BEREC: Voice Roaming Rates near Regulated Caps

Yesterday BEREC published its ninth International Roaming Benchmark Report. Although average voice rates are just below the cap in most countries, data roaming prices have fallen considerably. According to the authors there is a good level of compliance with the current Roaming Regulation in all EU Member States.

At the retail level, all consumers have access to a so-called Eurotariff and a Euro-SMS tariff. At the wholesale level, the voice, SMS and data roaming charges set between operators are in line with the declining regulated average caps. Some countries still reported average prices that were around 0.001 euro above the regulated cap, but in a couple of cases up to almost 0.03 euro above the cap.

Since the last report the above-retail cap-margin grew larger. The NRAs concerned checked compliance with the regulation by their operators. In a few instances, NRAs have launched a compliance investigation to gather further information on the possible reasons for this reported price. BEREC will keep monitoring this issue closely.

The applicable caps are shown below:

Average Eurotariff retail voice roaming rates remained fairly near the regulated caps in most EU countries during the data collection period. This suggests that providers see little attraction in competing on Eurotariff rates, despite the fact that there is a significant margin between typical wholesale prices and retail caps.

At the wholesale level average voice prices are below the regulated wholesale cap of 0.18 euro with an EU average of 0.168 euro for Q3 and 0.172 euro for Q4 2011.

Considering "Rest of World" retail voice roaming calls, typical prices are significantly greater than for calls within EU countries. Comparing the same quarters of 2010 and 2011, while there is no consistent trend in average country prices for calls made or received, the average for all EU-based providers has decreased.

According to BEREC there are no clear indications that operators have tended to raise the prices of unregulated "Rest of World" roaming calls to make up for lost revenue due to the regulated price caps.

The European average price paid per minute for voice calls made under alternative tariffs was not, as would be expected, below the average price for the Eurotariff. This gap is widening, especially for incoming calls. In over half the member states, the national average price for incoming calls under alternative tariffs is a very significant margin above the Eurotariff average price (a factor of 2x is typical for those member states).

This is a matter of considerable concern, says BEREC. While the Eurotariffs account for the majority of voice and SMS traffic, there is a substantial minority of customers who use alternative tariffs. In the second half of 2011, 26.8% of calls made and 29.1% of calls received were based on non Eurotariffs. For text messages sent while roaming within EEA countries, 14.42% of the total volume accounted for non-Euro SMS tariffs.

It is not a problem that customers using alternative tariffs will, from time to time, pay more for a particular call or SMS than they would have done under the Eurotariff. Nevertheless, they would expect to gain on other calls and texts and at least break even overall. However, this appears to be very far from the situation which applies to alternative tariffs in a number of Member States, says BEREC.

For the moment, the reasons for the discrepancy remain a matter of speculation, the authors write. Some may be attributable to the sale of roaming bundles which are too large to suit most customers in practice. Alternative tariffs may employ larger billing units (per minute, rather than per second) which thereby reintroduces hidden surcharges which regulation has curtailed for the Eurotariff. Or headline rates for alternative tariffs may have remained stable or even increased over time while Eurotariff rates decreased.

Whether a combination of these reasons or another effect accounts for the discrepancy, it seems that a number of consumers have made bad choices. The observed effect was clearly not the outcome intended when Council and Parliament decided that there should be freedom to provide alternative tariffs alongside the Eurotariffs.

Clearer information from providers about the relative pros and cons of different tariff options seems a necessary step for the reversal of this extremely undesirable trend. The new Regulation requires providers to take necessary steps to provide information to their customers. BEREC will update on compliance with this requirement in the next Benchmark Report.

The picture is different for data roaming, where average wholesale and retail charges have fallen significantly between Q4 2007 and Q4 2011. BEREC also found a continued drop in EU average charges for wholesale non-group data roaming of almost 40% between Q4 2010 and Q4 2011. The average wholesale price is well below the regulated cap but still higher than the (conservative) BEREC cost estimates.

Source: BEREC

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