European Parliament study calls for reduction in wholesale roaming price caps

The parliamentary study found that wholesale roaming rates are below the price caps set by the EU, but still at least 10 times the actual cost of providing the service

A group of smaller mobile operators and MVNOs have called on the EU to work faster on reducing wholesale roaming prices because they are struggling to cover the costs of increased roaming following the implementation of roam-like-at-home last year.

The roaming coalition, which includes operators such as ‘3’, ‘Free and Play’ as well as industry group ‘MVNO Europe’ covering together nearly 70 million customers. MVNO Europe welcomed a study by the European Parliament’s ITRE Committee that also called for a swift cut in the wholesale rates to a more cost-based level.

The differences in roaming versus domestic rates and between EU countries was flagged already in 2014 by EU regulator Berec, before the latest roaming regulation was adopted. The regulator had warned that without further intervention in the wholesale market, ‘roam like home’ may not prove tenable.

Michael Krammer, CEO of Austrian MVNO Ventocom, a member of MVNO Europe, gave testimony at a recent ITRE hearing on the matter. While praising the advantages gained by consumers from RLAH, Krammer underlined the “huge cost” incurred by MVNOs as a result of the more than doubling in roaming traffic, in particular data usage. Given that MVNOs do not own their own network, they cannot offset those costs by trading wholesale roaming to other operators, like MNOs do. Furthermore, they lack the negotiating power to secure lower wholesale rates from network partners.

The parliamentary study found that wholesale roaming rates are below the price caps set by the EU, but still at least 10 times the actual cost of providing the service. In addition to the competitive problems for MVNOs, this may be holding back the IoT market, which often relies on MVNOs. IoT segments such as automotives and aerospace need affordable long-term and cross-border data contracts, without the fair-use restrictions on permanent roaming.

The study recommends that the wholesale price cap glide path set in the EU regulation be reviewed so that the data prices are in line with costs. An approximate indicator could be the average domestic retail price (EUR/GB) across the EU for bundled data. This should be brought into force “in a short timeframe”, the report authors said. To support the IoT market, permanent roaming agreements for wholesale providers also should be allowed, as well as access to 5G networks for virtual operators.

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