EUROPEAN COMMISSION Brussels, 29.11.2019 SWD(2019) 416 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document Report from the Commission to the European Parliament and the Council on the review of the roaming market {COM(2019) 616 final}



Table of Contents 1 Introduction 2 Scope of the Roaming Regulation and main provisions 3 Scope of the roaming review 4 The Commission’s approach to the roaming review 4.1Information and data gathering on wholesale and retail roaming markets 4.1.1Operators’ data collected for the BEREC International Roaming Benchmark Reports 4.1.2Online surveys 4.2Data analysis 4.3External studies 4.3.1Study to estimate the costs of providing wholesale roaming services 4.3.2Study to assess technological and market developments that might have an impact on the roaming market 4.3.3Study on mobile broadband prices 4.4BEREC input 4.4.1Benchmark Reports 4.4.2Transparency Reports 4.4.3BEREC Opinion on the roaming market (June 2019) and BEREC Supplementary analysis on wholesale roaming costs (September 2019)

4.5European Parliament study 5 Competition in retail roaming markets 5.1Evolution of retail (outbound) roaming volumes 5.1.1The introduction of RLAH has lead to an explosive increase in roaming traffic 5.1.2Retail (outbound) roaming traffic remains a small fraction of domestic traffic 5.2Implementation of fair use policy 5.3Application of the derogation mechanism 5.3.1The number of sustainability derogations is getting smaller every year 5.3.2The maximum surcharges granted by the NRAs are low and generally decreasing every year 5.3.3The share of EU/EEA roaming traffic subject to a surcharge due to the sustainability derogation has remained marginal 5.3.4Operators having been granted the derogation have used the surcharge with parsimony 5.3.5The application of the derogation mechanism should continue to decrease 5.4Use of alternative roaming tariff plans 5.5Evolution of domestic tariff plans 5.5.1Domestic prices 5.5.2Domestic-only tariff plans 5.6Quality of services 5.7Situation of MVNOs 5.8Rest of the World roaming 5.9Consumer perception

6 Assessment of the costs of providing wholesale roaming services 6.1Description of the Commission’s approach 6.2Previous estimates of wholesale roaming costs 6.2.1BEREC cost estimates from 2010 and 2012 6.2.2TERA consultants cost estimates from 2016 6.3The Axon Partners cost model 6.3.1The approach and methodology followed by Axon Partners 6.3.2Choice of cost standards and general cost allocation 6.3.3Treatment of seasonality 6.3.4The structure of the cost model 6.4Modelled scenarios 6.5Results derived directly from the cost model 6.6Estimated total costs including transit and termination 6.7BEREC response to the cost model and estimates 7 Competition in wholesale roaming markets 7.1Evolution of wholesale (inbound) roaming volumes 7.1.1Net inbounder and outbounder countries 7.1.2Inbound roaming traffic exhibits an explosive increase 7.1.3National wholesale roaming markets are not overly concentrated 7.1.4Group operators keep part of their roaming traffic within the group

7.2Evolution of prices 7.2.1Wholesale roaming prices have been steadily decreasing 7.2.2In-group wholesale roaming rates are not necessarily lower than out-of-group rates 7.3Wholesale structural measures 7.4Situation of MVNOs 7.4.1The various types of wholesale roaming access for MVNOs 7.4.2Specific challenges reported by MVNOs in wholesale roaming agreements 7.4.3Wholesale roaming prices paid by MVNOs 7.4.4Possible measures to improve the situation for MVNOs 7.5Fraud 8 Technological developments 8.1The main developments with the prospect for a substantial impact on roaming 8.2The study concludes that there does not seem to be a case for significant changes to the regulatory rules for international roaming under the current review. 8.3The study suggests considering if developments relating to M2M and permanent roaming would call for immediate attention 9 Conclusion

Figure 1: Regulated wholesale roaming data price cap, Q3 2017 – Q2 2022 Figure 2: EEA retail roaming voice traffic (calls made), Q2 2016 – Q1 2019 (millions of minutes) Figure 3: EEA retail roaming data traffic, Q2 2016 – Q1 2019 (millions of GB)

Figure 4: EEA average voice roaming consumption (calls made) per month per roaming subscriber, Q2 2016 – Q1 2019 (minutes per month) Figure 5: EEA average data roaming consumption per month per roaming subscriber, Q2 2016 – Q1 2019 (MB per month) Figure 6: Voice services - Ratio between the total volumes after RLAH (Q4 2017 - Q2 2018) and the total volumes over the last period before RLAH (Q4 2016 - Q2 2017), for retail domestic traffic (blue bars) and outbound roaming traffic (red bars) Figure 7: Data services - Ratio between the total volumes after RLAH (Q4 2017 - Q2 2018) and the total volumes over the last period before RLAH (Q4 2016 - Q2 2017), for retail domestic traffic (blue bars) and outbound roaming traffic (red bars) Figure 8: Voice services - Cumulative density distributions of the retail (outbound) roaming voice traffic as % of the retail domestic voice traffic. Figure 9: Data services - Cumulative density distributions of the retail (outbound) roaming data traffic as % of the retail domestic data traffic. Figure 10: Share of total EU/EEA retail roaming traffic which is subject to a surcharge in excess of FUP (%), Q4 2017 – Q1 2019 Figure 11: Development of % of voice and data roaming traffic in the EU/EEA subject to a surcharge, due to the sustainability derogation, Q3 2017 – Q1 2019 Figure 12: Development of % of voice roaming traffic subject to a surcharge due to the sustainability derogation in the Member States where derogations were granted to MNO(s), Q3 2017 – Q1 2019 Figure 13: Development of % of data roaming traffic subject to a surcharge due to the sustainability derogation, in the Member States where the derogation was granted to MNO(s), Q3 2017 – Q1 2019 Figure 14: % of roaming voice and data traffic from alternative tariffs in total EU/EEA roaming traffic, Q4 2016 – Q1 2019 Figure 15: Cumulative density functions of the % of outbound voice traffic coming from alternative tariffs per operator Figure 16: Cumulative density functions of the % of outbound data traffic coming from alternative tariffs per operator Figure 17: % of domestic-only subscribers per country Figure 18: Individual MVNOs’ market shares (1 dot = 1 MVNO) before and after RLAH Figure 19: Total MVNO market share among the operators (MNOs and MVNOs) that responded to all 19th to 22nd BEREC Benchmark Reports’ data collection, by country Figure 20: Average Retail Revenue Per User (ARRPU) of MVNOs, by country, Q4 2016 to Q1 2019 Figure 21: Development of retail roaming prices for travelers roaming in non-EU/EEA countries, Q2 2016 – Q1 2019 Figure 22: Roaming-related topics of consumer complaints received by NRAs and their relative importance Figure 23: Outgoing wholesale roaming voice – Estimated costs, TERA model in 2016

Figure 24: Wholesale roaming data service – Estimated costs €cent/MB, TERA model in 2016 Figure 25: Structural overview of the Axon Bottom-Up LRIC model Figure 26: Cover sheet of the Axon cost model Figure 27: Estimated data roaming unit costs in €/GB, transit costs not included Figure 28: Estimated voice roaming unit cost in €ents/min, transit and termination costs are not included Figure 29: Estimated SMS roaming unit costs in €cents/SMS Figure 30: Estimated data roaming unit costs in €/GB including estimates for transit costs Figure 31: Estimated voice roaming unit costs in €cents/min, including transit and termination costs Figure 32: Voice services, inbounder countries - Left panel: ratio between inbound and outbound roaming voice volumes. Right panel: net outbound roaming voice volumes (outbound voice volumes minus inbound voice volumes) as % of total domestic voice volumes, Q4 2016 – Q1 2019. Figure 33: Voice services, outbounder countries – Left panel: ratio between inbound and outbound roaming voice volumes. Right panel: net outbound roaming voice volumes (outbound voice volumes minus inbound voice volumes) as % of total domestic voice volumes, Q4 2016 – Q1 2019. Figure 34: Data services, inbounder countries. Left panel: ratio between inbound and outbound roaming data volumes. Right panel: net outbound roaming data volumes (outbound data volumes minus inbound data volumes) as % of total domestic data volumes, Q4 2016 – Q1 2019. Figure 35: Data services, outbounder countries. Left panel: ratio between inbound and outbound roaming data volumes. Right panel: net outbound roaming data volumes (outbound data volumes minus inbound data volumes) as % of total domestic data volumes, Q4 2016 - Q1 2019. Figure 36: Inbound roaming voice traffic, Q4 2016 – Q1 2019 Figure 37: Inbound roaming data traffic, Q4 2016 – Q1 2019 Figure 38: HHI for the wholesale roaming market – Voice volumes Figure 39: HHI for the wholesale roaming market – Data volumes Figure 40: Voice services - Cumulative density distributions of in-group outbound retail roaming voice traffic (calls made) as % of the total outbound retail roaming voice traffic (calls made), per operator, for Q3 2017-Q1 2019 Figure 41: Data services - Cumulative density distributions of in-group outbound retail roaming data traffic as % of the total outbound retail roaming data traffic, per operator, for Q3 2017-Q1 2019 Figure 42: Voice services: development of the average wholesale roaming rate for voice in the EEA, Q2 2016 to Q1 2019 Figure 43: Data services: development of the average wholesale roaming rate for data in the EEA, Q2 2016 to Q1 2019

Figure 44: Voice services: average wholesale roaming rate for voice in the Member States, Q2 2017 and Q1 2019 Figure 45: Data services: average wholesale roaming rate for data in the Member States, Q2 2017 and Q1 2019 Figure 46: Average in-group wholesale voice roaming rates versus average out-of-group wholesale voice roaming rates (Q1 2019) Figure 47: Average in-group wholesale data roaming rates versus average out-of-group wholesale data roaming rates (Q1 2019) Figure 48: Type of wholesale roaming access for full and light MVNOs Figure 49: Wholesale roaming prices paid for voice by MNOs (blue dots) and MVNOs (red dots), 2018 Figure 50: Wholesale roaming prices paid for data by MNOs (blue dots) and MVNOs (red dots), 2018 Figure 51: Voice services - Average wholesale domestic price plus EU weighted average MTR (as of July 2018) versus average wholesale roaming price paid by MVNOs (1 dot = 1 MVNO), 2018 Figure 52: Data services - Average wholesale domestic price versus average wholesale roaming price paid by MVNOs (1 dot = 1 MVNO), 2018

1Introduction In October 2015, the European Parliament and the Council adopted Regulation (EU) 2015/2120 which mandated the end of retail roaming charges in the Union from 15 June 2017, subject to fair use policy and a sustainability derogation. These new roaming rules are widely known as "Roam-Like-At-Home" (RLAH). For RLAH to be provided in a sustainable manner throughout the Union, the co-legislators have agreed to have in place the following measures: ·substantially reduced wholesale roaming price caps ; ·the possibility for operators to apply a fair use policy to prevent abusive or anomalous use of roaming services at domestic prices, such as the permanent use of a SIM card in other Member States than the Member State of the roaming provider that issued the SIM card; ·an exceptional and temporary derogation system for operators to be used only if authorised by the national regulator, under strict circumstances when the abolition of roaming charges in a specific market could lead to domestic price increases for the customers of the operator in question. In accordance with the mandate given by the co-legislators, the Commission adopted, on 15 December 2016, the Commission Implementing Regulation (EU) 2016/2286 laying down detailed rules on the application of fair use policy and on the methodology to be used for submitting and assessing a request for a sustainability derogation (hereinafter referred to as the 'Implementing Regulation (EU) 2016/2286') . The above set of rules has been applicable in the EU/EEA since 15 June 2017. In line with its reporting obligations laid down in the Roaming Regulation, the Commission:

-adopted on 12 December 2018 an interim Report to the European Parliament and the Council on the implementation of those rules over the first 18 months (hereinafter ‘the interim Report’); -published on 28 June 2019 a Staff Working Document (SWD) on the findings of the review of the rules on fair use policy and the sustainability derogation laid down in the Implementing Regulation (EU) 2016/2286 (hereinafter ‘the SWD on fair use policy and the sustainability derogation’). The interim Report concluded on the overall success of the RLAH reform over the first 18 months, showing in particular that the demand for mobile consumption while travelling in the EU/EEA had rapidly and massively increased since RLAH was introduced. The SWD published on 28 June 2019 concluded that the safeguards foreseen in the Roaming Regulation to avoid distortions on domestic markets, namely fair use policy and the sustainability derogation, had so far worked adequately where needed. As a follow up to the interim Report and the review of the fair use policy and sustainability derogation, the Roaming Regulation further mandates the Commission to submit, by 15 December 2019, a comprehensive report to the European Parliament (EP) and the Council to assess the functioning of the roaming market under the RLAH rules. This is the subject of the Report from the Commission to the European Parliament and the Council on the review of the roaming market (the Roaming Review Report) and of this accompanying Staff Working Document (SWD). 2Scope of the Roaming Regulation and main provisions Roaming in the meaning of the Roaming Regulation is a service that allows a customer of a Mobile (Virtual) Network Operator (M(V)NO) in one EU/EEA country to have access to mobile services (voice, SMS or data) from an MNO in another EU/EEA country . The service provider (the mobile operator) ensures that its customers remain connected to a mobile network when travelling abroad while using the same mobile handset (or possibly laptop or tablet in case of data roaming) and the same phone number. The service provider that wants to offer roaming services to its customers ("retail roaming services") in another country has to buy them from an MNO located in the visited country ("wholesale roaming services"). To this end, commercial wholesale roaming agreements between service providers have to be concluded. In practice, when a customer places a call or uses mobile data while roaming abroad, that service is provided by a mobile operator in the visited country. The roaming customer’s home operator has to pay the visited operator for that service. This is called wholesale roaming charges. The level of those charges is capped by the Roaming Regulation and annually decreasing for data (see below in this section). Since 15 June 2017 mobile operators have not been allowed to levy any charges in addition to the domestic price for the provision of roaming services (voice, SMS and data) to their customers when they periodically travel in the EU/EEA. In order to prevent abusive or anomalous use of roaming services - such as permanent roaming - at domestic prices that may have detrimental effects on the domestic markets, mobile operators may apply a fair use policy. Fair use policy aims in particular at ensuring that roaming at domestic price is used only when periodically travelling in the EU/EEA. For this purpose, an operator may ask its customers for a proof of residence in, or stable link with, the EU/EEA country where it provides services and issues the SIM card to be used at domestic price when travelling abroad. An operator may also check that the SIM card is used more in its home Member State than abroad. If such a fair use policy is applied and, during a time window of at least four months, the customer has roaming consumption prevailing over domestic consumption or presence in other Member States of the Union prevailing on domestic presence, the operator has to alert the customer to verify whether there is any abusive or anomalous use of roaming services at domestic prices . After a period of at least 14 days from the date of the alert, the operator may apply small roaming surcharges linked to the wholesale price caps if the customer continues to consume mobile services abroad. In addition, in order to allow for the continuous development of the best data offers on domestic markets (e.g. unlimited data), an operator may apply a volume safeguard on roaming data consumed at domestic prices. Beyond that volume, the operator may apply a small roaming surcharge not exceeding the wholesale roaming price cap on data (see in more detail below in this section). In any event, even in excess of fair use policy, the sum of the domestic price plus the small roaming surcharge applicable may not exceed the roaming fees in place in the first quarter 2016 (prior to the transitional period that led to RLAH in June 2017). In exceptional and specific circumstances, in order to avoid a domestic price increase, an operator may obtain from its national regulatory authority (NRA) a so-called sustainability derogation. For this purpose, the operator must demonstrate that the provision of roaming services without the application of a surcharge would not be sustainable with its current domestic charging model. In that case the NRA may authorise the operator to apply a small roaming surcharge for one year. In order to prolong such an authorisation the operator must renew its application yearly. At wholesale level, the price caps were substantially reduced in 2017 by the Roaming Regulation : as of 15 June 2017, the wholesale roaming price caps were reduced from 0.05 €/min to 0.032 €/min for outgoing calls (voice), from 0.02 €/SMS to 0.01 €/SMS, and from 50 €/GB to 7.7 €/GB for data. The data price caps are programmed, in the Roaming Regulation, to further decline every year until 2022 as displayed in Figure 1 , in order to ensure that market players can benefit from wholesale rates that allow for the provision of roaming services to their customers without levying any charge on top of the domestic price. The wholesale roaming price caps also ensure that wholesale costs are fully recovered by the operator providing the wholesale roaming service. Note: Prior to 15 June 2017, the wholesale roaming data price cap was 50 €/GB (not shown because out of scale) Being established by a Regulation, the roaming rules are directly applicable in all EU Member States and also apply in the EEA countries . The Roaming Regulation entrusts NRAs with the task of monitoring, supervising and enforcing the roaming rules in Member States. In order to ensure a consistent approach of all NRAs, the Body of European Regulators in Electronic Communications (BEREC) issued Retail Roaming Guidelines in March 2017 and Wholesale Roaming Guidelines in June 2017, prepared in close collaboration with the Commission and after consulting stakeholders. While not binding in themselves, BEREC Guidelines support the NRAs in the monitoring, supervision and enforcement of the new roaming rules in practice. BEREC Guidelines also serve as detailed guidance for mobile operators on how to implement the new roaming rules in their various offers. 3Scope of the roaming review The review requirements are laid down in Article 19(3) of the Roaming Regulation: “The Commission shall (…), after consulting BEREC, submit biennial reports to the European Parliament and to the Council, accompanied, if appropriate, by a legislative proposal to amend the maximum wholesale charges for regulated roaming services laid down in this Regulation. The first such report shall be submitted by 15 December 2019. Those biennial reports shall include, inter alia, an assessment of:

(a) the availability and quality of services, including those which are an alternative to regulated retail voice, SMS and data roaming services, in particular in the light of technological developments; (b) the degree of competition in both the retail and wholesale roaming markets, in particular the competitive situation of small, independent or newly started operators, and MVNOs, including the competition effects of commercial agreements and the degree of interconnection between operators; (c) the extent to which the implementation of the structural measures provided for in Articles 3 and 4, and, in particular, on the basis of the information provided by the national regulatory authorities, of the procedure for prior authorisation laid down in Article 3(6), has produced results the development of competition in the internal market for regulated roaming services; (d) the evolution of the retail tariff plans available; (e) changes in data consumption patterns for both domestic and roaming services; (f) the ability of home network operators to sustain their domestic charging model and the extent to which exceptional retail roaming surcharges have been authorised pursuant to Article 6c; (g) the ability of visited network operators to recover the efficiently incurred costs of providing regulated wholesale roaming services; (h) the impact of the application of fair use policies by operators in accordance with Article 6d, including the identification of any inconsistencies in the application and implementation of such fair use policies.” All elements listed above are analysed and assessed in the remainder of this report. 4The Commission’s approach to the roaming review In order to cover all review requirements of the Roaming Regulation listed above, the Commission services have conducted the following work streams and used the following inputs and data sources. Information and data gathering on wholesale and retail roaming markets 4.1.1Operators’ data collected for the BEREC International Roaming Benchmark Reports BEREC is mandated by the co-legislators in the Roaming Regulation to regularly collect data from NRAs on roaming developments at retail and wholesale levels. For that purpose BEREC and NRAs run a dedicated questionnaire twice a year to collect the relevant data from mobile operators throughout the EU, in particular data on volumes of roaming traffic (retail and wholesale), wholesale roaming revenues, wholesale roaming rates and information on wholesale roaming contracts. For the purposes of this review, the Commission services have had access to, and analysed, these data. Such data are confidential and are published at country and EU aggregate levels. Data shown at operator level are anonymised. 4.1.2Online surveys In order to complement the quantitative market information provided by the BEREC Benchmark data collection, the Commission and BEREC have jointly run two online surveys of MNOs, MVNOs and NRAs in June 2018 and March 2019 to gather information on the implementation of fair use policy, of the sustainability derogation, as well as other elements to be assessed under this review such as quality of services or misuses/fraudulent usage of roam-like-at-home. Data analysis The analysis of the operators’ data collected for the BEREC Benchmark exercise and the analysis of the data collected through the online surveys were conducted by DG CNECT and the Competence Centre on Microeconomic Evaluation (CC-ME) of the Joint Research Centre (JRC). DG CNECT has also relied on BEREC's analysis of this data carried out in parallel to the Commission's analysis (see section 4.4). External studies 4.1.3Study to estimate the costs of providing wholesale roaming services

In order to estimate the costs of providing wholesale romaing services in the EU/EEA, the Commission ordered an external study to AXON Partners. The study was conducted between March 2018 and June 2019. Building upon cost models used by NRAs for mobile networks and on the cost model developed during the last roaming review, the contractor has developed a cost model to estimate the costs of providing wholesale roaming services in each EU Member State and EEA country. The cost model was developed in close collaboration with the BEREC International Roaming Expert Working Group, BEREC experts on terminationrates and NRAs, in particular via the coordination of the study work by the Steering Commmittee composed of DG CNECT and 8 NRAs. The methodology, input data gathering exercise, consultation process and final results of the study are described in section 6. The final version of the cost model developed by the contractor is described in more detail in the final report of the study, which was published on 24 July 2019 together with the final results and a public version of the model accompanied by the necessary documentation. 4.1.4Study to assess technological and market developments that might have an impact on the roaming market The Commission ordered to WIK Consult an external study on technological and market developments that might have an impact on the roaming market. The purpose of the study was to assess the availability and quality of services, which are an alternative to regulated retail voice, SMS and data roaming services, in particular in the light of technological developments. The study was conducted between December 2018 and June 2019. The contractor followed a modified greenfield approach to assess the competitive impact of various technological developments in the roaming market, including: (a)Technologies and services that enable roaming bypass: wi-fi and wi-fi aggregation, Over-the-top (OTT) voice and messaging, Rich Communication Services. (b)Technological developments and platforms facilitating competition in the roaming services: virtual SIM, embedded SIM, 5G and network slicing, wholesale capacity trading platforms, Local Break-Out. (c)The role of new business models and players in the roaming space: verticals, equipment manufacturers and Operating Systems providers, communication application providers etc. The findings of the study are presented in detail in the final report published on 24 July 2019. An overview of these findings and main conclusions is presented in section 8. 4.1.5Study on mobile broadband prices The Commission publishes every year the “Mobile Broadband Prices in Europe” which reports on the level of domestic retail mobile prices in EU Member States and in a number of non-EU countries. For the purpose of cross-country comparisons, the study uses the standard mobile internet usage baskets defined by the Organisation for Economic Co-operation and Development (OECD). The results of this study have been used to monitor the evolution of domestic mobile prices in the EU over the last years. BEREC input The Commission services have worked continuously and closely with the International Roaming BEREC Expert Working Group (EWG) for the purposes of this review. Implemention-related work and questions raised by operators, end users and NRAs since RLAH rules have been adopted have been discussed with the EWG and have fed in this review. In addition, NRAs were closely involved in the Commission’s external study to assess the costs of providing wholesale roaming services (see section 4.3.1). 4.1.6Benchmark Reports BEREC is mandated by the co-legislators in the Roaming Regulation to regularly collect data from NRAs on roaming developments at retail and wholesale level (e.g. traffic, prices). Based on these data, BEREC publishes twice a year country-level results in the BEREC International Roaming Benchmark Report in March and October every year. BEREC Benchmark Reports published since June 2017 have been used for the purposes of this review. 4.1.7Transparency Reports BEREC is mandated by the co-legislator in the Roaming Regulation to collect data from NRAs on transparency and comparability of roaming tariffs once a year. For this purpose NRAs are running another data collection from mobile operators in August every year. Based on these data, BEREC publishes country-level results in the BEREC Report on Transparency and Comparability of International Roaming Tariffs in December every year. BEREC Transparency Reports published since June 2017 have been used for the purposes of this review. 4.1.8BEREC Opinion on the roaming market (June 2019) and BEREC Supplementary analysis on wholesale roaming costs (September 2019) In line with the obligation to consult BEREC before submitting the review Report to EP and Council in December 2019, the Commission services requested BEREC to provide its formal Opinion on the functioning of the roaming market by 19 June 2019. The Review Report and this SWD take utmost account of the BEREC Opinion and BEREC Supplementary cost analysis published on 19 June 2019 and 20 September 2019 respectively. European Parliament study In November 2018, the European Parliament published a study entitled “Roaming: One year after implementation”, which was prepared at the request of the European Parliament’s Committee on Industry, Research and Energy. The study reviews the retail and wholesale roaming markets during the first year after the introduction of the RLAH regime. It acknowledges its benefits to the retail roaming market and makes certain recommendations focusing mainly on the wholesale regulation, including adjusting the wholesale caps. The European Commission has taken note of the study, some recommendations of which are also reflected in theBEREC Opinion.

5 Competition in retail roaming markets Evolution of retail (outbound) roaming volumes 5.1.1The introduction of RLAH has lead to an explosive increase in roaming traffic The introduction of RLAH and the ensuing elimination of roaming charges in the EU/EEA from 15 June 2017 has triggered an immediate and massive increase in retail roaming traffic. The volume of roaming phone calls made increased by 2.5 times in Q3 2017, compared to one year before and by almost 2 times in Q4 2017, Q1 2018 and Q2 2018, compared to one year before ( Figure 2 ). In summer 2018 (Q3 2018), the volume of roaming phone calls made was about 3 times higher than in the last summer before RLAH (Q3 2016). The increase of traffic continues, though at a much lower level, even when comparing quarters after the introduction of RLAH (12% in Q4 2018 and 9% in Q1 2019, compared to one year before). Source: Based on 23rd International Roaming BEREC Benchmark Report In the first three quarters from the introduction of RLAH (Q3 2017, Q4 2017 and Q1 2018), mobile data consumption while roaming was around 5 times above its level one year before (5.3, 5 and 4.9 times respectively, see Figure 3 ). In Q2 2018 and Q3 2018, mobile data consumption while roaming was respectively 15 and 12 times more compared to its level two years before. In Q4 2018 and Q1 2019 the increase compared to one year before remains high (above 80%), even though both comparisons are entirely after the introduction of RLAH. Source: Based on 23rd International Roaming BEREC Benchmark Report During the first year of RLAH, travellers called on average about 1.7 times more while roaming than before the implementation of RLAH ( Figure 4 ) . During that first year, they used on average almost 4 times more data while roaming than before RLAH ( Figure 5 ) . In Q4 2018 and Q1 2019 we observe a decrease in the average consumption of voice traffic per roamer (6% and 7%), which should be attributed to the increase in the number of subscribers using roaming. In contrast, the average consumption of data traffic per roamer continues to increase at a high pace (51% in Q4 2018 and 38% in Q1 2019 compared to one year before). Source: Based on 23rd International Roaming BEREC Benchmark Report Source: Based on 23rd International Roaming BEREC Benchmark Report All Member States experienced a considerable increase in roaming consumption by subscribers during the first year of RLAH . Particularly high increases in customers' EU/EEA roaming consumption for voice (by 3 to 5 times) were observed by Bulgarian, Croatian, Polish and Romanian operators (red bars in Figure 6 ). In contrast, domestic consumption has been stable over the same period (blue bars in Figure 6 ). The increase observed in roaming voice consumption is therefore entirely due to the introduction of RLAH.

Source: Data collected for the 19th-22nd International Roaming BEREC Benchmark Reports. JRC calculations. The increase in roaming data consumption during the first year of RLAH was even higher. Bulgarian, Croatian, Czech and Polish operators observed an increase in roaming data consumption by 9 times or more, while in several other countries operators have observed an increase in roaming data consumption by 5 times and more (Austria, Cyprus, Greece, Italy, Latvia, Slovenia and Spain) (red bars in Figure 7 ). In all Member States, the increase in domestic consumption has been much smaller than the increase in roaming consumption over the same period (blue bars in Figure 7 ). The increase observed in roaming data consumption is therefore mostly due to the introduction of RLAH. Source: Data collected for the 19th-22nd International Roaming BEREC Benchmark Reports. JRC calculations In the three Member States where all MNOs have been granted sustainability derogations since 15 June 2017 (Finland, Lithuania and Estonia , see section 5.3), users have also markedly increased their consumption of mobile services abroad in the EU/EEA in proportions that are similar to many other Member States. Data consumption in Estonia and Finland has increased by almost 3 times while in Lithuania by almost 4 times. Voice consumption has increased by 2 times in Lithuania and more than 1.5 times in Estonia. This is because operators which were granted derogations nonetheless provided roaming services without surcharges to some extent (section 5.3) and, when applied, the roaming surcharges authorised by the NRA were substantially lower than the surcharges in place prior to 15 June 2017. Therefore customers of these operators have substantially benefitted from the new roaming rules as well and have reacted consequently with increased demand. 5.1.2Retail (outbound) roaming traffic remains a small fraction of domestic traffic The evidence from BEREC International Roaming Benchmark Reports shows that, despite its massive increase, roaming traffic remains only a small fraction of domestic traffic. As shown in Figure 8 , in the first year of RLAH, the retail roaming voice traffic represented less than 6.8% of the retail domestic voice traffic for 90% of the operators. The increase, since the introduction of RLAH, is visible: before RLAH, the retail roaming voice traffic was less than 4.2% of the retail domestic voice traffic for 90% of the operators. The seasonality of roaming can be observed as the curve representing the summer period under RLAH (Q3 2018) is shifted to the right, showing that retail roaming voice traffic represents a higher proportion of domestic voice traffic during summer for most operators than during the rest of the year. However, even in summer 2018 with the highest roaming traffic recorded so far, the retail roaming voice traffic was still less than 6.8% of the retail domestic voice traffic for 90% of the operators. Source: Data collected for the 19th-23rd International Roaming BEREC Benchmark Report. JRC calculations. Note: 'pre-RLAH' covers the last period before RLAH (Q4 2016 - Q2 2017), 'post-RLAH’ covers the corresponding period after RLAH (Q4 2017 - Q2 2018). Q3 2018 is the last summer available. Q1 2019 is the last available quarter.

The same can be observed for retail roaming data traffic. As shown in Figure 9 , in the first year of RLAH, the retail roaming data traffic represented less than 6.2% of the retail domestic data traffic for 90% of the operators. Again, the increase since the introduction of RLAH is visible: before RLAH, the retail roaming data traffic was less than 2.8% of the retail domestic data traffic for 90% of the operators. In the case of data, seasonality is much more marked than in the case of voice. The corresponding ratio for Q3 2018 (post-RLAH) is 10.7%. Source: Data collected for the 19th-23rd International Roaming BEREC Benchmark Reports. JRC calculations.

Note: 'pre-RLAH' covers the last period before RLAH (Q4 2016 - Q2 2017), 'post-RLAH covers the corresponding period after RLAH (Q4 2017 - Q2 2018). Q3 2018 is the last summer available. Q1 2019 is the last available quarter. Implementation of fair use policy Regulation (EU) 2016/2286 laid down detailed rules to ensure a consistent implementation of fair use policies (FUP) that roaming providers may apply in order to avoid anomalous or abusive use of regulated retail roaming services under RLAH that could have detrimental effects on domestic markets. The Staff Working Document on the findings of the review of the rules on roaming fair use policy and the sustainability derogation laid down in the Implementing Regulation (EU) 2016/2286 published on 28 June 2019 (hereinafter ‘the SWD on fair use policy and the sustainability derogation’) analyses in detail the application of fair use policy, based on the joint survey by the Commission and BEREC (see section 4.1.2). The analysis shows that the overwhelming majority of operators, i.e. 95% of MNOs and 78% of MVNOs have utilised one of the FUP criteria to address abusive or anomalous use of roaming services at domestic prices (such as permanent roaming) by individual customers. A significant majority of operators (87% of MOs and 80% of MVNOs offering data bundles) have relied on the open data bundle limits. A sizeable number of mobile operators rely on other criteria, notably the residence/stable link criterion (52% of MNOs and 44% of MVNOs), the 4-month window (41% of MNOs and 26% of MVNOs) and the pre-paid limits (32% of MNOs and 33% of MVNOs offering pre-paid tariff plans). While fair use policy is now a common practice among mobile operators, the overwhelming majority of roaming customers stay abroad for much shorter time periods and therefore do not need to worry about these control mechanisms. As noted by BEREC in its Opinion on the roaming market, MNOs that have responded to the Joint Commission/BEREC survey of March 2019 have alerted in total approximately 0.6% of their subscribers and have imposed a surcharge after the alert to half of them (i.e. approximately 0.3%). Also, operators’ data collected in the framework of the International Roaming BEREC Benchmark Data Reports, indicate that hardly more than 5.5% of the total roaming data traffic in the EU/EEA and slightly below 4% of the roaming voice traffic is subject to a FUP surcharge ( Figure 10 ). The fact that the share of roaming voice traffic subject to a FUP surcharge is significantly higher than the share of subscribers subject to a surcharge under the 4-month control mechanism shows that this small proportion of long-term travellers generates a significantly higher proportion of the roaming voice traffic. Source: Based on data from 20th-23rd International Roaming BEREC Benchmark Data Report. Table 1 shows the Member States exhibiting the highest percentage of traffic subject to a FUP surcharge. In these Member States, FUP obviously plays a major role in mitigating the effects of abusive or anomalous use of roaming services at domestic price. Member States, where >10% of voice traffic is subject to a FUP surcharge Member States, where >10% of data traffic is subject to a FUP surcharge ·Sweden (20%) ·Bulgaria (15%) ·Sweden (22%) ·Poland (20%) ·Bulgaria (18%) ·Latvia (14%) ·Romania (14%) ·UK (11%) Source: Based on data from 23rd International Roaming BEREC Benchmark Data Report. Both Figure 10 and Table 1 indicate that the proportion of data traffic subject to FUP surcharge is higher than the respective proportion of voice traffic. This is consistent with the fact that many operators use the open data bundles limits, beyond which the operator may impose a FUP surcharge only to roaming data traffic. The analysis in the SWD on fair use policy and the sustainability derogation shows that FUP measures have overall enabled operators to successfully address abusive or anomalous use of roaming services at domestic prices (such as permanent roaming) by individual customers., although this entails some costs and complexity. According to the data from the joint Commission/BEREC survey of March 2019, less than 15% of respondents assesses any of the open data bundles, 4-month window or stable link as unnecessary. Also, more than 75% of the operators that have applied each of these criteria assess them as effective or partially effective. Furthermore, as noted by BEREC in its Opinion on the roaming market, operators generally comply with the legal provisions when applying a FUP. In the few cases where breaches of those rules have been observed, operators have corrected their offer as requested by the NRA. BEREC has however noted the increasing number of zero-rated offers in the mobile market and the need to clarify how such offers should be treated under RLAH. NRAs, in the context of the BEREC International Roaming Expert Working Group and in coordination with the Commission services, have agreed on a common approach to enforce the fair use policy rules on such offers. According to NRAs, applying the same domestic charging mechanism while roaming like at home implies that the consumption of zero-rated services may not be counted against the domestic data allowance while roaming in the EU/EEA, as it is the case at home. However, a fair use data volume limit can be applied while roaming in the EU/EEA, in accordance with the formula provided in the Regulation (EU) 2016/2286 for open data bundles. Consumption of normal (non-zero-rated) services and of zero-rated services can be counted against this fair use limit. In its Opinion on the roaming market, BEREC proposes to revise its Retail Roaming Guidelines accordingly, in order to facilitate a common approach on the assessment of zero-rated tariffs within the EU. Based on the analysis performed, the Commission services observed in the SWD on fair use policy and the sustainability derogation that the evidence available would not support a change in the scope of FUP - be it the duration of the time window, the level of the volume limit on data or the introduction of a volume limit on voice. Since the publication of the SWD in June 2019, the Commission services have not received any information nor additional data that would change that conclusion.

Operators that, with a FUP designed in accordance with the Regulation (EU) 2016/2286, have faced or would have faced levels of roaming usage that threaten their domestic charging model have been granted a sustainability derogations (section 5.3). As to fraud activities using roaming services, they can be tackled by specific appropriate measures that do not fall under the scope of FUP (section 7.5). Application of the derogation mechanism In exceptional and specific circumstances, in order to avoid a domestic price increase, an operator may obtain from its NRA a sustainability derogation, after demonstrating that the provision of roaming services without the application of a surcharge would not be sustainable with its current domestic charging model. The SWD on fair use policy and the sustainability derogation analyses in detail the application of sustainability derogations, based on the joint survey by the Commission and BEREC of March 2019. The analysis shows that the derogation mechanism has acted as an effective safeguard against possible distortions on the few markets where domestic charging model could have been at risk. The analysis also show that operators authorised by the NRA to apply a surcharge still largely offer RLAH. 5.1.3The number of sustainability derogations is getting smaller every year The table below presents the number of derogations that have been granted during the first two years of RLAH (June 2017 to May 2018, June 2018 to May 2019) and between June and October 2019, per Member State, split by type of operator (MNO and MVNO). Derogations granted between June 2017 and May 2018 Derogations granted between June 2018 and May 2019 Derogations granted between June 2019 and October 2019 MNO MVNO MNO MVNO MNO MVNO AT 0 2 0 2 0 2 BE 0 1 0 1 0 1 DK 0 1 0 0 0 1 EE 3 0 3 0 0 0 ES 0 1 0 0 0 0 FI 3 1 3 1 3 1 FR 0 11 0 6 0 3 IT 0 4 0 3 0 4 LT 3 1 3 1 2 1 PL 4 8 4 7 0* 3** RO 1 0 1 0 1 0 SI 0 1 0 1 0 1 Total 14 30 14 23 6 17 * In October 2019, for the first time a request from an MNO was rejected. One more request from an MNO is pending and the remaining 2 have not requested a derogation until now. ** 3 more requests are pending. Sources: Commission's survey of NRAs, June 2018 (first year), Joint Commission/BEREC survey of NRAs, March 2019 (second year), NRA inputs (June 2019 to October 2019) Since June 2019 (until October 2019), derogations have been granted to 6 MNOs and 17 MVNOs. Some derogations might still be renewed for some MNOs and MVNOs during the first semester of 2020. As expected, MVNOs have been the primary users of the sustainability derogation given their specific situation on the wholesale roaming market. Over the first year of RLAH, about 2/3 of the derogations have been granted to MVNOs (30 vs 14). Over the second year of RLAH, more than 60% of the derogations have been granted to MVNOs (23 vs 14). Since June 2019, 74% of the derogations have been granted to MVNOs (17 vs 6). Still, this is a small fraction of the more than 330 MVNOs existing in the Union. Most of the providers that were granted a derogation have a small market share in their respective countries. As regards MNOs, there are four Member States in which all MNOs have obtained a sustainability derogation during the first two years of RLAH, namely, Estonia, Finland, Lithuania and Poland (in the latter only since 2018). Romania's smaller MNO was also granted a sustainability derogation. These countries are characterised by particularly low mobile data prices and high net outbound roaming traffic (i.e. operators in these countries have much more roaming traffic by their customers abroad than they receive roaming traffic from foreign users on their networks). However, since June 2019 (start of the third year of RLAH), there has been a significant decrease in the number of derogation requests from the MNOs in these Member States. In Lithuania, one MNO (the incumbent) did not request to renew the derogation anymore, and in Estonia none of the MNOs decided to renew the derogation. Additionally, according to the most recent data, the Polish MNOs have started to record a profit from roaming services provided in the EU Member States, and in October 2019, for the first time a request for derogation from a Polish MNO was rejected. Hence, as expected by the Commission and BEREC, with the decreasing wholesale price caps on data, the need for sustainability derogations is decreasing. According to the joint Commission/BEREC survey of March 2019, NRAs are expecting to grant in total around 20 derogations in 2020, which would amount to less than 50% of the derogations granted during the first year of RLAH. As expected, no derogation has been granted to MNOs in Member States which are net recipients of inbound roaming traffic. 5.1.4The maximum surcharges granted by the NRAs are low and generally decreasing every year The maximum surcharges allowed by the NRAs are normally at or – sometimes even significantly – below the wholesale roaming price caps, so that, when a surcharge is applied, the customers concerned pay only a small fraction of what they used to pay for roaming services before June 2017 (less than 10% for data). As a result of the partial application of the surcharge and its modest level, increases in retail roaming traffic by subscribers from Finland, Lithuania, Estonia and Poland are comparable to that observed in the other Member States. In most cases, the new maximum surcharges allowed by NRAs are lower than those of the first and second derogations. One reason is the decreasing wholesale roaming prices. For example, in Lithuania, the maximum surcharges for the outgoing calls granted for the period 2019-2020 for the two MNOs and the MVNO which were granted the derogation decreased by 100%, 20% and 71% respectively compared to the year before. For data, the decrease was 57%, 27% and 43% respectively for the same periods.

5.1.5The share of EU/EEA roaming traffic subject to a surcharge due to the sustainability derogation has remained marginal Figure 11 shows the development, in the EU/EEA, of roaming voice and data traffic subject to a surcharge due to the sustainability derogation, as % of the total roaming traffic. Both remain at marginal levels, below 3.5% and 1.5% respectively. The increase observed since 2018 is likely to be linked to several of the first derogations granted only in Q1-Q2 2018 in Poland, the biggest market with derogations, and the progressive application of these derogations since then in that Member State (see the start of the derogation in Poland in Q1 and Q2 2018 in Figure 12 ). Source: Based on data from the 20th-23rd International Roaming BEREC Benchmark Report Note: The Q3’17 figures take on board data updates, provided by some operators after the publication of the 20th International Roaming BEREC Benchmark Report 5.1.6Operators having been granted the derogation have used the surcharge with parsimony Figure 12 and Figure 13 show, in the specific Member States where the derogation has been granted to one or more MNOs, the development of roaming voice and data traffic subject to a surcharge due to the sustainability derogation, as % of the total outbound roaming traffic from these Member States. In all other Member States the corresponding percentages are at (or close to) zero. Source: Based on data from the 20th-23rd International Roaming BEREC Benchmark Report Note: The Q3’17 figures take on board data updates, provided by some operators after the publication of the 20th International Roaming BEREC Benchmark Report. Source: Based on data from the 20th-23rd International Roaming BEREC Benchmark Report Note: The Q3’17 figures take on board data updates, provided by some operators after the publication of the 20th International Roaming BEREC Benchmark Report. First of all, the figures show that even in those Member States where all MNOs have been granted the derogation (Estonia, Finland, Lithuania), in general only a minority of the outbound roaming traffic has been subject to a surcharge (exceptions observed only in Lithuania for some quarters of 2018). This shows that MNOs in those countries have used the derogation in a limited manner and have provided large amounts of RLAH to their customers. Second, the trend in using the surcharge is overall decreasing in Estonia, Finland and Lithuania, where derogations were granted from the beginning of RLAH. In these three Member States voice traffic subject to a surcharge due to the derogation has been decreasing either from the beginning (Finland) or from Q1 2018 (Estonia, Lithuania). In Finland the drop is more than half. Roaming data traffic subject to a surcharge due to the derogation is also presenting a decreasing trend either from Q1 2018 (Finland), Q3 2018 (Estonia) or Q4 2018 (Lithuania). In Romania the proportion of voice and data traffic subject to a surcharge due to derogation decreased for the first time in Q1 2019. The decreasing trend in these Member States can be attributed, on the one hand, to the reduced negative impact of wholesale roaming costs and, on the other hand, to an increasing expectation of consumers for RLAH services, which could act as a competitive pressure. In contrast, in Poland, roaming traffic subject to a surcharge due to the derogation, as % of total roaming traffic, continues to present an increasing trend, for both voice and data. This evolution is due to the late granting of most of the derogations in Q1-Q2 2018 only and to the application of the surcharge to new contracts. Given that none of the Estonian operators has renewed its request for derogation from June 2019, no roaming traffic from Estonia is expected to be subject to a surcharge due to the derogation since June 2019 (data not available yet). In Lithuania, the share of roaming traffic subject to a surcharge due to the derogation is expected to be significantly reduced since June 2019 compared to the two Figures above, following the non-renewal of the incumbent’s derogation in June 2019. The first rejection of a request for derogation by an MNO in Poland in October 2019 should also lead to a decrease of the overall share of roaming traffic subject to a surcharge due to the derogation.

5.1.7The application of the derogation mechanism should continue to decrease Based on the analysis performed, the Commission services observed in the SWD on fair use policy and the sustainability derogation that the sustainability mechanism has been applied as intended by the co-legislator and adequately worked as a safeguard to avoid distortions on domestic markets where needed. In its Opinion on the roaming market, BEREC notes that it has been a useful tool for some operators to achieve the overall sustainability of the RLAH. In addition, the derogation has not prevented the concerned end users to massively benefit from the new roaming rules. As concluded in the SWD on fair use policy and the sustainability derogation, the Commission expects the application of the derogation to continue to decline, as further reductions in regulated wholesale roaming price caps for mobile data services take effect, improving the sustainability of RLAH in the countries concerned. In its Opinion on the roaming market, BEREC notes that the derogation mechanism concerns a small and shrinking part of the market and that NRAs too expect the number of derogations to further decrease in the coming years. Use of alternative roaming tariff plans Pursuant to Article 6e(3) of the Roaming Regulation, mobile operators may offer alternative tariffs, which deviate from the RLAH requirements laid down in Articles 6a, 6b and 6c. Mobile subscribers can choose such tariffs but this choice must be deliberate and requires awareness about the existence of the regulated tariff (i.e. RLAH in the EU/EEA) and the nature of the roaming advantages which would thereby be lost. Furthermore, subscribers using alternative tariffs should have the possibility to switch back to the regulated RLAH tariffs, at no extra charge and without any conditions or restrictions pertaining to elements of the subscriptions other than roaming. As assessed in the BEREC Report on Transparency and Comparability of International Roaming Tariffs, such tariffs are mostly addressed to the business segment providing for example special pay-as-you go tariffs, customized price plans for large customers, pooling tariffs and day-passes. According to the above report, 31% of the operators that responded to the BEREC questionnaire offer alternative roaming tariffs, in the form of daily, weekly, monthly or other packages. Nevertheless users’ interest in alternative tariffs has substantially decreased, since the introduction of RLAH. As reflected in Figure 14 , roaming traffic from alternative tariffs dropped in Q3 2017 to less than half of its level before. Roaming voice traffic from alternative tariffs has remained stable since Q1 2018 to around 6% of the total roaming voice traffic. Roaming data traffic from alternative tariffs has further decreased from around 6% in the first three quarters of RLAH (Q3 2017 to Q1 2018) to around and even below 5% as of Q2 2018. Source: Based on data from the 19th-23rd International Roaming BEREC Benchmark Report In the majority of countries the use of alternative tariffs is marginal and remains well below 5% for either voice or data. Only in few cases the share of EU/EEA roaming traffic under alternative tariffs exceeds 10% of roaming traffic (Estonia, Germany, Ireland, Italy, Lithuania and Luxembourg for voice; Estonia, Germany, Ireland, Italy, Luxembourg and Slovakia for data). The declining trend of EU/EEA roaming traffic from alternative tariffs is also reflected in the following figures, depicting the cumulative density function for the proportion of retail traffic coming from alternative tariffs for voice ( Figure 15 ) and for data ( Figure 16 ) Source: Data collected for the 19th-23rd International Roaming BEREC Benchmark Reports. JRC caculations. Source: Data collected for the 19th-23rd International Roaming BEREC Benchmark Reports. JRC calculations. Evolution of domestic tariff plans 5.1.8Domestic prices

As noted by BEREC in its Opinion on the roaming market, operators report to have maintained the overall availability of their tariff plans under RLAH. Less than 15% of MNOs and 10% of MVNOs report to have ceased offering certain domestic tariff plans. According to BEREC, in most cases, the overall domestic tariff structure has not changed. Tariff plans which have been removed relate to certain data-only tariffs, certain pre-paid plans, legacy tariffs with unitary roaming prices or tariff plans with high SMS volumes. Furthermore, BEREC observes that domestic consumption patterns have remained relatively stable following the introduction of RLAH, and so has the average retail revenue per user (ARRPU). In the same direction, according to the study “Mobile Broadband Prices in Europe” , between 2018 and 2019 (i.e. the second year of application of the RLAH rules) there is no trend for increasing domestic prices. On the contrary, the overall trend on average EU prices is decreasing for all voice and data baskets except the one with unlimited calls as well as for all data-only baskets, as reflected in the following table. A similar observation was made in the interim Report; 100MB, 30 calls 500MB, 100 calls 1GB,

300 calls 2GB,

900 calls 2GB,

100 calls 5GB,

300 calls 5GB,

unlim calls Change in average EU price for voice and data baskets, 2018-2019 -14% -2% -4% -1% -7% -10% 7% 512MB 1GB 2GB 5GB 10GB 20GB 50GB Change in average EU price for data only baskets, 2018-2019 -8% -12% -11% -14% -15% -14% -13% Source: Empirica/TUV study on Mobile broadband prices in Europe 2018-2019 (2019 not published yet) commissioned by the European Commission. The comparison is between prices collected in July 2018 and in February 2019. 5.1.9Domestic-only tariff plans According to the most recent BEREC International Roaming Benchmark Reports , the proportion of EU/EEA subscribers that had a roaming-enabled SIM card has remained stable above 95% since summer 2017. SIM cards restricted to domestic use (i.e. SIM cards providing no roaming service abroad at all) are in most cases serving local communication needs and/or data-only plans or fixed wireless access products that can only be used at a specific location . As Figure 17 shows, this proportion has declined in Bulgaria (from 30.9% to 16%), Latvia (from 23.7% to 22%) and Estonia (from 13.1% to 12%) but has increased in Romania (from 21% to 48%). From the other Member States, the proportion of domestic-only subscribers has evolved substantially over the same period in Austria (increase from from 3.2% to 9%) and in the Netherlands (decline from 5.4% to almost 0). (*) Data for Hungary are not presented. Source: Data collected for the 20th and 23rd International Roaming BEREC Benchmark Reports. JRC calculations. In the last quarter available (Q1 2019), MVNOs have a substantially higher share of domestic-only subscribers than MNOs in Cyprus, Lithuania and Spain, while the opposite is true in Romania. In all EU/EEA countries however, the proportion of domestic-only mobile subscribers remains well below the proportion of the population that has not travelled abroad over the last year. Quality of services The Roaming Regulation includes obligations on mobile operators concerning roaming prices at retail level and wholesale levels. It does not include any explicit obligation on the quality of service (QoS) as such. However, the quality of service is an integral part of the product whose price is regulated. By paying a certain price, the user has access to a given mobile service domestically. The Roaming Regulation requires that the user have access to the same service abroad in the EU/EEA for the same price, as long as such service can be delivered on the visited network. The quality of service, in particular data speed, while roaming does not depend entirely on the home operator, it largely depends on the QoS provided by the visited network. However, as 4G technology is now covering almost all of the Union's territory, 4G can normally be expected to be provided while roaming. As noted in the BEREC Opinion on the roaming market, BEREC considers that domestic operators should not deliberately lower the QoS compared to the QoS offered in the home country, so that the end-users could genuinely ‘roam like at home’. Beyond the intrinsic performance of the mobile network itself, there are multiple factors, influencing the QoS, and in particular the data speed, experienced by an end-user at a specific location and a specific point in time (e.g. network capacity solicited by other users simultaneously, particular end-user equipment used, meteorological conditions). On any given network, the QoS may vary across end-users and time, be they local or roaming end-users. The BEREC Opinion on the roaming market notes a lack of transparency of a number of operators as regards the data speed provided to their customers while they roam abroad. According to it, 23 NRAs have reported that some operators provide no information about QoS on their websites, some do have roaming QoS information available (and almost half of them clarify that they do not impose any limitations regarding QoS while roaming), while some are transparent about the fact that they limit roaming to 3G access (3G only availability; 3G only for specific countries or 3G only for specific networks in specific countries). BEREC however underlines in its Opinion that the information is incomplete. Therefore, the research is not conclusive at this stage. In its Report on Transparency and Comparability of International Roaming Tariffs (December 2019) BEREC asked the operators whether they offer 3G roaming when 4G roaming is available. 46% of the respondents gave a positive answer. However, BEREC acknowledges in this report that the question did not specify that operators replying positively offer 3G across all roaming networks and all member states. Therefore, it is not clear, if those operators responding yes, apply this restriction to all countries and networks or only in few instances. This inconclusiveness is further supported by the findings of the joint BEREC/Commission survey of NRAs that took place in March 2019. According to the BEREC Opinion, almost all operators surveyed (98 % of MNOs and 94 % of MVNOs) report that they do not themselves limit QoS or data speeds of roaming services to 3G besides exceptional circumstances (brief limitation of data roaming speeds in order to provide a consistent level of service, lack of 4G roaming implementation for one MVNO, dependence on the speed from the selected MNO in the host country).

In fact, there is no particular evidence that roaming users get lower data speed than local users. According to the joint Commission/BEREC survey of NRAs March 2019, the number of consumer complaints regarding roaming has not increased in most Member States following the introduction of RLAH and end-users’ dissatisfaction with the QoS while roaming ranks low among the consumer complaints received by NRAs (see also section 5.9). Only 3 NRAs found it necessary to undertake some investigations on the speed of data roaming services. None of them concluded on a specific problem in that regard. The above are to a large degree confirmed in the BEREC Report on Transparency and Comparability of International Roaming Tariffs (December 2019). According to it, fewer than half of the responding NRAs (14 out of 30) reported that they received complaints regarding quality of service between July 2018 and August 2019 and only one of them received more than 10 compaints (30). According to the BEREC Opinion, a few MNOs and MVNOs reported problems with the QoS regarding available data speeds of roaming services for their customers while roaming in the EEA (lower data speeds due to poor capacity, overloaded networks during summer time, low data speed, possible data throttling by some visiting operators). However, the overwhelming majority of MNOs and MVNOs (89 % of MNOs and 96 % of MVNOs) reported that the introduction of RLAH did not have an impact on their QoS. At wholesale level, 98 % of all MNOs answered that they do not offer different prices for wholesale roaming access based on the QoS. According to the BEREC Opinion, almost all MNOs do not differentiate in the QoS/data speeds for roaming services in their reference wholesale agreement for roaming access for operators in the EU. MVNOs reported mostly to have a wholesale roaming resale contract without restrictions towards the quality of data roaming (72 %). Almost all MVNOs reported no price difference between 3G or 4G in their wholesale resale roaming access agreement with their host operator. As for the external studies quoted in the BEREC Opinion, both the Monroe Project and the Speedtest study regarding the quality of mobile broadband access note that routing data traffic through the user’s home network has always been the norm for handling SIM cards that visit foreign networks and that this may naturally introduce short delays for the roaming end-users. The Speedtest study focused on comparing general speeds in a home country and speeds experienced while roaming and concluded that the differences are at least partially due to different speeds offered in different countries in general, i.e. not due to the artificial lowering of speeds for roaming customers. Therefore, the conclusions of both projects indicate that different experiences while roaming are influenced by different speeds available in different EEA countries. BEREC indicated in its Opinion that its open internet measurement tool, which will allow to measure certain QoS parameters for internet access, could be used for further monitoring the QoS while roaming with the EU/EEA, at least for data. Its specification already mentions that internet access services quality measurements need to reflect the transnational topology and usage of the Internet, which makes it relevant to measure performance across borders, and check the ability to access content from different parts of Europe when the end user is at home, in his domestic network, and when connecting from a visited network when roaming. Additionally, it is worth noting that when it comes to the use of mobile data, according to the EU rules on the open internet all traffic should be treated equally. Therefore, if end-users travel within the EEA, their use of data is additionally protected by the open internet rules except for limited exceptions (such as temporary congestion management). Finally, in 2020 BEREC will adopt guidelines detailing the relevant QoS parameters pursuant to Article 104 of the EECC aimed to ensure further transparency and comparability of the services offered. Situation of MVNOs Because MVNOs do not own a radio access network in the country(ies) where they operate, MVNOs cannot exchange roaming traffic with MNOs and are therefore in a structurally different situation from MNOs on the wholesale roaming market (see more details in section 7.4). This particularity, inherent to MVNOs’ business model, renders the provision of RLAH more challenging for MVNOs than for most MNOs. It is therefore useful to monitor the evolution of MVNOs’ competitive situation on domestic markets following the introduction of RLAH. The data on MVNOs from the International Roaming BEREC Benchmark reports seem to indicate that for most of the countries for which data is available, MVNOs have been able to broadly maintain or slightly increase their domestic market share (in subscriber numbers) ( Figure 18 and Figure 19 ). This tends to indicate that MVNOs have overall been able to maintain their competitive position in their respective markets under RLAH. Source: Data collected for the 19th-23rd International Roaming BEREC Benchmark Reports. JRC calculations. Note 1: Each MVNO market share is calculated over the population of MNOs and MVNOs, in that MVNO’s country, that have provided the number of subscribers in all 19th to 22nd BEREC Benchmark Reports’ data collection. Note 2: 'pre-RLAH' covers the last period before RLAH (Q4 2016 - Q2 2017), 'post-RLAH covers the corresponding period after RLAH (Q4 2018 – Q1 2019), as Q2 2019 was not available at the time this analysis was made. Source: Data collected for the 19th-23rd International Roaming BEREC Benchmark Reports. JRC calculations. Note: 'pre-RLAH' covers the last period before RLAH (Q4 2016 - Q2 2017), 'post-RLAH covers the corresponding period after RLAH (Q4 2018 – Q1 2019), as Q2 2019 was not available at the time this analysis was made. Figure 20 shows an overall stability of the Average Retail Revenue Per User (ARRPU) of MVNOs that have replied to all International Roaming BEREC Benchmark data collections.

Source: Data collected for the 19th-23rd International Roaming BEREC Benchmark Reports. JRC calculations. The above Figures however can only partially represent the situation of MVNOs on the various markets as the population of MVNOs having provided sufficient data for such calculations since Q4 2016 is a small sample of all MVNOs operating in Europe. Section 7.4 below assesses the challenges faced by MVNOs at wholesale level in providing RLAH to their customers and looks at several options to improve their position on the wholesale roaming market. Rest of the World roaming According to data from the most recent BEREC International Roaming Benchmark Reports , retail roaming prices of EU/EEA mobile operators in non-EU/EEA countries have continued to decline ( Figure 21 ). Seasonal variations, especially in the rates for calls made, do not affect this conclusion. Between Q1 2017 and Q1 2019, rates for data roaming services in non-EU/EEA countries fell by 78% while rates for voice services fell by more than 30%. The sharp declining trend for data roaming prices in non-EU/EEA countries has therefore continued after the introduction of RLAH. Source: Based on data from the 19th-23rd International Roaming BEREC Benchmark Report Overall therefore, abolishing intra-EU/EEA roaming charges has not come at the price of higher roaming prices in the rest of the world (so-called "waterbed effect") In particular, many operators include some popular non-EU/EEA destination countries in their RLAH offering or apply a reduced roaming fee to those countries. Consumer perception The interim Report noted that the RLAH reform was widely recognised and appreciated by Europeans. One year after the introduction of RLAH, a Eurobarometer survey showed that 81 % of the travelers were aware that roaming charges had ended in the EU/EEA and 69% of all Europeans thought that they, or someone they know, benefit or will benefit. The feedback received by the Commission from consumer associations since June 2017 has overall been very positive. The study performed on request by the European Parliament one year after the implementation of RLAH (see section 4.5) reports positive feedback not only from consumers but also from business users. It specifically refers to an increase in the productivity of employees because they can connect with their corporate network and interact with their company more frequently when they are abroad in the EU. The joint Commission/BEREC survey of NRAs of March 2019 indicates that the volume of roaming-related complaints received by NRAs has generally not increased following the introduction of RLAH in June 2017. 17 NRAs found that the number of consumer complaints related to roaming in 2017 was comparable to the previous year, 6 NRAs that it was higher and 1 NRA that it was lower. One year later, only 4 NRAs found that the number of roaming-related consumer complaints had increased. Overall, the total annual number of roaming related complaints received by NRAs remains very small (from a few complaints to a few hundreds of complaints depending on the NRA) compared to the number of users. Figure 22 shows the relative importance of roaming-related topics of consumer complaints received by NRAs. The most important ones have been inadvertent roaming , fair use policy volume on data and incorrect billing of roaming volumes, which are among the top complaint topics for close to, or more than, 25% of the responding NRAs, which actually received roaming-related complaints. Source: Joint Commission/BEREC survey of NRAs (March 2019). All figures are % of NRAs who have received complaints relating to roaming (total 26).

In the joint Commission/BEREC survey of operators of March 2019 all responding MNOs report to have received a total of approximately 9000 complaints and MVNOs about 1220 in 2018. BEREC noted in its Opinion that, in comparison with the total number of active subscribers from responding operators (several hundreds of millions) this number seems to be rather negligible. In addition, the total number of consumer complaints is highly unevenly distributed over operators and a few operators have received much more complaints than the others. 6Assessment of the costs of providing wholesale roaming services This section describes the approach to assessing the costs of providing wholesale roaming services in the EU/EEA. It begins by a description of the Commission’s approach to cost modelling, followed by a reference to previous relevant estimates provided for these services. The cost model developed for the purposes of this review is then described, including the assumptions and methodological decisions made. The results under a specific scenario are then explained, followed by a discussion on additional necessary costs that must be taken into account when evaluating the total costs faced by a visited mobile network operator for providing roaming services. The sections ends with a summary of BEREC’s assessment of the cost model and estimates produced. Cost assessment and in particular the cost estimates produced by the cost model are one input among other inputs and considerations when it comes to deciding on the appropriate level of wholesale roaming caps, which in any event are not mandated to be set at cost orientation levels. Description of the Commission’s approach In order to assess the costs of providing wholesale roaming services in the 31 EU/EEA countries for the purposes of the roaming review, an independent study was commissioned. The study’s dual objective was to assess the cost of providing both wholesale roaming services and voice call termination rates. For the purposes of this SWD, the main focus of this summary of the study is on the estimated costs related to roaming. The cost study was conducted by Axon Partners Group from mid-March 2018 to mid-July 2019. At the start of the study, a first workshop with all relevant stakehoders was organised on 10 April 2018 in order to collect feedback on the methodology proposed by Axon. A comprehensive data gathering was then conducted in June-July 2018, via the NRAs, in order to obtain, from mobile operators, the relevant information and inputs needed to populate a country-specific model for each Member State. The aim was to built 31 models with a similar skeleton, based on country-specific input where relevant, facilitating as best possible the estimation of the relevant mobile wholesale costs in each of the 31 Member States. The models would rely on country-specific input where relevant and, where not, on averages/common values across the EU/EEA. On 29 October 2018 the first draft cost model was shared with stakeholders for consultation, followed by a second version of the draft model shared on 15 February 2019 for a second round of consultation. The relevant comments and suggestions received during both consultations were implemented in the draft final model, which was presented to stakeholders at a second workshop on 28 May 2019. The cost model was then finalised and published on 24 July 2019. To ensure transparency throughout the project, several steps were taken to associate the NRAs, operators and other stakeholders. First, two workshops were held and two rounds of consultation were organised over the period going from October 2018 to March 2019. Stakeholders were also consulted on the structure and content of the data gathering exercise of June-July 2018 itself . Also, a steering committee composed by experts from NRAs was established and regular meetings between the Commission, Axon and the Steering Committee were held throughout the project. The steering committee consisted of representatives from 8 NRAs and was composed of members of the two BEREC Expert Working Groups dealing with roaming and with termination rates. Previous estimates of wholesale roaming costs Prior to the Axon cost model, the costs of providing wholesale roaming services were assessed by the Commission based on two inputs in particular: BEREC cost estimates in 2010 and 2012, followed by a cost model developed by TERA consultants in 2016. This section briefly summarises these cost estimates. 6.1.1BEREC cost estimates from 2010 and 2012 In 2010 BEREC estimated the upper bound, average and lower bound of the costs for wholesale roaming services. In 2012 BEREC updated its analysis of wholesale roaming costs. The then estimated costs are shown in Table 3 below. Minimum (2010) Average (2010) Maximum (2010) Maximum (2012) Voice call (out) €3cents/min €5.4cents/min €9.7cents/min €5cents/min Voice call (in) €3cents/min SMS €0.6cents/SMS €0.8cents/SMS €2.7cents/SMS €1cents/SMS Data €1.6cents/MB €8.1cents/MB €15cents/MB €5cents/MB Source: BEREC International Mobile Roaming Regulation Report BoR(10)58 (2010 estimates) and BEREC Analysis of Wholesale Roaming Costs BoR(12)14 (2012 estimates) These cost estimates informed the setting of the wholesale roaming price caps adopted in 2012. Table 3 shows that the costs have decreased throughout the period. 6.1.2TERA consultants cost estimates from 2016 In order to prepare for the then upcoming RLAH regime, TERA was commissioned to estimate the costs of providing wholesale roaming services for a mobile network operator in 29 EU/EEA countries. For this purpose, TERA built a bottom-up cost model - using the relevant inputs from operators and NRAs and a selection of scenarios. The costs estimated by TERA are represented in Figure 23 and Figure 24 below. The wholesale cost for outgoing roaming voice services was estimated between 0.2 and 2.8 €cents per minute in the TERA cost model. The model showed great differences between the lowest and highest cost countries, with Malta having the highest estimated cost.



Source: TERA Consultants, SMART 2015/0006 For wholesale roaming data services, the estimated costs are shown in Figure 24 below. The trend seen from above is also visible here, albeit the variations are smaller, ranging from 0.1 to 0.45 €cents per MB. For data as well, Malta is the country with highest estimated costs.

Source: TERA Consultants, SMART 2015/0006 The Axon Partners cost model This section briefly describes the main features of the Axon Partners’ cost model (hereinafter, the cost model). For additional information on the methodological approach followed and the results of the cost model, the reader is referred to the full list of materials published with the Axon Partners' cost model. 6.1.3The approach and methodology followed by Axon Partners The Axon Partners’ cost model estimates the costs of providing wholesale mobile roaming services as well as voice termination in 28 EU/EEA countries. Each cost model contains a number of adaptable scenarios, allowing the Commission services to evaluate many different scenarios in each country. Any cost model enables the user to evaluate costs of all elements required to offer mobile services. For the purposes of the roaming review, the relevant costs to be estimated are those related to wholesale roaming services, specifically the estimated costs for: ·Data roaming ·Outgoing voice calls ·Outgoing SMS Each service and related costs can be evaluated under a number of scenarios. For this purpose it must be noted, that not all scenarios reconcile and as a result, any estimated cost should be evaluated together with the full list of materials published to avoid conclusions based on scenarios which do not reconcile. Furthermore, one should bear in mind that the results produced by the model do not include the costs of international transit nor the cost of terminating a roaming call. Hence, these costs need to be added to the costs estimated by the model when assessing the total costs of providing wholesale roaming services. This addition of transit and termination costs is described further in section 6.6. The Axon cost model is based on a number of methodological choices. First of all, the model is a bottom-up model, calculating the provision of a service under a given set of methodologies and scenarios. A bottom-up model involves a reasonable approximation of the network that a reference operator would need in order to meet the coverage and capacity requirements of the users. It produces a reasonable approximation of the costs that such an operator would bear and provides service-level results under different scenarios. A bottom-up model resorts to a number of methods dealing with various aspects of the economics of a communications network. These methodological considerations include the choice of cost standard, the type of operator modelled, the method to forecast the volumes, allocation of joint and common costs as well as seasonality. In Table 4 , an overview of each methodological aspect is presented together with the approach adopted. Methodological aspect Approach adopted Cost standard Pure LRIC (termination) and LRIC+ (rest of the services). Cost categories considered Network CapEx, Network OpEx, General and administration costs (G&A) and Wholesale specific costs Modelled operator Hypothetical Efficient operator, with a market share equal to 1/#MNOs (subject to a minimum of 20%). Description methodology Economic depreciation, where two economic depreciation scenarios are included based on (i) demand or (ii) revenues as the relevant production factors. Modelled period 2015-2025 Volume forecast Projections are based on an assessment of historical traffic patterns and data provided by the stakeholders. A total of three scenarios are included to assess alternative volume forecasts (conservative, base case and aggressive). Allocation of joint and common costs Two cost allocation modules are available in the model: 1: Network module: Joint and common costs are allocated to services based on their network usage, by using a routing factors matrix. 2: Regulatory policy module: The allocations performed in the network module are adjusted to take into account regulatory policy decisions (e.g. re-allocation of the joint and common costs initially allocated to the voice/SMS termination service to voice/SMS origination). Please refer to the descriptive manual for further indications on how this is implemented. Treatment of seasonality The impact of seasonality on all domestic and roaming services was assessed (when data was provided) based on the monthly evolution of traffic. A total of 11 Member States provided the required information to assess the impact of seasonality in their networks. Three alternative seasonality scenarios are included in the model depending on the minimum threshold required between monthly fluctuations and the yearly average to consider that seasonality exists. Source: Axon Consulting, SMART 2017/0091 The following section further describes the choice of cost standards, general cost allocation, followed as well as the approach followed to take seasonality into consideration. The full description of the methodological approaches taken by Axon Partners is to be found in the methodological approach document available here .

6.1.4Choice of cost standards and general cost allocation The Axon cost model allocates costs related to wholesale roaming services following the so-called Long-Run Incremental Cost (LRIC) plus some allocation of joint and common costs (LRIC+). This cost standard can be divided in two parts, essentially the LRIC and the plus (+). LRIC is a way to derive the cost of producing an additional increment of a given output, when assessed over a long period of time (long-run). In economic theory, the long-run means that all inputs relevant to the production of the output are considered variable. The increment refers to the relevant part (service) of interest in the specific situation, here roaming services. The LRIC cost standard encompasses solely the elements needed to provide this specific service. As an illustrative example, the incremental cost of data roaming is therefore the total cost for a fully functioning mobile network minus the cost of an identical network unable to provide data roaming. Accordingly, the LRIC cost standard leaves out any joint and common costs needed in this case for both e.g. data and voice, as only the elements solely linked (i.e. not shared by other services) to data roaming are considered relevant in the LRIC cost standard. The LRIC+ cost standard allows for including joint and common costs which are relevant for other services as well. Clearly, costs estimated under the LRIC+ cost standard are higher than costs derived under LRIC. However, as these shared elements are also necessary for the relevant service, and in line with the regulatory obligation for the wholesale roaming cap to cover such costs, the Axon Cost model deploys the LRIC+ standard for all services related to roaming. This approach ensures that for shared equipment needed for e.g. data and voice the costs are captured in the estimation. As companies need to recover joint and common costs to ensure long-term sustainability, joint and common costs are shared among the services that generate them and accordingly recovered by any price cap set above the estimated costs for those services. In contrast, incoming voice (voice termination) is calculated purely on the basis of the LRIC cost standard (pure LRIC), in accordance with the the Commission's 2009 Recommendation on Termination Rates, which recommends the estimation of termination rates based on a bottom-up pure LRIC approach. For incoming SMS, the Axon cost model follows the approach adopted in the previous cost model, where no costs are allocated to termination of incoming roaming SMS. To ensure cost recovery for these services, the cost of incoming roaming SMS is re-allocated to outgoing roaming SMS. 6.1.5Treatment of seasonality The Axon cost model incorporates seasonality patterns for five Member States, following analysis of the 11 Member States who provided the required “high-priority information” to assess the impact of seasonality on their networks. For these 5 countries, country-specific seasonality can be evaluated under a number of scenarios and thresholds. For the remaining countries where seasonality was not proven to have an /relevance, no assessment of seasonality is done. When proven to be relevant, seasonality is taken into consideration to design a network capable of accommodating the demand requirements at all relevant points in time. Essentially, any network must support the peak demand and the seasonality assessment determines whether traffic is distributed evenly across months or whether it peaks at specific months (e.g. summer period or winter period). Therefore, seasonality is assessed on a country-by-country basis to ensure that the relevant peak-time of the country is considered. The Data Request Form from Axon requested operators to provide information on traffic per site and month. This exercise reveals whether traffic is evenly distributed over the months (and therefore not subject to seasonality) or if patterns of seasonality exist in the network, to ultimately assess the potential impact on underlying costs. Based on the information collected, seasonality can be further divided into geotypes. The whole process from evaluating the existence of seasonality to allocating the relevant costs to services includes four phases: ·Phase 1: Identification of seasonality ·Phase 2: Assessment of the relevance of seasonality per geotype ·Phase 3: Identification of traffic in the busy month per service ·Phase 4: Cost allocation to services The four phases are described in detail in the Methodological Approach Document supplied by Axon, under section 3.1.10. A short overview is presented below. The first phase would conclude whether the specific country is eligible for any seasonality assessment. In this phase, steps were taken to identify the busiest month of the year, defined as a month with 50% more traffic than the yearly average. In this assessment, the annual growth in traffic was taken into account, to evaluate whether any structural growth and resulting increase in traffic by the end of the year would exceed the peak traffic of the seasonal month. Seasonality should only be a cost driver when it is clearly demonstrated that seasonality triggers the extra capacity requirement. In the second phase, all the reported data from operators on seasonality were assessed to determine the level of details required to properly model the possible effects of seasonality on costs. Each country is, for the purpose of modelling, divided into a subset of geotypes. The purpose of phase 2 is to assess the existence of seasonality per geotype. Seasonality is therefore decided per geotype in each country. Where relevant, seasonality is eventually included in the cost calculation. Phase 3 assesses the traffic in the seasonal months per service and geotype. For roaming voice, roaming data, domestic voice and domestic data, the traffic in the busiest month per geotype is divided by the yearly traffic per geotype. From this, the total percentage of traffic generated in the busiest month is derived and used as input to the seasonality cost allocation. The busy month traffic is finally determined in Phase 4. Here, the model obtains the number of network elements required to meet the coverage and capacity constraints in each geotype and the annual costs generated by these elements. From this, the costs per network element and geotype are derived and the model allocates costs to seasonal and non-seasonal geotypes, allocating costs to services based on the busy hour traffic demand. As mentioned above, seasonality was found relevant for Croatia, France, Greece, Malta and Spain and costs are evaluated under three potential thresholds: 10%, 30% and 50%. 6.1.6The structure of the cost model As described above, the Axon cost model is a Bottom-Up LRIC model comprising a number of functioning blocks. Costs are estimatd per service following the specific cost allocation required. The structure of the model is graphically represented in Figure 25 .

Source: Axon Consulting, SMART 2017/0091 The model functions by incorporating the demand - and network inputs from stakeholders initially - and then dimensioning these through a set of modules. The first step is the “Dimensioning Drivers”, whereby traffic is converted into dimensioning drivers which help to perform the network calculations. The “Dimensioning module” calculates the resources needed to supply the main services provided by the reference operator. Additionally, geographical data is introduced in the dimensioning module to take into consideration the relevant geographical aspects of the EU/EEA countries. The “OPEX and CAPEX costing module” addresses the costs of ressources for operational expenses (OPEX) and capital expenditures (CAPEX) respectively. This module also includes factors related to economic depreciation to properly incorporate the lifetime of investments by annualising the capital investments over the years. In “Cost allocation to services” the costs of services are calculated, by allocating the incremental, fixed and common costs to each distinct service. Finally, in the “Regulatory policy allocation module”, the costs are allocated (and reallocated) to reflect the relevant costing methodology as described in section 6.3.2. The following section presents the scenarios the user can choose in the cost model, followed by a presentation of the wholesale costs produced by the model. Modelled scenarios The Axon cost model estimates costs for mobile services under a given set of scenarios. These scenarios were defined at the outset of the project and adjusted during the modelling period to reflect feedback from stakeholders. Understanding these scenarios is key to assess the costs produced by the model, as different scenarios produces different results. Furthermore, some scenarios have proven not to reconcile optimally, so any results obtained through these scenarios should be treated with the utmost caution. The remainder of this section presents and discusses the various scenarios and highlights the scenarios that do not reconcile. The cover sheet of the cost model allows the user to choose between the scenarios. The scenario chosen will implement a number of calculations within the cost model. All NRAs have received a cost model tailored to the specific country but with similar modules and possibilities for changing the scenarios. The cover sheet of the publicly available model is shown in Figure 26 . Figure 26 : Cover sheet of the Axon cost model Source: Axon Consulting, SMART 2017/0091 The first two options (“Execution mode” and “Selected Country”) can be modified only in the cost model available to the European Commission, as the models shared with NRAs only contain information specific to their own country. For the others, Table 5 presents the description of the 18 scenarios that can be selected in the cover sheet. Scenario Alternatives Description VoLTE scenario 4G Operator All traffic goes through the 4G network Terminal Adoption Percentage of VoLTE traffic based on the adoption of VoLTE ready handsets Traffic split per technology forecasts Same percentages across EEA from 2020 The traffic split per technology forecasts from 2020 are the same for all countries Country-specific projections Traffic split per technology forecasts from 2020 are set at country level Annualisation criteria Economic depreciation based on ARPU Revenues act as the modulation factor in economic depreciation Economic depreciation based on demand Demand acts as the modulation factor in economic depreciation Roaming increment Specific roaming increment Roaming traffic is grouped in a single increment Joint roaming and domestic increment Roaming and domestic traffic are assessed within the same increment Specific costs allocation Allocation based on GB Wholesale specific costs allocated to services based on equivalent GB Allocation based on drivers Wholesale specific costs allocated to services based on equivalent GB/TAPs Cell Radii Mix EEA Average-Country specific figures Cell radii based on EEA averages except when deviations from EEA average were justified due to country-specific conditions Country specific figures only Cell radii always set based on data reported by NRAs for each country Threshold to identify seasonal patterns 10% Areas are considered as seasonal when the traffic in the peak month (net of structural growth) is above the traffic in the average month by 10% 30% …The threshold is set at 30% 50% …The threshold is set at 50% Demand Conservative Domestic data traffic forecast based on the historic growth rate with a 30% year-on-year reduction in the annual growth rate Base-case …Considering a 20% year-on-year reduction in the annual growth rate Aggressive …Considering a 10% year-on-year reduction in the annual growth rate Source: Axon Consulting, SMART 2017/0091 During the consultation rounds, stakeholders expressed various methodological preferences and approaches to cost allocation. The inclusion of 5G in the model, in particular, was discussed at the first workshop in April 2018. Axon and the Commission services invited stakeholders to provide information on 5G during the data collection process, in June 2018, to be included in the cost model. However, no stakeholder could provided the complete set of data requested on 5G and only a few provided some information. Consequently, 5G could not be included in the model. The scenarios described above allow the Commission services to properly evaluate the effects of various inputs and thereby gain a better understanding of the effect of various elements on the estimated costs. There is no preferred combination of scenarios and the Commission services will consider the results obtained under all reconciled scenarios to inform any regulatory policy proposal that could be made. A scenario is said to reconcile when both the parameters number of sites and cost base are within ± 20% of the reference value in a country. For the number of sites, the reference is the average number of sites per MNO in a country. For the cost base, the reference is the average cost base of MNOs in the country or that of a similar operator in terms of market share. Not all scenarios reconcile for all EU/EEA countries.The results derived under these scenarios should therefore be treated with extra caution. The results may reconcile and be reasonable for a given country, but may not show a proper behaviour for all 28 countries. Specifically, results derived under scenario(s) set to: VoLTE scenario ‘4G operator’, Cell Radii ‘Country specific figures only’ and/or demand ‘Aggressive’ (see Table 5 ) should be treated with caution in terms of the costs per service and country. In addition, the scenario for cost allocation ‘based on GB’ had a very low acceptance by the industry, although the results for this scenario are reconciling for all countries. Results derived directly from the cost model This section shows the results from the Axon cost model, as published together with the full set of materials. As results are derived under various scenarios and assumptions affecting the results, this section should be read together with the full set of information contained in the materials published. The costs shown below indicate the efficiently incurred costs, as defined in the published materials, of providing regulated wholesale roaming services for the visited network in a specific country. Costs are shown both including and excluding termination and/or transit and each presentation of results must be carefully evaluated to avoid incorrect conclusions. The results and scenarios shown below do not necessarily reflect the Commission services’ preferences and do not need to represent the combination of scenarios that reconciles the best with MNOs’ financial and operational reality. The combination of scenarios considered here, represents stakeholders’ preferred option for each of the 8 scenarios. Specifically, the results throughout this section are derived under the following assumptions (see Table 5 for a description of each scenario): ·VoLTE scenario ‘Terminal Adoption’

·Annualisation criteria ‘Economic depreciation based on demand’ ·Roaming increment ‘Specific roaming increment’ ·Allocation of wholesale specific costs ‘Allocation based on