thegeographiclocation,thenumberofcountriesinwhichtheoperatorisactiveandwhethertheoperatorisaMNOorMVNO,anadvantageofalargeroperatorcaneasilyprovetobeadisadvantagesforasmalleroperator.ThereisnouniversalstrategyapplicableforeveryMNObecauseoftheirinherentdiversityandcorrelatethevariousheterogeneousmarketsinwhichtheyareactive.AslongassignificantstructuraldifferencesbetweenEUcountriestoexist,itwillbehardtocomeupwithasingleidealsolutionforuniformtariffsintheentireEU.

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7 References1. EuroStatistic.http://ec.europa.eu/eurostat/statistics-

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market/en/roaming.24. EC.BriefingEULegislationinProgressDecember2016.;2016.25. GSMAfairusepolicy.FairUsePolicy.;2016.26. EuropeanComission.AdditionalAnalysisFUP.;2016.27. RoamingImplementingAct.;2016.28. EC.ImplementationoftheRegulatoryFramework.29. OettingerH.ParliamentQuestions.

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8 AppendixInterviewwithJakobWillerJakobWillerisadirectorattheTelecomassociationindustryinCopenhagen,Denmark.Duringthemeetingwewentthroughmanypoints,mainlyabouttheeconomicandbusinesssideofthedataroaming.WehavediscussedthemainproblemofhavingRLAHmethodorinotherword;roamingchargesforcustomerswillbezero,sotelecomoperatorswillnotbeableanymoretochargecustomersfortheirinternationalroaminginEurope.Theproblemisthatpoliticalhaspromisedthatroamingwillbefreebutnothingisfree,historicallytheyhaveregulatedroamingin2007andimplementedsomemethoddownlevelbyreducingretailpricesandwholesaleprices,therewassomekindofsince.Butnowtheywanttheroamingtobezeroandwestillhavewholesalepricesandtheywanttoimplementiton2017andwearealreadyattheendof2016anduntilnowtheydon’tknowhowtoregulatethewholesalecharges.Europeancommissionsuggestedforroamingchargesitwillbearound65Danishkroner/GBdatawhichmeansthatatypicalDanishsubscriptionhasaround20GBandtheaveragerevenuefortheDanishcompanyis120DKK/monthly,andifyoucalculateitanddeductthecostfromtherevenueitwillbeshownthatitsreallybadforthetelecomoperatorswhichtheywillnotbeabletocoverthecostofroaming.Twothingscouldhelp:Fairusepolicy&reducewholesaleprices.Butforthefairusepolicyoption,thecommissionsuggestedis90daysforthefairusepolicybutdoesn’tmakeasenseforthecustomers.Buttheonlythingthatcanhelpistousevolumecapusageonmonthlybasis.

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InterviewwithRikkeJohan

RikkeJohanPoliticalAdvisor-MEPJensRohdeThediscussionwasaboutthewholesalecapsandfairusefromdifferentpointsofviewfromtheEuropeanParliament,Commission,BEUCandIndustries.“Theregulationdidnot,however,addressthewholesaleroamingmarket,onaccountoftheneedtoinvestigatemarketconditionsinmoredepth.Areviewfor

theEuropeanCommissionconcludedthatnationalwholesaleroamingmarketsare

notworkingwellandneedregulatoryintervention.Itthereforeproposeda

regulationestablishingthemaximumlevelofwholesaleroamingchargesthat

telecomsoperatorscanchargeeachother,totakeeffectfrom15June2017.

Stakeholderreactionsaredivided:whileconsumerswouldenjoyfreeroaming,

operatorsareworriedaboutrecoveringcostsatwholesalelevel”.

On29November,Parliament'sIndustryCommitteevotedforareductioninthecallanddatawholesalecapsproposedbytheCommission.

Theinterviewwasshort,soRikkeJohanhavesentfewarticlesthatwerewrittenbyJensRohdetouseitinthethesis.