REVIEW OF THE ROAMING REGULATION
REMARKS
JUNE 2019
MVNO Europe l Rue de la Loi, 38 l www.mvnoeurope.eu l +32 (0) 2 789 6623 l
[email protected]
REVIEW OF WHOLESALE INTERNATIONAL ROAMING REGIME
By December 2019, the European Commission (EC) is required to decide whether to issue a legislative
proposal reforming the mobile international roaming regime1 (to be presented to the European Parliament
(EP) and Council (Member State governments)). BEREC is tasked with providing an Opinion (expected in June
2019).
In December 2018, the EC issued an ‘interim report summarising the effects of the abolition of retail roaming
charges’2. In parallel, the EC appointed Axon Partners Group to develop bottom-up models to calculate the
cost of providing mobile telecoms services in 31 EU/EEA countries. The outcomes of this project will partly
assist the EC in the evaluation of the need to review the wholesale roaming price caps (as established in
Regulation 2017/920) in the context of Roam-Like-At-Home (RLAH).
Given that current wholesale caps create competitive distortions on European telecommunications markets
and that MVNOs are unilateral buyers of international roaming access and thereby can neither offset the
costs the RLAH regime implies nor negotiate fair wholesale roaming deals, MVNO Europe intends to make
the voice of European MVNOs heard and demonstrate to BEREC and to the EC it is absolutely necessary to
reduce wholesale roaming caps to a level equal similar, or at least similar, to national wholesale charges.
More particularly, MVNO Europe would like to address and – when necessary – oppose a number of
hypotheses contained in the EC interim report of December 2018. The following remarks should be read
as a complement to the responses provided by MVNO Europe’s members as regards the 2019 EC-BEREC
joint survey on international roaming and fair use policy.
1) MVNO customers’ behaviour and MVNOs’ offers
a. Roaming usage
i. Fair use policy: The EC indicates (p.12 of EC interim report) that the number of MVNOs applying
a FUP has been relatively lower than the average of all operators (67% for MVNOs in inbound
countries and 87% for MVNOs in outbound countries as compared to 80 and 94% for all
operators). This may suggest that MVNOs’ customers roam less and that MVNOs are less
impacted by the RLAH regime.
MVNO Europe’s remarks: It is not a customer-friendly commercial proposition for MVNOs, many
of whom focus on simple and attractive offers without complex contracts, to apply a FUP. Many
MVNOs have not applied some of the parameters foreseen by the FUP because the costs of their
implementation (and the complexity of procedures) are disproportionate when compared to
their actual effect on the limitation of abusive use of RLAH rules. Nevertheless, half of our
members do apply a FUP. Please refer to point 1)b.ii of this paper to learn more about the
behaviour of MVNOs’ customers when it comes to roaming.
ii. Sustainability mechanisms: The EC indicates that only a small portion of MVNOs (30 out of 330)
have been granted the sustainability derogation (p. 17 of EC interim report). This may suggest
that MVNOs do not really need derogations and therefore are fine (or at least not very impacted)
with the RLAH regime as it stands.
MVNO Europe’s remarks: It is correct that many MVNOs refrain from applying for and/or making
use of the sustainability mechanism, even where they are eligible for it or have obtained the
derogation. This is the case because practicing retail roaming surcharges is not a customer-
1
According to Article 19 § 3 of Regulation 531/2012 as amended by article 1 (7) of Regulation 2017/920
2
European Commission. (December 2018) Report from the Commission to the European Parliament and the Council on the implementation
of Regulation (EU) 531/2012 of the European Parliament and of the Council of 13 June 2012 on roaming on public mobile communications
networks within the Union, as amended by Regulation (EU) 2015/2120 and Regulation (EU) 2017/920.
l MVNO Europe l Review of wholesale roaming caps l 2
friendly commercial proposition, and is basically commercial suicide if one or more MNOs in the
same market do not make use of the derogation.
b. Domestic traffic
i. MVNOs’ offers: The EC indicates that some MVNOs offer domestic only offers, excluding roaming,
for price-sensitive customers, and therefore aren’t affected by the RLAH regime as well as by the
level of wholesale roaming caps (point made by the EC during one EC-MVNO Europe meeting).
MVNO Europe’s remarks: This assumption seems questionable as, out of the 15 MVNO Europe
members, only one provides domestic-only offers (and to a very limited extent). No other
member sees demand for such a proposition (some members tried domestic-only offers but
rapidly put an end to them as customers did not seem to be interested in such tariffs). In addition,
in some cases, average consumption of data services per roaming day tends to be higher than
the average consumption of data services domestically. The EC’s reasoning does not seem to
take into consideration the increasing importance of roaming traffic at EU level – which must also
be accommodated by MVNOs in their offers if they are to remain competitive.
ii. Domestic-only subscribers: Without giving numbers, the EC indicates that MVNOs’ customers
roam less than the customers of MNOs. In general, MVNOs have a higher share (and sometimes
a significantly higher share) of domestic-only subscribers than MNOs, which is likely to be
attributable in part to the customer segments that they typically target (p. 7 of EC interim report).
It is therefore alleged that the proportion of roaming traffic to domestic traffic is quite small and
therefore the impact on MVNOs’ business is claimed to be minor.
MVNO Europe’s remarks: We question these assumptions, as our members’ proportion of EU
data roaming users has continuously increased since summer 2016 and that the take-up rate of
data roaming amongst data users seems now to surpass 50% in a certain number of cases (see
the chart line concerning our Belgian member Unleashed below).
Figure 1 - Proportion of users making use of roaming services within the EU/EEA
l MVNO Europe l Review of wholesale roaming caps l 3
Moreover, for those of our members that can clearly report on the proportion that roaming
traffic represents in comparison to domestic traffic (not all of them can do so because
underwent internal changes with their IT vendors and systems in the period studied) we observe
that this proportion can go up to 25 % of total data volumes during the holiday season peak.
With the implementation of the RLAH regime, customers do not only roam more often but also
use higher quantities of data (i.e. 10-fold increase in data roaming usage and it is still increasing
according to some of our members).
In addition, it has to be noted that the average number of roaming days as we see today tends
to have increased significantly, especially when compared to the “classic” holiday-season
periods in summer. As the data shared by one of our members (Ventocom) shows below, the
average number of roaming days in holiday season before RLAH corresponds to the new
average for the off-holiday season, after implementation of the RLAH regime.
6
5
Figure 2 - Average of roaming days
4
3
2
1
0
Figure 2 - Average of roaming days
Our members also observe that, while the wholesale roaming price caps imposed by the glide-path
will be decreasing by a factor of 1.2x until 2022, their EU roaming data volumes are growing at a
ratio of at least 2x year over year (n.b. for some of them the factor can be as high as 19x). This
means that wholesale caps are not decreasing at a rate that matches traffic growth. Due to MVNO’s
limited ability to negotiate better wholesale pricing, wholesale caps need to decrease at a faster
rate to ensure a fair and even playing field for MVNOs and MNOs.
2) MVNOs’ position on the market and wholesale roaming deals
a. MVNOs’ position on the market: The EC indicates that MVNOs have successfully maintained their
domestic market share (in subscriber numbers) and, in some instances, they have been able to
improve it over the period considered. On average, MVNOs' ARPU increased between Q4 2017
and Q1 2018, while it remained stable for MNOs (p. 14 of EC interim report).
MVNO Europe’s remarks: It is correct to say that MVNO Europe’s members have relatively
maintained their market shares at the domestic level. This should not obscure the squeezing of
roaming margins the RLAH regime and the underlying wholesale roaming caps have engendered
for MVNOs.
l MVNO Europe l Review of wholesale roaming caps l 4
The costs induced by the RLAH regime have indeed risen for all our members (e.g. +163% for
Ventocom, + 38% for Freenet, + 20% for Mobile Vikings between 2017 and 2018). At the moment,
the level of the wholesale roaming caps prevent MVNOs from fully unleashing their growth
potential and from efficiently competing on domestic markets (sometimes to the extent of
requiring them to sell below costs).
b. Wholesale roaming deals:
i. The EC indicates that the great majority of surveyed MVNOs obtain wholesale roaming access via
their domestic host MNOs (71%), only 5% via direct bilateral negotiations with MNOs and 7% via
a hub (p. 14 of EC interim report).
MVNO Europe’s remarks: The majority of our members obtain wholesale roaming access via their
domestic host MNO or via a hub. While those two solutions are probably the easiest methods for
MVNOs to secure wholesale roaming, it has to be noted that they are a manifestation of MVNOs’
overdependence on MNOs and weak bargaining power. While hosting operators may use
MVNO’s traffic to better negotiate their bilateral roaming deals, it appears that they do not
transfer the best prices they obtain to MVNOs (see figures provided in next section). This is one
of the reasons why wholesale roaming caps need to take market reality into account (i.e. retail
prices and traffic trends) and allow smaller players to compete.
ii. The EC suggests that there are many examples where MVNOs can/do get better wholesale
roaming deals than regulated wholesale roaming caps. Indeed, according to the EC, a certain
number of MVNOs would pay wholesale roaming prices at similar levels to those paid by MNOs
(p. 15 of EC interim report).
MVNO Europe’s remarks: In light of the scatter plot shown below which included in the EC interim
report of December 2018, MVNO Europe cannot agree with the EC when it states that “there are
many examples of MVNOs that pay wholesale roaming prices well below the regulated tariffs in
most EU countries”. From our perspective, only a minority of cases can be considered as “well
below the regulated tariffs” as, out of the 35 values reported, only 8 are located below the 4€/GB
threshold (n.b. threshold which, in our opinion, cannot reasonably be regarded as “well below
the regulated tariffs”).
l MVNO Europe l Review of wholesale roaming caps l 5
The data our association compiled indicates that in 2018, on average, our members paid
4.93€/GB for wholesale roaming services in the EU/EEA (i.e. at similar levels of the regulated
caps). This is a very high price to pay when you know that the cost of providing wholesale data
roaming services within the EU was modelled at 1.52€ in 20183.
When MVNOs succeed to obtain reduced wholesale rates, it tends to be because those rates
tend to follow the periodic reductions foreseen by the Regulation (the glide path). Without
further reductions of the wholesale caps, it is likely that wholesale roaming deals secured by
MVNOs will never be able to approach values compatible with retail prices.
When it comes to termination rates, the EC is about to set a single wholesale mobile termination
rate at EU level, which is expected to be substantially lower than those set until now by NRAs.
Given that termination rates are a substantial component of current voice wholesale caps, the
reduction foreseen by the EC will have to be reflected into the regulated wholesale voice roaming
caps.
CONCLUSION
The aforementioned points lead us to conclude that MVNOs are substantially affected by the
implementation of the RLAH regime. Indeed, MVNOs have no alternative to effectively making
wholesale roaming outpayments at or very near the level of the caps set by EU Regulation 2017/920 –
which prevents MVNOs from fully unleashing their growth potential and from efficiently competing on
domestic markets (sometimes to the extent of requiring them to sell below costs). Over time, especially
as retail roaming traffic increases, the situation entails important risks of jeopardizing the business case
of MVNOs, and thus damaging competition, to the detriment of end-users.
Moreover, given that there is an increased quantity spectrum available to network operators (e.g.
second digital dividend, spectrum earmarked for ‘5G’ in the EECC), substantial technological progress
with regard to networks (spectral efficiency, modulation, antenna design, massive MIMO, etc.), as well
as a rapid decline in retail prices for mobile data, and bundles of voice/sms/data in many Member States
(retail prices as low as 0.20 €/GB in some Member States and retail prices below 1€/GB in nearly all EU
Member States), it is clear that the wholesale data roaming caps set in EU Regulation 2017/920 (6€/GB
for 2018, declining to 2.5 €/GB in 2022) do not correspond to the genuine costs incurred by Mobile
Network Operators, as (these costs are) revealed by the retail prices practiced by the Mobile Network
Operators.
Therefore, MVNO Europe calls on the European Commission to review EU Regulation 2017/920 and
drastically reduce the wholesale caps it sets. When doing so, the Commission should apply a future-
proof mechanism consisting of the introduction in the Regulation of two new principles, supported by
a combination of three elements (as opposed to there being a single element today):
1. New principle 1: As per BEREC document BoR (16) 167 (page 4), when setting wholesale
roaming caps, these must be consistent with the following principle:
3
Average of the costs reported in the lower range forecast developed by Axon Partners (Spring 2018) for data
roaming services.
l MVNO Europe l Review of wholesale roaming caps l 6
2. New Principle 2: Wholesale caps shall be reviewed, and revised if appropriate, on an annual basis,
in order to dynamically take into account market developments, including retail pricing
evolutions.
In order to ensure that new principles 1 and 2 are respected, the following three elements should be
relied upon to set wholesale roaming caps:
A. Element 1: Modelling of the costs of inbound roaming incurred by Mobile Network Operators
(as is the case today).
B. Element 2: Assessment of regulated or commercially agreed: (i) wholesale charges for domestic
national roaming and, (ii) wholesale charges for domestic MVNO access (note that these
charges are not readily publicly available, but NRAs have the power to make information
requests, and the information can be utilized on a no-name basis while respecting business
confidentiality). This is relevant because (as per the ITU paper referenced in footnote4), the cost
of national and international roaming does not materially differ.
C. Element 3: Collect and examine (on a 6-monthly basis) retail (domestic and roaming) prices
observed. Retail prices practiced by operators reveal the underlying relevant costs and/or
related economic drivers of the Mobile Network Operators, which drive market development
in reality (as opposed to hypothetical cost models).
4
2015 ITU Guidelines to NRAs on International Mobile Roaming Cost Analysis – Technical Paper, p.11
http://www.itu.int/dms_pub/itu-t/opb/tut/T-TUT-ROAMING-2015-03-PDF-E.pdf. The document provides detailed analysis
regarding the additional costs of providing roaming services and concludes that if roaming cost may in some cases exceed
domestic costs the difference is certainly only a fraction of the domestic cost and not a multiple.
l MVNO Europe l Review of wholesale roaming caps l 7
ABOUT US
MVNO Europe represents the interests of Mobile Virtual Network Operators active on European mobile
and Internet of Things markets, and that have negotiated wholesale access to the networks of host
Mobile Network Operators (MNOs). MVNO Europe gathers various type of business models addressing
retail consumers, business users, the public sector, machine-to-machine (M2M) and Internet of Things
(IoT). The goal of MVNO Europe is to create a more openly accessible market for all MVNOs so that they
can better contribute to the growth of the fast-moving mobile communications sector, further ensure
that consumers as well as business users have a wider range of diversified services to choose from and
to, finally, boost competition on the retail mobile market to their benefit. Our members believe that
MVNOs can stimulate innovation in the telecom sector.
CONTACT US
MVNO Europe Quentin de Philippart de Foy
Rue de le Loi, 38 Policy Officer
B-1000 Brussels T +32 (0)2 550 41 10
Belgium
[email protected]
[email protected]
l MVNO Europe l Review of wholesale roaming caps l 8
Saatja: Quentin Philippart de Foy <
[email protected]>
Saadetud: 07.06.2019 14:58
Adressaat: TTJA <
[email protected]>; Anu Võlma <
[email protected]>
Teema: [review of wholesale roaming regulation] MVNO Europe remarks
Tähtsus: Kõrgeim
Manused: MVNOE_remarks_wholesaleroaming_spring.pdf
Dear Sir/Madam,
[Please confirm upon receipt]
Ahead of the publication of the BEREC opinion on the need to revise Regulation (EU) 2017/920 as
regards rules for wholesale roaming markets, MVNO Europe would like to share some remarks with the
ETRA (see here attached). Those remarks pertain to issues addressed in both the European
Commission’s interim report of December 2018 and the EC-BEREC joint survey (on international roaming
and FUP) of March 2019. The document we enclosed provides more concrete information on the effects
the implementation of the Roaming-Like-At-Home regime has had on MVNOs active in the EU.
We would be grateful if you could take the MVNO perspective in consideration when discussing the
finalization of the BEREC opinion with the heads of EU NRAs.
Do not hesitate to contact us if you have any questions.
Sincerely yours,
Quentin Philippart de Foy
Quentin Philippart de Foy
Policy officer
MVNO Europe
Rue de la Loi, 38
B-1000 Brussels
T +32 2 896 65 86
www.mvnoeurope.eu
Follow us on Twitter @MVNO_Europe and LinkedIn