By Jo Best, 27 April 2006 16:10
NEWS
Mobile industry body the GSM Association has released the results of a study which it says shows that decreasing roaming charges could end up increasing mobile tariffs all round.
The study comes in response to potential changes mooted by the EC, which could see roaming costs drop by up to 60 per cent.
The GSMA objected to the proposed changes, saying roaming charges are "good value" as they are - and has commissioned an "independent" study from consultancy CRA which backs up its assertion.
The report says lowering charges for roaming will mean customers will eventually see other tariffs go up as operators try to make up for the shortfall in sales, while European service providers are also likely to create special 'no roaming allowed' tariffs to keep costs down.
It added: "To avoid higher prices for domestic mobile services, most customers are instead likely to opt to be on plans that do not allow roaming (or only allow a small number of roaming calls) - these customers would lose the option to roam that they currently have.
"In recent years, many operators have made roaming available to all customers... but this trend is likely to be reversed."
The abolition of extra charges to call a local user in a foreign country could apparently also lead to higher domestic call charges. CRA said: "To avoid the risk of large losses, operators would need to raise their prices for domestic mobile services to cover the costs of both domestic and international calls."
Regulation of wholesale roaming costs is likely to prove equally unsuccessful, according to the report, with some wholesale roaming providers dropping their services, a move likely to affect MVNOs most heavily. The report added that investment in poorer geographies will also be scaled back as a result.
The GSMA believes one of the major effects of changes in roaming regulation will be mobile users keeping two SIM cards to get the best prices when they're at home or abroad.
Comments
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1. Michael Dixon.
But I thought thaty cross-subsidy was illegal?
Oh, I see, not with non-BT companies.
Sorry.
2. Simon
So a total admission that they are using roaming charges (where there is effectively little competition) to cross subsidise the areas where there is competition.
Other than that, a load of whineing and misleading statement to try and disguise what they are doing. Not to put if too strongly, it should not cost significantly more to call from a mobile in the UK to a UK mobile roaming abroad than it would (in total) to call from the same mobile to a UK landline, call from a UK landline to a landline in the foreign country, and call from a landline there to a mobile. That fact that it does says one (or both) of two things : 1) the operators are making an unhealthy margin, and/or 2) they have built inefficient systems in which case we the users should not be paying for their ineptitude.
3. anonymous
No need for an increase the extra calls from people like me will actually increase revenue.
4. Radical Meldrew
Raising charges to cover reducing the price of roaming will only reveal the true cost of UK mobile ownership. If prices initially rise, so be it, consumers would then be aware of and be able to make direct comparisons with foreign competitor's charges which are almost without exception lower when taken as a whole package.
This could be a solid basis for the watchdog to justify biting off big chunks of UK corporate excess!
I don't think the telcos will have the bottle to carry out this threat, they know that laying their true charges on the table would only be detrimental to them in the long term.
5. Michael Furey
Well, we should be thankful for the forewarning then. As the EU is meant to be a 'common market' then let's just make it compulsory that roaming be enabled.
As for "good value", that I believe is a standard industry (any industry) term for 'we are happy with the money we are making'.
Well, tough.
Perhaps a timely reminder that all can get involved in having their say with the EU:
http://europa.eu.int/information_society/activities/roaming/index_en.htm