What's New: New Eurotariffs for mobile phone operators

In 23 of the 27 EU Member States, there is at least one mobile operator offering roaming tariffs below the regulation's ceilings.

mobile eu biz 88 224 (photo credit: Bloomberg)
mobile eu biz 88 224
(photo credit: Bloomberg)
Following the European Commission's publication of its "name and shame" roaming benchmarking Web site on August 2, all mobile operators have since informed the Commission of the Eurotariffs they are offering their customers as required by the EU's new Roaming Regulation. All these Eurotariffs are now listed on the Commission's Web site. For mobile customers roaming in Europe, the first result is quite positive: In 23 of the 27 EU Member States, there is at least one mobile operator offering roaming tariffs below the regulation's ceilings. The Commission's Web site lists the Eurotariff on offer per operator in all 27 EU Member States. The table is based on responses to a questionnaire sent in mid-July to 95 mobile operators in the EU. Initially the Commission received 74 responses. Some operators only later informed the Commission about their offers or corrected the information they had sent. Last week, the last two operators - Estonia's EMT and Cyprus's Areeba - having communicated their offer to the Commission, the EU-wide overview is now complete. Overall, the introduction of the new EU Roaming Regulation appears to be proceeding smoothly. In 23 of the EU Member States, there is at least one operator offering roaming tariffs below the new regulation's ceilings. Most mobile operators have also offered or activated a Eurotariff before the regulation's deadlines. In October, the Commission, together with the European Regulators Group, will make a more detailed and qualitative assessment of the transition to the Eurotariff. The results will be important in view of the evaluation that the Commission must present to the European Parliament and to the EU Council of Ministers by December 30, 2008. The new EU Roaming Regulation (in force since June 30, 2007) requires mobile operators to make available, and actively offer, a Eurotariff to their customers by July 30. It states that roaming charges should not exceed €0.49 for making and €0.24 for receiving calls abroad (excluding VAT). Operators are encouraged to compete with cheaper prices below the ceilings, as has happened in 23 Member States so far. Once a customer accepts the offered Eurotariff, the operator has one month maximum to activate this tariff. Consumers who do not react will be automatically switched to the Eurotariff on September 30 unless they had previously subscribed to a special roaming package. The Roaming Regulation does not prescribe a minimum or maximum charging interval or regulated roaming calls. However, charge limits are expressed on a per-minute basis. Provided that a provider does not under any circumstances adopt a charging interval that would give rise to a charge exceeding the maximum permitted levels when expressed on a per minute basis, European Regulators Group (ERG) takes the view that the matter can be left to market players to adopt a convenient charging interval. Nevertheless, the matter is of considerable interest to regulators and to stakeholders. ERG made it clear that it would consider it inappropriate if market players generally exploited the opportunity to increase the minimum charging interval, so as to claw back some of the wholesale price reduction. Where providers adopt a minimum charging interval of multiple numbers of seconds (for example, 30 seconds or one minute) the effective rate charged per second will be significantly greater, on average, than the rate implied by the charge limit. ERG, therefore, proposes to monitor carefully both the rate charged per chargeable minute and the rate charged per elapsed minute so as to be able to report on the size of the difference, in particular to the Commission for the purposes of its review of the Regulation in 2008. This will include reporting to the Commission on practices that have clearly changed following the entry into force of the Regulation. Reductions in wholesale charges and the caps on wholesale charges apply to the average charges levied by any one network operator on any other. Charges may differ by time of day and at different times of the year and must be compliant when assessed on a one-year basis. This maximum is an average charge to be calculated over a 12-month period. The necessary adjustments therefor should the be made to existing wholesale rates to ensure that the average price cap is met by the end of the 12-month period. Network operators should enter into early bilateral negotiations with a view to adjusting the contractual pricing provisions as soon as possible. The result of such negotiations should provide assurance on both sides that the limits in the Regulation will be respected over the 12-month compliance period. ERG reportedly believes that six months after the Regulation came into effect should be a sufficient timeframe for such negotiations, which therefor should be complete by the end of 2007. One method of achieving this would be for a provider to implement a unilateral price cut so that charges levied after August 30 are transparently consistent with the Regulation. In the absence of an explicit bilateral agreement, ERG said it considers that it would be unacceptable for providers to maintain existing prices, inconsistent with the Regulation, throughout much of 2007 and early 2008 with the intention of making a retrospective adjustment at some later stage. For example: provider A maintains existing charges to Provider B until February 2008. In the absence of explicit agreement between the providers, the rates charged by A for March to August 2008 would need to take account of the above-cap rates in the first six months. If, for example, the rate charged for the first six months was double the regulated maximum, the maximum permissible rate for the second six months would be close to zero (after talking due account of pricing elasticity). Where it becomes clear to a provider that overcharging of a wholesale customer over the year as a whole is likely, on the basis of expected traffic patterns, immediate remedial action should be taken. syrquin@013.net The author is the head of the International Department at the Joseph Shem-Tov Law Firm.