EUROPEAN COMMISSION Brussels, 15.6.2016 SWD(2016) 202 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 531/2012 as regards rules for wholesale roaming markets

{COM(2016) 399 final}

{SWD(2016) 201 final}



Table of Contents Table of Figures Table of Tables Executive Summary 1. Policy background 2. Problem definition 2.1. What is the problem 2.2. Who is affected 2.3. What would happen if nothing is done? 3. Why should the European Union act? 4. Policy objectives 5. Policy options 5.1. Option 1: no action at Union level (baseline scenario) 5.2. Option 2: set EU-wide wholesale roaming caps at the level currently in force 5.3. Option 3: set EU-wide wholesale roaming caps at a lower level 5.4. Option 4: set country-specific wholesale roaming caps 5.5. Additional measure to Options 2 to 4 5.6. Discarded options 6. Impacts of the different policy options

6.1. Option 1: Baseline scenario - no action at Union level 6.2. Option 2: set EU-wide wholesale roaming caps at the level currently in force 6.3. Option 3: set lower EU-wide wholesale roaming caps 6.4. Option 4: set country-specific wholesale roaming caps 6.5. Additional Measures: Enable operators to freely agree wholesale roaming terms which are not unit-based 7. Comparison of options 7.1. Stakeholders' views on the most appropriate regulatory approach 7.2. Commission's assessment of the best option 7.3. Commission's assessment of additional measures suggested by stakeholders 8. Monitoring and evaluation ANNEX 1: Procedural information concerning the process to prepare the impact assessment report and the related initiative 1. Information and data gathering on roaming markets 2. Analysis of the data on roaming markets and development of a sustainability assessment model 3. External study to estimate the costs of providing wholesale roaming services 4. Public consultation (see Annex 2) 5. Commission's inter-service group ANNEX 2: Stakeholder consultation 1. Consultation on the cost model to estimate the costs of providing wholesale roaming services in the EEA 2. Public consultation on the initiative ANNEX 3: Who is affected by the initiative and how

ANNEX 4: Analytical models used in preparing the impact assessment. 1. Forecasted roaming consumption under RLAH in 2017 2. Sustainability test based on operators' data



Table of Figures Figure 1 - Scheme of current regulatory treatment of retail and wholesale roaming services within the EU Figure 2 - EEA average price per minute for wholesale non-group roaming voice calls Figure 3 - Average wholesale price per intra-EEA roaming SMS: charges to non-group companies Figure 4 - Average wholesale data price per MB (prepaid+postpaid), EEA average Figure 5: Parts of the problem, drivers and consequences table Figure 6 - Total intra-EEA wholesale roaming balance (revenues minus payments) as a % of total retail domestic revenues (y-axis), all services included, per country Figure 7: General and specific objectives Figure 8: Criteria to assess the impact of each option Figure 9: Total voice origination cost and average wholesale roaming voice price (unbalanced traffic) in MS (€c/min) Figure 10: Total data costs and average wholesale roaming data prices (unbalanced traffic) in MS (€c/MB)



Table of Tables Table 1: RLAH consumption in 2017 valued at wholesale roaming cap of the preferred option (4€c/min, 1€c/SMS and 0.85€c/MB)

Table 2: Average net annual wholesale cost of unbalanced outbound RLAH at current EU wholesale roaming caps, as % of ARRPU, per country Table 3: Sustainability results for Option 2 under the Base case scenario modelled Table 4: Wholesale roaming services' cost estimates in each of the 29 countries considered in TERA Consultants' cost model Table 5: Wholesale roaming cost recovery in Malta Table 6: Average net annual wholesale cost of outbound unbalanced RLAH at Option 3's wholesale roaming caps as % of ARRPU, per country Table 7: Sustainability results for Option 3 under the Base case scenario modelled Table 8: Sustainability results for Option 4 under the Base case scenario modelled Table 9: Sustainability results for each regulatory option under each of the three scenarios modelled Table 10: Comparison of options: effectiveness, efficiency, stakeholder views and coherence Table 11: Forecasted roaming consumption under RLAH in 2017 Table 12: % change in roaming consumption between 2014 and 2017 under RLAH , total EEA Table 13: Sample of operators used in the assessment of sustainability by operator Table 14: Allowances included in the baskets included in the price study conducted for DG Connect Table 15: Country VAT rates used to derive domestic retail prices excluding VAT Table 16: Country retail prices derived using the DG CNECT study Table 17: Assumed percentage change in outbound roaming volumes between 2014-2017 Table 18: Assumed percentage change in domestic retail traffic between 2014-2017 Table 19: Assumptions considered in each of the three sustainability scenarios Table 20: Sustainability results for each wholesale price cap option under each of the three scenarios modelled



List of Acronyms

ARPM - Average Revenue Per Minute ARRPU - Average Retail Revenue Per User BEREC - Body of European Regulators in Electronic Communications DG CNECT - Directorate General for Communications Networks, Content & Technology EEA - European Economic Area EU - European Union EUR - Euro EUR/PPP - EUR/Purchasing Power Parity FUP - Fair Use Policy GB - Gigabyte GSM - Global System for Mobile communications GSMA - GSM Association HD - High Definition IA - Impact Assessment IMSI - International Mobile Subscriber Identity IOT - Internet of Things JRC - Joint Research Centre LBO - Local Break Out LTE - Long-Term Evolution MB - Megabyte

MS - Member State MNO - Mobile Network Operator MTR - Mobile Termination Rate MVNO - Mobile Virtual Network Operator MWC - Mobile World Congress M2M - Machine to Machine NRA - National Regulatory Authority OECD - Organisation for Economic Co-operation and Development OTT - Over-the-top VoIP - Voice over Internet Protocol Q1 - Quarter 1 Q2 – Quarter 2 Q3 - Quarter 3 Q4 - Quarter 4 RLAH - Roaming Like At Home SIM - Subscriber Identity Module SME - Small and medium-sized enterprises SMS - Short Message Service STIRA - Standard Terms for International Roaming Agreements US - United States

VAT - Value-added tax VoIP - Voice over Internet Protocol VoLTE - Voice over Long-Term Evolution Wi-Fi - Wireless Fidelity 3G - 3rd Generation 4G - 4th Generation €c - euro cent Countries BE - Kingdom of Belgium BG - Republic of Bulgaria CY- Cyprus CZ - Czech Republic DK - Kingdom of Denmark DE - Federal Republic of Germany EE - Republic of Estonia IE - Ireland EL - Hellenic Republic ES - Kingdom of Spain FR - French Republic

HR - Republic of Croatia IS - Republic of Iceland IT - Italian Republic LI - Principality of Liechtenstein LV - Republic of Latvia LT - Republic of Lithuania LU - Grand Duchy of Luxembourg HU - Hungary MT - Republic of Malta NL - Kingdom of the Netherlands NO - Kingdom of Norway AT - Republic of Austria PL - Republic of Poland PT - Portuguese Republic RO - Romania SI - Republic of Slovenia SK - Slovak Republic FI - Republic of Finland SE - Kingdom of Sweden UK - United Kingdom of Great Britain and Northern Ireland





Executive Summary Impact assessment on Wholesale roaming legislative proposal A. Need for action Why? What is the problem being addressed? The co-legislators agreed on ending retail roaming surcharges for periodic travels in the EU as of 15 June 2017 (RLAH regime imposed by Regulation 531/2012 as amended by Regulation 2015/2120 of 25 November 2015, the 'Roaming Regulation'), on condition that, following a review of the wholesale roaming market in the EU by the Commission, the EU takes appropriate legislative measures on this market in order to enable RLAH from that date. The wholesale roaming review conducted by the Commission shows that national wholesale roaming markets are not well-functioning and that they are expected to remain so under the future RLAH retail obligation. This IA therefore seeks to determine the best option for regulating the wholesale roaming market in the EU in order to enable RLAH in 2017 while maintaining the sustainability of domestic charging models. Affected parties will mainly be EU mobile network operators. The main beneficiaries will be all customers of EU mobile operators using mobile communications services while travelling in the EU. What is this initiative expected to achieve? The initiative aims at proposing appropriate measures on the wholesale roaming market to make it compatible with the obligation upon EU mobile operators of providing retail roaming services at domestic prices as of 15 June 2017. In assessing such measures, the Commission has taken into account the need to ensure that roaming providers are able to recover all costs of providing regulated wholesale roaming services, including joint and common costs. The options are hence assessed against the policy objectives set out in the Roaming Regulation: (i) enabling a sustainable abolition of retail roaming surcharges for all, or virtually all, operators in the EU, avoiding distortions on the home markets, (ii) ensuring cost recovery at wholesale level, whilst preserving incentives to invest in visited networks and avoiding distortion of domestic competition in the visited markets. What is the value added of action at the EU level? The Roaming Regulation entrusted the Commission with the task to review the wholesale roaming market and make appropriate proposals to enable the abolition of retail roaming surcharges in the EU from 15 June 2017. The abolition of retail roaming surcharges mandated in the Roaming Regulation is conditioned to the adoption and applicability at that date of measures at wholesale level necessary to enable this abolition. Therefore, if no measure were proposed and given the foregoing evidence that the current wholesale market legislative regime is not a sufficient basis for the introduction of RLAH, the obligation laid down in the Roaming Regulation to abolish retail roaming surcharges from 15 June 2017 would not be applicable at that date. B. Solutions What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why? Further to implementation implications, the options are assessed based on: country-level estimate of the average cost of RLAH for retail roaming providers compared to their average domestic revenues; sustainability test at operator level; all relevant costs at wholesale level for visited networks by reference to cost estimates, current mobile termination rates' level, and domestic wholesale and retail prices. Four options are considered: Option 1-no action at Union level (baseline scenario): RLAH would not be applicable from 15 June 2017 and consumers would continue to pay retail roaming surcharges after that date. Option 2-set EU-wide wholesale roaming caps at the current level: RLAH would not be sustainable for at least 20% of the operators in our sample and/or in at least six Member States. Option 3-set EU-wide wholesale roaming cap at a lower level than today: The analysis shows that this option best fulfils the policy objectives. Option 4-set country-specific wholesale roaming caps: This option does not significantly improve the sustainability of RLAH at operator level compared to Option 3, while entailing greater risks regarding cost recovery at wholesale level, as well as considerable implementation difficulties. Who supports which option? The public consultation shows that operators are divided as to what is the most appropriate regulatory wholesale level measure to enable sustainable RLAH: certain historic incumbents and operators with a large footprint, and generally operators with large inbound roaming traffic, defend the view that RLAH is sustainable under current wholesale roaming price caps (Option 2), while other operators, in particular smaller ones, mobile virtual network operators, and operators with large outbound roaming traffic argue that wholesale roaming price caps must be significantly lowered in order to enable sustainable RLAH (Option 3). Virtually no support of Option 4 has emerged from the public consultation. C. Impacts of the preferred option What are the benefits of the preferred option (if any, otherwise main ones)? Under Option 3 (lowered EU-wide wholesale roaming caps), setting the EU-wide wholesale roaming caps at 4 €c/min, 1 €c/SMS and 0.85 €c/MB enables sustainable RLAH in the EU, including for operators with less bargaining power, while ensuring the recovery of visited operators' foreseeable costs of providing wholesale roaming services and keeping investment incentives in the visited markets. The cap level under Option 3 also leaves space for competition below the cap, allowing in particular to derive economic advantages from scale and the associated ability to negotiate lower tariffs. The analysis also shows that allowing the visited and visiting operators to agree together to opt out from the cap regulation in favour of an unregulated contract, e.g. capacity-based pricing or any other contractual form, would bring a positive impact to the wholesale roaming market, and thus is proposed as a complementary measure. By enabling RLAH from June 2017, Option 3 achieves the significant positive impact of aligning roaming prices to domestic prices for consumers travelling in the EU, as decided by the co-legislator in 2015. What are the costs of the preferred option (if any, otherwise main ones)? The preferred option does not create additional administrative or technical costs compared to current regulation applicable to the wholesale roaming market in the EU. By imposing lower wholesale roaming prices to mobile operators, it may in the short term reduce wholesale roaming revenues of operators when they host roaming customers of foreign operators, while reducing at the same time the wholesale costs they incur when they provide retail roaming services to their own customers. However the resulting higher demand for mobile services on travels in the EU, in particular for data, should mitigate and counterbalance both effects to a large extent. Unleashing the development of new usages of connected devices and applications on travels in the EU will in turn trigger considerable new revenues for EU mobile operators, exceeding largely in the medium term those of today's limited EU roaming mobile usage, fully in line with other initiatives under the Commission's DSM Strategy. How will businesses, SMEs and micro-enterprises be affected? Smaller mobile network operators and mobile virtual network operators: significant positive impact expected as these operators have more difficulty in having access to favourable wholesale roaming deals. The initiative will enable them to benefit from wholesale roaming prices facilitating their providing of retail roaming services at domestic prices. Online businesses and start-ups: significant positive impact; usage of their services while roaming in the EU will grow, which means more opportunities for them to provide services to consumers when they travel in the EU. The initiative will promote cross-border use of connected devices/services/mobile apps, favouring innovation. SMEs: significant positive impact for those having employees travelling in the EU for business (reduced bills). Will there be significant impacts on national budgets and administrations? This initiative as such will not impact on national public administrations. National regulatory authorities (NRAs) will monitor and supervise compliance with the Roaming Regulation as amended by Regulation 2015/2120. Will there be other significant impacts? No significant impact expected on third countries, international trade or investment. The EU's Roaming Regulation is a legislative instrument focusing on the creation of the EU internal market. Its scope covers intra-EU traffic, when a customer of one EU network operator roams on a network of another EU operator's network. The EU, a Word Trade Organisation Member on its own right, is an economic integration within the meaning of Article V GATS and the EU and its Member States thereby benefit from a waiver under that Article. As the EU Roaming Regulation applies to the EU internal market only, there is no discrimination or Most-Favoured-Nation issue if (wholesale and retail) roaming rates for operators within EU differ from those outside the EU. D. Follow up When will the policy be reviewed? The EC is required to report every 2 years as from June 2018. The Roaming Regulation mandates NRAs to monitor and supervise compliance with this Regulation, and BEREC to collect data from NRAs on retail and wholesale charges development (notified to the EC twice a year) and to report on the evolution of wholesale prices. 1.Policy background International roaming services ensure that a travelling wireless device (typically a mobile phone) is kept connected to a foreign visited network without breaking the connection when crossing a border. The provision of retail roaming services rely on the functioning of a wholesale roaming market, where visited network operators offer access and capacity to visiting home operators. Since 2006 the Commission has taken action to address the high roaming charges paid by consumers for using their mobile phones when travelling abroad in another EU Member State. Regulatory measures adopted by co-legislators in 2007, 2009 and 2012 have introduced binding maximum caps for retail and wholesale roaming prices. The ultimate objective was to ensure that market forces would achieve an internal market for mobile communication services in which no differentiation between national and roaming tariffs would exist; accordingly the Commission was required to verify whether this objective was achieved through these measures. During these years wholesale and retail roaming prices have decreased in the EU. However roaming and national tariffs remained differentiated. In particular, as analysed in the accompanying Review Staff Working Document (SWD) on the wholesale roaming market in the EU ('accompanying Review SWD' hereinafter), at both retail and wholesale levels the evolution of prices for roaming services has been closely aligned to the dynamics of the various price caps set by the EU Roaming Regulations since 2007, although differences exist on the extent and timing of prices' decreases in particular at wholesale level between voice and SMS on the one hand and data on the other. While an increasing number of operators have started to offer some domestic tariff plans which include roaming services in the domestic bundle, also in view of the forthcoming "roam-like-at-home" regime (see below), most of these tariff plans do not cover all EU Member States, or concern only voice and SMS, or data only, and/or include roaming services in the domestic bundle as an add-on package (i.e. for a fixed periodic - daily, weekly or monthly – charge which represents a fixed roaming surcharge over the domestic price). Several market failures analysed in the accompanying Review SWD affect the roaming retail market. These include the absence of substitutes at retail level fully satisfying the mobility needs of users, the lack of tariff transparency and of sufficient incentives for intermittent roaming users to look for alternatives to the roaming services bundled with the domestic tariff and the resulting inelastic demand for roaming services for a significant proportion of the customer base. These market failures prevent the same competitive dynamics characterising the retail domestic services to extend also to the provision of retail roaming services. Even if some technological developments analysed in the accompanying Review SWD could increase competitive pressure at retail level, yet these are unlikely to be massively available in the medium term and above all, they do not address the competitive issues affecting the wholesale roaming markets and in particular the risk of high prices for some of the wholesale inputs still needed for the provision of the retail service. Indeed high prices for the input acquired at wholesale level, well above the underlying costs, also hinder convergence of domestic and roaming retail prices, since the home operator faces costs for providing roaming retail services which differ significantly from its own domestic costs, which are taken into account in defining domestic prices. Taking into account the importance for the effective establishment and functioning of a telecom single market of achieving the objective of no differentiation between national and roaming tariffs, the policy makers considered necessary to ensure such an objective directly. In particular in 2015, the European Parliament and the Council completed the process of adoption of Regulation 2015/2120, which entered into force on 29 November 2015 and, inter alia, amended Regulation 531/2012. In the rest of the document, the Roaming III Regulation as amended by Regulation 531/2012 is called the Roaming Regulation. The co-legislators in particular agreed to directly mandate the abolition of retail roaming surcharges in the EU from 15 June 2017, subject to fair usage of roaming services and a sustainability clause. This new regulatory regime for retail roaming services in the EU is designated as the "roam-like-at-home" (RLAH) regime in the remainder of the report. The entry into force of RLAH is subject to the adoption of appropriate legislative measures regarding the wholesale roaming markets, following a review carried out by the Commission. In the meantime a transition regime applies, where retail roaming surcharges to domestic conditions are applicable (s.c. RLAH+) in line with the applicable maximum roaming wholesale price caps laid down in the Roaming III Regulation and which were not addressed by the co-legislators in 2015. Indeed the retail and wholesale roaming markets are closely interrelated, in particular in the event of regulation at retail level, since the price at which the wholesale input is available to the home operator is key to ensure that regulated operators can fulfil their retail price obligations. Accordingly, since the correct working of wholesale roaming market is a precondition for the achievement of a full RLAH regime but was not specifically addressed in 2015, the Commission has therefore been entrusted with the specific task to review the wholesale roaming markets, as a precondition for the entry into force of RLAH. This review was carried out with a view to analyse the degree of competition in national roaming markets, any observable risk of distortion of competition and investment incentives in domestic and visited markets in order to assess the measures necessary to enable the achievement of the objective established by the co-legislators, i.e. the abolition of retail roaming surcharges by 15 June 2017; it also took into account the need to ensure that the visited network operators are able to recover all costs of providing regulated wholesale roaming costs and the need to prevent permanent roaming or anomalous or abusive use of wholesale roaming (Article 19 of the Roaming Regulation).

The Commission has therefore conducted a comprehensive review of national wholesale roaming markets in the EU in view of these specific objectives laid down in the Roaming Regulation, since other aspects of the overall roaming regulatory regime set out in Roaming III, and in particular those concerning the regulation of retail roaming services have been already addressed by the policy choices made by the co-legislators in the context of the adoption of Regulation 2015/2120. The methodology and findings of the review are detailed in the accompanying Review SWD. Based on these findings, this Impact Assessment takes stock of the problems affecting the functioning of the wholesale roaming markets identified in the accompanying Review SWD and their impact on the provision of regulated retail roaming services across the Union, and analyses the options for addressing them in view of the policy objectives indicated by the co-legislators, i.e. to enable European citizens to access mobile services at domestic prices when periodically travelling abroad in the EU, without distorting visited and home markets. 2.Problem definition 2.1.What is the problem With the establishment of the obligation to charge retail roaming services at domestic prices (no more retail roaming surcharges), Regulation EU 2015/2120 has defined the substance of the new RLAH retail regulatory regime for regulated roaming services. However, while retail pricing of roaming and domestic services would be aligned by regulation, the provision of retail roaming services does not use the same wholesale inputs as retail domestic services, in view of the fact that the provision of retail roaming service requires, by definition, the use of a different (visited) network. These wholesale roaming inputs are therefore to be bought in the market by the visiting operator. Wholesale roaming inputs include a number of costs specific to roaming (i.e. not incurred in providing domestic services), such as roaming operation and management costs, roaming financial and data clearing costs, roaming negotiation and contract management costs. In order to ensure that the retail roaming services can be provided at domestic retail prices, therefore, it is necessary that wholesale roaming inputs are available at a price that makes generally possible for the visiting (home) operators the provision of RLAH, eventually subject to fair use and without prejudice to the possibility to ask for a sustainability derogation in exceptional circumstances, while at the same time ensuring that the visited operators can recover the costs of provision of these services. A perfect functioning of national wholesale roaming markets, which would bring prices in line with the costs of visited networks, would clearly facilitate the sustainability of RLAH. However, the accompanying Review SWD shows that wholesale roaming markets do not always function correctly and that the future retail RLAH obligation is by itself unlikely to lead to well-functioning wholesale roaming markets. The main findings of the Review report are set out below. National wholesale roaming markets exhibit a number of market failures First of all it is widely admitted by stakeholders in the public consultation that any competitive dynamics that may be observed on the wholesale roaming markets in the EU are essentially linked to existing EU caps which provide a starting point for price negotiations in bilateral roaming agreements. This is also confirmed by the dynamics of wholesale prices in relation with the caps, in particular for voice and SMS. Source: International roaming BEREC Benchmark Data Report April – September 2015, BoR(16)28, February 2016 Source: International roaming BEREC Benchmark Data Report April – September 2015, BoR(16)28, February 2016 Source: International roaming BEREC Benchmark Data Report April – September 2015, BoR(16)28, February 2016

Absent regulation in the EU, wholesale roaming prices would be higher than they are, as evidenced by unregulated wholesale roaming prices inside the EU before any regulation.. The main market failures identified in the accompanying Review SWD, persisting despite some competitive dynamics emerging thanks to steering traffic techniques (i.e. the possibility for the home operator to steer most of the traffic originated by its subscribers to a single visited network offering the best quality and pricing wholesale conditions) are the following: Oligopolistic character of national wholesale markets: only MNOs offer roaming services in visited markets (3 to 4 depending on the Member State) and among those, often not all of them can provide a full range of services (such as full geographic or services coverage) needed to provide services to all roamers (see also section 6.2.1 of the accompanying Review SWD). Bilateral nature of roaming agreements: the main negotiation driver in roaming agreements is the amount of inbound and outbound traffic that can be balanced between each pair of operators, more than the final price agreed for the unbalanced part. This means that operators with no or little inbound traffic to balance off (MVNOs, MNOs with large outbound balance) are unable or seriously impaired to negotiate better conditions than those in the cap. (see also section 6.2.4 of the accompanying Review SWD) Imperfect wholesale roaming substitutes: these did not develop beyond very niche markets, in view of their inconveniences at retail level (need to change number; need to acquire a new subscription in the local/visited market, see also section 6.2.2. of the accompanying Review SWD) Exclusion of MVNOs from wholesale roaming markets: this reduces competition among visited networks as well as the possibility for MVNOs to negotiate autonomously from the host MNOs better deals for their outbound roaming traffic. (see also section 6.2.5. of the accompanying Review SWD) The impact of these market failures on the functioning of wholesale markets results in observed prices substantially above estimated costs, as analysed in the aaccompanying Review SWD. That analysis in particular shows that the gap between prices and estimated underlying costs is likely to be larger for data than for voice. The report also shows that a number of market players, in particular smaller operators not part of a group and with smaller traffic volumes and MVNOs, do not generally benefit from lower wholesale roaming prices than the caps (see section 6 of the accompanying Review SWD). The anticipated impact of the future RLAH obligation on competition dynamics in national wholesale roaming markets is uncertain The Wholesale Report also concludes that it is not possible to anticipate with certainty a positive impact of the future RLAH obligation on competition on national wholesale roaming markets. The public consultation shows that, if 70% of the mobile operators expect an effect of the retail RLAH obligation on competition dynamics in the wholesale roaming markets, they are split as to whether the retail RLAH obligation will increase or decrease competition on the wholesale roaming market. Overall, the mandatory imposition of RLAH is supposed to produce an increase of wholesale roaming traffic. On the one hand, this expansion of wholesale markets could bring per-unit production costs down, thanks to economies of scale. This could be accordingly reflected in lower wholesale prices, depending on the level of competition between visited operators to attract to their networks the increased demand by home operators. On the other hand, the overall demand will increase, and this may inflate overall costs borne by the home operators, taking also into account that they have more limited freedom in the wholesale roaming negotiations in view of the reduced capacity to influence demand for retail roaming services of its subscribers through pricing. The obligation upon the home operator to provide RLAH to its customers could therefore exacerbate and aggravate the structural differences and imbalances in the relative negotiation positions between net senders and net receivers in bilateral roaming negotiations. In light of the analysis carried out in section 7 of the accompanying Review SWD, therefore, the risk that the negotiation position of the net senders of roaming traffic, including the weaker market players on wholesale roaming markets, would in fact deteriorate under RLAH cannot be excluded in the absence of countervailing measures. In assessing whether and to what extent RLAH regime could be delivered in accordance with the objective of the co-legislator, therefore, it can be first of all concluded that the current functioning of the wholesale roaming markets has not by itself supported a competitive dynamic leading to a convergence of wholesale prices generally available in the markets towards underlying costs. Accordingly, with a generalisation of a RLAH regime (in particular in the event of mandatory abolition of retail roaming surcharges), the current functioning of wholesale roaming markets would not enable in general the sustainability of operators' domestic charging models, in particular for those operators with weaker bargaining powers in wholesale markets. Drivers Problem Consequences - Retail and wholesale roaming markets are strictly interlinked, since in order to provide retail roaming it is necessary to acquire wholesale access inputs in the visited country. - National wholesale roaming markets exhibit a number of market failures which result in wholesale roaming prices being supra-competitive compared to underlying costs. - The impact of the retail RLAH obligation on competition dynamics in national wholesale roaming markets is uncertain and unlikely to change wholesale roaming market conditions so as to ensure that they would work competitively to satisfy increased demand, in particular from operators with low or no inbound traffic to exchange. The current functioning of national wholesale roaming markets would not enable a competitive dynamic enabling the abolition of retail roaming surcharges by 15 June 2017 while in general ensuring the sustainability of operators' domestic charging models, in particular for those operators with weaker bargaining powers in wholesale markets. - Customers of the derogating operators will not enjoy the benefits of RLAH and continue to pay a roaming surcharge in addition to the domestic price. - In effect RLAH will not happen throughout the EU from 15 June 2017. - If RLAH is implemented while wholesale roaming costs are inconsistent with current domestic retail prices, domestic prices may rise. 2.2.Who is affected Wholesale roaming markets represent a fraction of overall domestic traffic, which actually vary across operators, as analysed in the accompanying Review SWD. In most instances, wholesale roaming revenues represent between 1 and 2% and in any case are below 4% of overall domestic retail revenues (see in particular Section 6.4.). On the other hand, the distribution of roaming traffic across Member States diverges quite significantly, since roaming traffic flows are highly influenced by the patterns of tourism and travelling in the EU as well as, increasingly, by consumption patterns.There has been a traditional distinction between countries with a high ratio of inbound traffic compared to outbound traffic (i.e. more users coming in the country using roaming services than users leaving the country), and those with a larger amount of residents leaving the country for tourism, usually along a South-North divide. This results in significant divergences of the total wholesale roaming balance (revenues minus payments) as a percentage of retail domestic revenues, as shown in the graph below. Data: operators' replies to the autumn 2015 data collection

JRC's calculations In assessing the sustainability of RLAH under current market conditions, it should be noted that the size of these traffic imbalances, in particular those deriving from general touristic and travelling flows, may actually increase, in view of the generalised expected increase in roaming consumption. Under current market conditions and in view of the functioning of wholesale markets illustrated above, operators that would be more affected by that imbalance would be operators with less bargaining power in wholesale roaming negotiations (e.g. smaller operators not part of a group, MVNOs, which cannot negotiate significant discount compared to the wholesale caps in view of their limited size) and/or with large net outflows of roaming customers and/or roaming traffic (e.g. operators operating in Northern countries and with high domestic consumption patterns). With regard to operators in many Northern countries with high imbalance in roaming traffic this is due both to the travelling patterns towards the South of the EU and, in some cases, to their intensive and growing use of mobile data. Altogether, the exposure of operators in Northern countries to wholesale roaming charges is high and will increase considerably under the RLAH regime as their subscribers will, subject to fair use, be able to replicate their sizeable domestic data consumption while roaming. In contrast, operators with large net inflows of roaming customers and/or capacity to negotiate better rates, in particular a number of incumbents and operators with large footprint, benefit from high wholesale roaming caps (in terms either of direct wholesale revenues, or of competitive advantage relative to domestic rivals) and this could be accentuated with the abolition of roaming surcharges, in view of the increase in demand due to the mandatory RLAH obligation. In conclusion, the imposition of RLAH is expected to affect the demand for wholesale roaming services. In view of the current traffic flows and market conditions, on the one hand this could accentuate the impact of current imbalances between Northern/smaller (net out-bounders) and Southern/bigger (net in-bounders) operators, leading to the risk of unsustainable provision of RLAH under current domestic prices for the former and additional revenues triggered by the RLAH regulatory obligation for the latter. . 2.3.What would happen if nothing is done? The abolition of retail roaming surcharges from 15 June 2017 mandated in the Roaming Regulation is conditioned to the adoption and applicability at that date of measures at wholesale level necessary to enable this abolition (Article 6a). Therefore, if no measure were proposed and given the foregoing evidence that the current wholesale market legislative regime is not a sufficient basis for the introduction of RLAH, the obligation laid down in Article 6a of the Roaming Regulation to abolish retail roaming surcharges from 15 June 2017 would not be applicable at that date. The transitional period put in place in the Roaming Regulation from 30 April 2016, which allows operators to apply to their customers roaming in the EU retail roaming surcharges in addition to the domestic price, would continue beyond 15 June 2017. EU would fail to deliver in June 2017 the end of retail roaming surcharges in the EU that it has mandated and announced publicly in 2015. 3.Why should the European Union act? As described in the background section, EU regulatory intervention on wholesale and retail roaming markets pursuant to Article 114 TFEU (former Article 95 TEC), has been necessary for the last 10 years in order improve the conditions for the functioning of the internal market for roaming services within the Union, taking also into account that NRAs acknowledged that they were unable to autonomously tackle alone this problem due to the cross-border nature of the international roaming market. This regulatory intervention includes the RLAH obligation introduced by the Roaming Regulation, which considered in particular this retail obligation as a necessary element to ensure the establishment and functioning of a single telecom market across the Union. While necessary, in view of the interrelationships between retail and wholesale roaming markets explained above, this retail regulation is not sufficient alone to ensure the correct functioning of the single telecom market and the roaming market in particular. Therefore, measures on regulation of wholesale roaming markets pursuant to Article 114 TFEU are therefore also needed to ensure the correct functioning of the wholesale roaming market across the Union and, ultimately, to enable the provision of RLAH in a sustainable way. In particular, with regard to wholesale roaming markets, individual Member States have insufficient incentive to regulate in a way that takes into account the possible effect of its regulation on the other Member States and on the implementation of RLAH. Therefore a common approach at the European level is preferable as this would better take into account the general interest of all European Member States. A European approach would also avoid that individual Member States take divergent approaches for dealing with the problem of high wholesale prices, which would create obstacles to the Internal Market since European roaming services providers would be treated differently depending on whether they are wholesale roaming providers (as visited operators) or buyers of wholesale roaming services (as home operators), in spite of common roaming retail regulation at European level as laid down in Regulation (EU) No 2015/2120. Moreover, in accordance with the principle of subsidiarity, while on the one hand national measures on roaming markets alone would not be able to ensure the objective of RLAH, a common approach at EU level on the contrary could establish the necessary regulatory conditions ensuring that national wholesale markets work in accordance with the European objective of abolition of roaming surcharges in a sustainable way throughout the EU. This will also take into account the interdependence between a common approach on regulation of retail and wholesale markets to ensure the smooth functioning of Union roaming markets, as highlighted by the Court of Justice. Finally, the principle of proportionality of EU action requires that measures implemented through Union law provisions are appropriate for attaining the legitimate objectives pursued by the legislation and do not go beyond what is necessary to achieve these objectives. Within the broad discretion granted to the legislator in achieving this objective, the Court clarified in particular with regard to roaming regulation that the legislator shall base its choice on objective criteria; moreover, even if substantial negative economic consequences for some operators could derive from the measures adopted, for the measures to be compatible with EU law these consequences need to be justified for the achievement of the objective. With specific regard to these aspects, the wholesale regulatory options assessed in this Impact Assessment take into account two elements in accordance with Regulation 2015/2120, i.e. the need to ensure that visited operators are able to recover all costs, including joint and common costs, of providing regulated wholesale roaming services and the need to prevent permanent roaming or anomalous or abusive use of wholesale roaming access. These specific requirements indeed ensure that wholesale roaming regulation, in accordance with the proportionality principle, does not go beyond what is necessary to ensure the general policy objective, by creating negative economic consequences which are not justified for the achievement of the objective, such as requiring efficient operators to provide services below their costs or imposing access regulation without visited operators having the effective means to limit this to roaming services. On the other hand, as highlighted by the Court, compliance with the proportionality principle does not exclude that in specific cases negative economic consequences could occur for some operators, such as with regard to reduction of supra-competitive profits stemming from wholesale roaming activities or losses due to inefficient management of network costs, since in these cases these negative consequences are indeed justified by regulatory measures necessary to achieve the objective. 4.Policy objectives The general policy objective, set out in the Roaming Regulation by the co-legislators in 2015, is to enable European citizens to access mobile services at domestic prices when periodically travelling abroad in the EU. This is an important element of the Digital Single Market strategy set out by the Commission on 6 May 2015 (COM(2015)192). Taking into account the interdependence between retail and wholesale roaming regulation and in line with the problem definition according to which the current functioning of wholesale markets would not ensure the achievement of that policy objective, the present initiative should ensure that national wholesale roaming markets function in such a way that, from 15 June 2017, that general policy objective can be met throughout the EU and without distorting domestic visited and home markets. The two specific objectives of this initiative therefore are to ensure that the functioning of wholesale markets with a view to enable RLAH a) do not distort domestic visited markets and b) do not distort domestic home markets, by making the provision of RLAH structurally unsustainable. With regard to the first specific objective, the Roaming Regulation explicitly requires the Commission to take into account the impact of wholesale regulation on the visited networks, including in particular in terms of cost recovery, in order to preserve incentives to invest in visited networks and avoid distortion of domestic competition in the visited markets due to regulatory arbitrage of operators using roaming access remedies to compete in domestic visited markets.. In order to take into account this specific objective, each of the regulatory options takes into account different estimations to assess the costs of provision of wholesale roaming services, including joint and common costs, by an efficient operator. Moreover, while bearing in mind that the visited operators are empowered to act against permanent roaming under Article 3(6) of the Roaming Regulation and will have relevant incentives to do so, the risk of permanent roaming is also analysed in order to determine whether there is a need for additional regulatory options, taking also into account the level of domestic retail prices. At the same time, the other specific objective of the proposal requires to verify that any appropriate regulatory measures to be imposed on national wholesale roaming markets enable a sustainable abolition of retail roaming surcharges for all, or virtually all, operators in the EU in order to avoid distortions on the home markets. Indeed, while other regulatory measures than wholesale measures may also have an impact on the way RLAH is provided in the Union (in particular by means of application of fair use policies by operators or sustainability derogations in specific circumstances in accordance with the other implementing measures to be adopted by the Commission pursuant to Regulation 2015/2120), the correct functioning of wholesale roaming markets is the main element to ensure that wholesale roaming inputs are available to the vast majority of market players at conditions enabling the provision of RLAH. This was also raised in the public consultation, where several respondents stressed that any restriction in the provision of RLAH allowed under fair use or via sustainability derogations is likely to be a competitive factor in the domestic market and should therefore be limited as much as possible.

The analysis of regulatory options vis à vis this specific objective, therefore, will be based on the assessment of the impact of different wholesale regulatory measures on the costs of the visiting operators providing RLAH and on its overall business case. As a matter of fact, the two specific objectives are interrelated and need to be taken into account together, since the highest level of sustainability can be achieved with the lowest level of wholesale prices, but any regulation of the latter should ensure cost recovery. Therefore the options considered in the impact assessed are meant, on the one hand, to minimise number of cases where the provision of RLAH is not sustainable for the home operators provided that, on the other hand, cost recovery for the visited operators is ensured. General Objective Specific Objectives Enable European citizens to access mobile services at domestic prices when periodically travelling abroad in the EU ensure cost recovery at wholesale level, preserving incentives to invest in visited networks and avoiding distortion of domestic competition in the visited markets enable a sustainable abolition of retail roaming surcharges for all, or virtually all, operators in the EU, avoiding distortions on the home markets 5.Policy options The different options to achieve the objective are the following: Option 1 (baseline scenario): no action at EU level. Option 2: set EU-wide wholesale roaming caps after 15 June 2017 at the level of the Roaming Regulation currently in force. Option 3: set EU-wide wholesale roaming caps after 15 June 2017 at a lower level than in the Roaming Regulation currently in force, but compatible with the recovery of (i.e. above) costs of providing wholesale roaming services, including a relevant share of joint and common costs, in all Member States. Option 4: set country-specific wholesale roaming caps after 15 June 2017 at a cost-oriented level based on costs estimated by NRAs using a common cost model. Additional measure in Options 2, 3, 4: allow mobile operators to opt out from the cap regulation if both the visited and visiting operators agree to the terms of an unregulated contract, e.g. capacity-based pricing or any other contractual form. All options are to be imposed on providers of mobile electronic communications services (hereinafter "operators"). 5.1.Option 1: no action at Union level (baseline scenario) The Commission does not make any legislative proposal. By conditioning the applicability on 15 June 2017 of the abolition of retail roaming surcharges (RLAH regime) to the applicability, on that date, of a legislative act adopted following the Commission's wholesale roaming review, Article 6a of the Roaming Regulation provides that, under Option 1, the abolition of retail roaming surcharges (RLAH) does not take effect on 15 June 2017. Pursuant to Article 10(2) litera (a) of the Regulation, the transitional regime defined in Article 6f (designated as the RLAH+ regime, which includes the possibility for operators to continue applying a retail roaming surcharge) continues to apply until that legislative act becomes applicable. 5.2.Option 2: set EU-wide wholesale roaming caps at the level currently in force This option implies setting, after 15 June 2017, the same wholesale roaming caps set in Articles 7, 9, and 12 of the Roaming Regulation and valid until 30 June 2022 for calls made, SMS messages and data respectively. Their respective values are 0.05 € per minute, 0.02 € per SMS, and 0.05 € per MB. This is done by adopting a new legislative act setting out the wholesale roaming caps at the same level 5.3.Option 3: set EU-wide wholesale roaming caps at a lower level This option implies setting EU-wide wholesale roaming caps at lower levels than the levels set in Articles 7, 9, and 12 of the Roaming Regulation and valid until 30 June 2022 for calls made, SMS messages and data respectively. In line with Article 19 of the Roaming Regulation, the new levels of the caps would allow the recovery of costs of providing wholesale roaming services in all Member States, including a relevant share of joint and common costs. Under this option, the Commission estimates the costs for a hypothetical efficient operator in the higher-costs Member States, using a variety of evidence sources such as the generic cost model developed by TERA for the Commission for the wholesale roaming review, assumptions underlying regulated termination rates for voice, evidence from domestic and roaming wholesale markets and from domestic retail prices. The EU-wide caps are set above those costs. 5.4.Option 4: set country-specific wholesale roaming caps Under this option, NRAs are requested to estimate the costs of providing wholesale roaming voice, SMS messages and data services for a hypothetical operator in their respective countries using the generic cost model developed by TERA for the Commission for the wholesale roaming review. The national cost estimates produced are used to set, at national level, cost-oriented country-specific wholesale roaming caps with an appropriate return on investment.

The national cost estimates of each NRA are peer-reviewed by the Commission. If, in a given Member State, the Commission finds the cost estimates of the NRA inconsistent with the methodology set out by the Commission, the Commission may oppose the caps proposed by the NRA and impose alternative caps based on the cost estimates found for countries of a similar cost level according to the cost model. 5.5.Additional measure to Options 2 to 4 This measure can be proposed next to any of the three options setting wholesale roaming price caps. The measure consists in giving the possibility to "opt out" of the regulated caps regime if both parties to the roaming agreement agree to the terms of a specific contract. This can be for example a capacity-based roaming contract based on bandwidth or a flat-rate based on the expected number of visiting subscribers. This option gives more negotiating flexibility and at the same time enables operators to explore specific agreements which are currently dis-incentivised by the possibility for one of the contracting party to have recourse to the legal wholesale caps ex post in contrast with initial contractual commitments: under this additional measure, neither party would be entitled to revert to the cap once the agreement outside the cap has been contractually established. 5.6.Discarded options Lifting (removing) wholesale roaming caps: The option of not imposing any wholesale roaming cap in the EU after 15 June 2017 has been actually proposed by a very limited number of operators, in particular with big footprint and large inbound roaming traffic, on the basis that the current wholesale market would be sufficiently competitive to ensure that wholesale roaming prices are sufficiently low. In contrast the vast majority of stakeholders are not calling for lifting any wholesale roaming price regulation under the future retail RLAH obligation. These are of the view that price caps are necessary, as operators tend to use wholesale price caps as the starting point for their bilateral negotiations on wholesale roaming prices. Removing wholesale roaming price cap regulation could affect the competitive dynamics observed in these markets and result in higher wholesale roaming prices. In its Report on the review of the wholesale roaming market, BEREC is not considering the option of lifting any wholesale roaming regulation at all. Taking into account the results of the public consultation, this option has been discarded as it raises significant doubts as to the possibility that it enables RLAH on a significant scale for the following reasons: 1) significant market failures affect the wholesale roaming markets, as highlighted in the accompanying Review SWD, and therefore there is no guarantee that without regulation wholesale roaming prices driven by market forces alone will be lower or even will not increase compared to existing price levels, in particular for specific categories of operators which have limited footprint, smaller volume traded and significant outbound roaming traffic 2) as shown in the accompanying Review SWD and in Option 2 below, even current wholesale roaming regulation is not sufficient to enable sustainable RLAH in 2017, 3) the impact of the future retail RLAH obligation on competition dynamics in the wholesale roaming markets is unlikely to improve the wholesale roaming market conditions so as to eliminate the unsustainability issues (on the contrary, the risk cannot be excluded that the future retail RLAH obligation may deteriorate the bargaining power of the weaker operator in bilateral roaming negotiations), 4) wholesale roaming caps also protect home networks when customers lose coverage from their preferred networks and roam on a network that does not have discounted rates, Therefore regulation of wholesale roaming markets will be necessary under RLAH. Set new, lower EU-wide wholesale roaming caps allowing additional seasonality mark-up: This option would be similar to Option 3, but the costs estimated for a hypothetical efficient operator in the higher-costs Member States would not include any possible impact of the seasonal character of roaming on the costs of providing wholesale roaming services going beyond the seasonal character of the domestic market and the overall trend in demand for the retail services in question. If an NRA demonstrates a measurable effect of seasonality contributing to increase those costs, it would be allowed to add a mark-up on those EU caps to enable the operators of the country to strictly recover those additional costs. The impact of roaming seasonality has been carefully analysed in the external study to assess the costs of providing wholesale roaming services using the best available data to quantify it. It is discussed in detail in section 5 of the accompanying Review SWD. In particular, for data services, network needs to support domestic users already tend to exceed the summer seasonal peak before the seasonal peak recurs the following year due to massive ongoing demand growth. For voice services, there are significant extra costs for seasonal peaks for some countries, but these are spread over all users (domestic and roamers) due to significant seasonal in-country displacement to touristic areas and to the compensating effect of roamers on capacity usage in metropolitan areas during the summer holiday season. While being not negligible for voice services in some countries, seasonality effects remain small relative to overall caps in Option 3, in particular because countries where seasonality effects are assessed as the highest (Croatia, Greece, Bulgaria) are not among the higher cost countries for wholesale roaming services (Malta, Cyprus, Luxembourg). The seasonality effects measured in the higher cost countries are smaller. Therefore an option excluding seasonality effects from Option 3's caps only allows a small reduction of EU caps and adds little value. In particular, seasonality effects alone do not jeopardise the sustainability of RLAH in the EU as shown in Option 3 below. In addition, like Option 4, this option implies important implementation challenges, complexities and costs compared to Option 3. By opening a new derogation procedure at wholesale level which may have consequences on the sustainability derogation procedure foreseen in the Roaming Regulation at retail level, this option would create an uncertain and unstable RLAH setting for at least several months. This option would therefore involve implementation complexities and additional administrative burden without adding value in reaching the policy objectives compared to Option 3. Create a spot market: A spot market would impose a mandatory obligation to trade roaming traffic anonymously through trading platforms. This would allow separating the offer to supply a given number of roaming units (minutes, SMS, MB) in a given visited country from the offer to purchase a given number of units of roaming traffic, removing the bilateral nature of roaming exchanges. Total volumes of demand and supply are broken down in standard size "bonds" in order to allow for easy and neutral trading. This option requires all wholesale inbound roaming traffic to be purchased by means of open trading (e.g. via an electronic platform). In this way, suppliers will compete to attract as much inbound traffic as possible in their visited networks, regardless of the amount of outbound traffic to be negotiated for, mimicking a perfectly competitive market. Creating a spot market would involve a significant structural change to the functioning of wholesale roaming markets. The whole structure of the market would be shaken up since all competitively and commercially grown alliances would be broken down. Such a complete overhaul of the system needs a significant time to be implemented and to fully and effectively replace the current system of bilateral agreements elaborated by operators over the last 20 years. It cannot be considered in practice as an option enabling RLAH by June 2017. In addition the outcome and real benefits of such a drastic change of the roaming structure is uncertain. As concluded in the impact assessment accompanying the Commission proposal for the Roaming III Regulation, it is not expected that this change would be beneficial to the European industry since it would be uncertain if the advantageous offers by multi-country alliances would still be possible once all of the national partners of these alliances would need to pass via the spot market. The spot market would also definitely make it much more difficult for operators to provide pan-European mobile offers since the underlying wholesale conditions would become too variable. Also, roaming traffic cannot be easily treated as a commodity in view of the qualitative aspects involved such as coverage or speed. Finally, no respondent to the public consultation identified the lack of an efficient trading platform as a source of concern for the functioning of roaming markets nor suggested this regulatory option. 6.Impacts of the different policy options The aim of this section is to assess to what extent each option considered reaches the policy objective set in the Roaming Regulation of enabling the abolition of retail roaming surcharges from 15 June 2017 in the EU (RLAH objective), while meeting the explicit requirement set out in Article 19 of the Roaming Regulation to ensure that the visited network operators are able to recover all costs of providing regulated wholesale roaming services, including joint and common costs. In addition, as also required in Article 19 of the Roaming Regulation, account is taken of the need to prevent permanent roaming or anomalous or abusive use of wholesale roaming access for purposes other than the provision of regulated roaming service (i.e. the risk of arbitrage distorting domestic competition in the visited country), while bearing in mind the means already available to visited operators under Article 3(6) of the Roaming Regulation. The wholesale cost recovery and permanent roaming criteria correspond to the first specific objective of the proposal indicated in section 4. The RLAH criterion corresponds to the second policy objective indicated in section 4. These three criteria are set out in Article 19 of the Roaming Regulation and must be simultaneously met by the option to be proposed by the Commission.

In addition, options are qualitatively assessed against their administrative burden, implementation challenges by public authorities and timeliness, as well as against their contribution to achieving the digital single market. The criteria against which each option is assessed are summarized in the table below. The RLAH objective of sustainability is assessed on the basis of data available at country level and operator level. The methodology for the RLAH sustainability assessment based on operators' data is explained in Annex 4. The two tests are complementary analyses that should be considered jointly. They are based on the best country-level and operator-level data available to the Commission for the purpose of assessing the impact of different options on the sustainability of domestic charging models under the RLAH regime. However, the tests should not be understood as an accurate prediction of the actual number of requests for sustainability derogations that may be filed by operators pursuant to Article 6c of the Roaming Regulation. Consumer welfare (or more generally user welfare) is stemming from the RLAH obligation already contingently imposed by the Roaming Regulation. As such, it is not referred to in Article 19 of the Roaming Regulation as a criterion to be taken into account by the Commission in assessing measures necessary to enable RLAH. However, as the different options considered enable RLAH from June 2017 to a varying degree, the proportion of consumers which can actually reap the benefits of RLAH from that date differs across options. The relative size of consumer welfare is therefore used as an additional criterion to compare, in section 7, the different options against the baseline scenario (no EU action) where very few consumers, if any, would benefit from RLAH. . Finally, any potential environmental impact stemming from the RLAH obligation already imposed by the Roaming Regulation (e.g. additional network capacity building) falls outside of the impact assessment of this initiative. There is no specific environmental impact in any of the options considered for this initiative. 6.1.Option 1: Baseline scenario - no action at Union level RLAH objective In Option 1, the RLAH objective is missed. RLAH is not applicable from 15 June 2017. The RLAH+ regime of the transitional period starting on 30 April 2016 continues to be in force instead. Consumers continue paying a roaming surcharge of up to 5€c/min, 2€c/SMS and 5€c/MB in addition to the domestic price, instead of paying no roaming surcharge for a fair usage of roaming services. Table 1 below provides an estimation of the missed consumer welfare under that baseline scenario compared to any option that enables RLAH from 15 June 2017. The missed consumer welfare is the amount of RLAH volume that they would have consumed at domestic prices (i.e. with no retail roaming surcharge) if RLAH were applicable from that date. This volume can be valued in euros at the level of the retail roaming surcharge applicable under the RLAH+ regime that would apply under Option 1. The amount of RLAH consumption considered in Table 1 is based on the assumption that, if RLAH were applicable, roaming customers would consume mobile services abroad in the EEA like at home (RLAH assumption). The method and data used to obtain the volumes in Table 1 are provided in Annex 4. This estimated total RLAH roaming consumption by country can be expected to take place at RLAH prices (i.e. domestic prices). It can be conservatively valued at the level of the wholesale roaming caps of the preferred option in this impact assessment (4€c/min, 1€c/SMS and 0.85€c/MB, see section 6.3 below), as shown in the last column of Table 1 . The total value for the EEA is 1.408 bn€. Most of this value is linked to the RLAH data consumption (1.012 bn€) while RLAH voice and SMS consumption is valued at 314 and 51 mln€ respectively. If users miss the above amount of roaming consumption at domestic prices, operators on their side do not face any sustainability issue as regards the provision of retail roaming services to their roaming customers, as operators can charge their roaming customers up to the regulated wholesale roaming caps, which allows them to cover the wholesale roaming payments to the wholesale roaming providers. Operators do not face any cost recovery issue as regards the provision of wholesale roaming services to visiting operators' customers as current wholesale roaming caps have been set above the costs of providing these services. Under this option, the transitional RLAH+ regime can be expected to be stable and last over time for the following reasons. As shown in the accompanying Review SWD, there have been some important developments on the retail roaming markets recently, with domestic offers proposing more and more affordable roaming prices to the customers. A number of new RLAH-like retail roaming offers have appeared on the market. However, most of them are not RLAH offers in the sense of the Roaming Regulation: they do not cover the full of the EU and they are usually available for an add-on (a fixed periodic charge, often a per diem) which constitutes an upfront roaming surcharge to be paid in addition to the price of the domestic bundle mobile services. In addition, even where RLAH is offered in accordance with the meaning of the Roaming Regulation, these developments are unequal across Member States, operators and tariff plans. During the transitional period, these roaming per diem offers can be expected to flourish further while being compliant with the retail roaming surcharge of that period (i.e. the price of the per diem divided by the roaming volume it gives access to is below the cap retail roaming surcharge). These per diem/up-front charges may still represent a less than optimal charging mechanism for the user, since, in case the user does not fully consume the roaming volume bought, the effective unit retail roaming surcharges resulting from this actual consumption may be higher than the cap. However, the per unit charging model of retail roaming consumption must always be available to the user, whereby the retail roaming surcharge is paid for each unit consumed in addition to the domestic price, should the user prefer this charging model over the per diem offer. With the retail roaming surcharge, be it in the form of a per diem or a per unit surcharge, home operators fully and undisputedly recover the costs of providing retail roaming services, while roaming customers pay relatively modest retail roaming prices in addition to the domestic price. As a consequence, in the absence of EU regulatory action resulting from this review of the wholesale market, the transitional RLAH+ regime can be expected to be relatively stable and last over time under the baseline scenario. In the most competitive national retail roaming markets in the EEA where demand is very elastic, some more aggressive retail roaming tariff plans offering RLAH all over the EU or over a subset of EU countries may become more numerous. Also in these cases, however, the possibility for some home operators in a given country to provide these offers may be limited in view of different negotiating power to secure lower wholesale roaming prices necessary to sustain RLAH offers in a mass market.

As also shown in the accompanying Review SWD, there has been some significant technological developments of relevance to roaming, especially the diffusion of smartphones, OTT services, and the proliferation of Wi-Fi hotspots. However, there has been no perfect substitute to roaming services so far. The most serious potential technological substitute to roaming services is the embedded SIM card provisionable over-the-air (eSIM cards) which allows switching operator without changing physically the SIM card. However, the technology is still in a very early stage of market take-up and the standardisation work that happened over the last years shows that this technology will start to be used in the B2B market for M2M communications. It is not clear yet if and when the technology will be used in the consumer market and in which devices (e.g. smartphones or other connected objects) and what the switching process will be in practice. Thus, their current and short-term market pressure remains limited. Altogether, under the baseline scenario, we do not expect that the market will by itself bring full RLAH over the entire EU to all customers in all EU Member States in the medium to long term, which is the policy objective decided by the co-legislator in the Roaming Regulation. Cost recovery at wholesale level Under this option, cost recovery at wholesale level is ensured as it is today. Permanent roaming As noted by operators in reply to the public consultation, current wholesale roaming caps act as an effective safeguard against unwanted permanent roaming. Raising wholesale roaming prices to the current cap level is a powerful deterrent against abusive use of wholesale roaming access, and would likely make intervention by visited operators under Article 3(6) of the Roaming regulation unnecessary. Implementation costs There are no additional implementation costs to be borne by public authorities nor by mobile operators compared to the transitional period already imposed by the Roaming Regulation. Digital Single Market Consumers still pay higher prices when roaming in the EU than domestically, which is a sign of fragmentation of the mobile market in the EU, which is not in line with the DSM objective. 6.2.Option 2: set EU-wide wholesale roaming caps at the level currently in force RLAH objective assessed with country-level data In Option 2, RLAH is applicable from 15 June 2017 with wholesale roaming prices capped at current level, i.e. 5€c/min, 2€c/SMS and 5€c/MB. The effective, net, wholesale cost of providing retail roaming services is generated only by the outbound roaming traffic in excess to the inbound roaming traffic. For balanced traffic, wholesale revenues generated by incoming roamers effectively balance wholesale payments for domestic customers who periodically travel outside the operator's domestic network. Table 2 shows the average net annual wholesale cost of the outbound unbalanced part of RLAH at current wholesale roaming caps level for retail roaming providers, per country (in euros in column (a) and as % of Annual Retail Revenue Per User, ARRPU, in the last column). For countries (or services within the country) with net inbound roaming traffic, the net wholesale cost of RLAH is set at zero in Table 2 . The amount of roaming consumption considered in the simulation is based on the assumption that roamers would consume abroad in the EEA like at home (RLAH assumption). The roaming consumption is therefore obtained by multiplying, for each country, the average daily domestic consumption of voice, SMS and data in the country by the average number of days abroad in the EEA of citizens of the country. The average daily domestic consumption itself is a forecast for 2017 based on 2014 consumption and growth forecast used in the cost model study. Table 2 does not separate out the RLAH retail revenues, which, within the overall ARRPU, serve to cover the net wholesale cost of roaming services. Under current caps, five Member States and Norway stand out with a net wholesale RLAH cost above 5% of ARRPU, and in some cases very significantly above 5%. The level of outbound imbalance established by BEREC on the basis of 2013 and 2014 operators' data collected in autumn 2015 has a determining impact in this simulation. By using the cap level, Table 2 provides an estimate of the cost of RLAH in the absence of any discount rate from the cap. With discounted rates, the effective cost of RLAH under Option 2 is likely to be lower than presented in this table. However, the situation is more difficult in almost all EEA countries for MVNOs and more generally for operators with a very large excess of outbound over inbound roaming traffic because these operators do not benefit from hosting roaming traffic in return. While, as stated above, this simulation does not attribute any RLAH revenues from overall ARRPU to correspond to the consumption which generates the assumed wholesale cost at capped rates, and is thus likely to somewhat overstate the problem of RLAH sustainability, it is clear that there are likely to be significant problems where operators in a country can be predicted to spend in excess of 10%, or even of 15%, of their ARRPU on wholesale costs for customers' roaming (which is assumed to follow domestic usage patterns) for less than two weeks a year on average. Keeping EU wholesale roaming caps unchanged would therefore not meet the objective of the present initiative to ensure that national wholesale roaming markets function in such a way that, from 15 June 2017, retail roaming surcharges may be sustainably abolished for all or virtually all operators in the EU without generating distortions on the home markets. RLAH objective assessed with operator-level data

As noted by operators in reply to the public consultation, current wholesale roaming caps act as an effective safeguard against unwanted permanent roaming. Raising wholesale roaming prices to the current cap level is a powerful deterrent against abusive use of wholesale roaming access, and would likely make intervention by visited operators under Article 3(6) of the Roaming Regulation unnecessary. Implementation costs Option 2 does not involve any additional implementation costs for public authorities nor for mobile operators compared to the current situation. Under this option, NRAs continue monitoring and supervising compliance with the current wholesale roaming caps, which has been good over the years according to the biannual BEREC's Benchmark Reports. Digital Single Market Because RLAH is not sustainable for operators based in several Member States, RLAH derogations pursuant to Article 6c of the Roaming Regulation may be obtained by a significant number of operators, and probably by all operators in some Member States. Mobile subscribers in these Member States would not benefit from RLAH. The EU would be divided between countries where some operators offer RLAH and countries where no operator offers RLAH. Depending on the specific competitive conditions in domestic markets, in some Member States where RLAH poses a sustainability problem, operators may prefer raising domestic prices over derogating from RLAH. Altogether, this option leads to distortions on the domestic markets and fragmentation of the EU between RLAH enabled and non-enabled Member States and operators. 6.3.Option 3: set lower EU-wide wholesale roaming caps Wholesale price caps considered in Option 3 In section 5 of the accompanying Review SWD, we have presented cost estimates for wholesale roaming services based on an analysis of different sources of information, namely: we have sense-checked the TERA Consultants' cost model; an alternative approach to estimate the total costs of wholesale roaming voice services based on national mobile termination rates; and retail unit prices in MS from a Commission study on retail prices in the EEA. In Table 4 below we present the cost estimates for wholesale roaming services in each of the 29 countries (28 MS and Norway) considered in TERA Consultants' cost model (this table corresponds with Table 10 in the accompanying Review SWD). Voice (€c/min) SMS (€c/SMS) Data (€c/MB) AT 2.60 1.00 0.30 BE 1.85 1.00 0.41 BG 2.74 1.00 0.53 CY 1.63 1.00 0.35 CZ 1.86 1.00 0.42 DE 1.70 1.00 0.31 DK 1.86 1.00 0.29 EE 1.82 1.00 0.34 EL 1.94 1.00 0.35 ES 2.81 1.00 0.41 FI 1.65 1.00 0.28 FR 2.79 1.00 0.39 HR 2.31 1.00 0.36 HU 2.39 1.00 0.39 IE 1.24 1.00 0.31 IT 1.75 1.00 0.31 LT 1.62 1.00 0.43 LU 2.63 1.00 0.44 LV 2.81 1.00 0.52 MT 4.20 1.00 0.67 NL 2.57 1.00 0.37 PL 1.72 1.00 0.32 PT 1.78 1.00 0.36 RO 1.79 1.00 0.59 SE 3.22 1.00 0.29 SI 2.52 1.00 0.57 SK 1.63 1.00 0.55 UK 2.65 1.00 0.36 NO 1.96 1.00 0.38 As we describe in the accompanying Review SWD's section 5, these cost estimates include: the total wholesale roaming costs in MS estimated by TERA (including network costs, roaming-specific costs and the impact of seasonality on roaming costs), as discussed in section 5.4 of the accompanying Review SWD; an allocation for the termination rate that the visited network operator needs to pay the terminating network operator for terminating a call on its network, as discussed in section 5.5 of the accompanying Review SWD; and an allocation for the transit costs that the visited network operator needs to pay for routing a call to the terminating network operator or to send data traffic back to the home network, as discussed in section 5.6 of the accompanying Review SWD. In order to assess the appropriate wholesale price caps for roaming services under Option 3, we have had regard to the twin objectives of minimising unsustainability of RLAH at retail level (which will tend to support setting lower wholesale roaming price caps), while at the same time ensuring that the caps recover costs (including joint and common costs) at the wholesale level. In relation to the cost recovery objective, we have also compared TERA's cost estimates above against the effective average wholesale roaming prices for unbalanced traffic currently effective in EEA countries. We consider that the relevant benchmark for wholesale costs is indeed the price for unbalanced traffic, given that prices for balanced traffic are merely a bilateral transfer between operators with no net cost for any of the parties and the weighted balanced-unbalanced price will also not be appropriate for the same reason, as it takes into account the price for balanced traffic.

It is already apparent from Table 4 above that there are significant asymmetries in the estimated costs of provision of individual wholesale roaming services within individual countries, in particular for voice and data, i.e. the countries with the highest estimated costs for provision of voice are not necessarily the same for data, and vice versa, as well as very considerable variation from country to country, with the highest-cost countries having estimated costs which are significantly in excess of the lowest or even of the median. In considering the role of safeguard wholesale caps in achieving the twin objectives of ensuring that wholesale providers recover all their relevant costs, while maintaining RLAH sustainability derogations as an exceptional case, it is appropriate to take into account the portfolio of services provided by each wholesale provider, and the predictable volumes of each. Just as retail roaming operators are likely to have to assess the sustainability of their domestic charging model under RLAH by reference to the overall costs and revenues of retail roaming services (and this is the approach in the country-level and operator-level simulations in this impact assessment), wholesale cost recovery should be considered in terms of aggregate costs of provision of the foreseen volumes. Safeguard wholesale caps fixed solely by reference to the highest estimated cost of each individual service would therefore risk creating an imbalance as between the retail-level and wholesale-level objectives of this review, going beyond what is necessary to ensure that each visited network is able to cover all wholesale costs. At the same time, too much weight should not be placed on the concept of aggregate cost recovery – the caps chosen should leave some margin for error in this respect, and it is also considered important that the safeguard caps for individual services should be broadly aligned (i.e. of a comparable order of magnitude) with the cost levels in the highest-cost countries for the respective services. We compare the average wholesale prices for unbalanced traffic against TERA's estimated costs for voice in Figure 9 below. The evidence on estimates of total wholesale roaming voice origination costs and wholesale roaming voice prices for unbalanced traffic in Figure 9 shows that: cost estimates are below the current wholesale roaming prices for voice in all MS with the only exception of Malta, for which TERA's cost estimate is 4.20€c/min compared to a wholesale roaming price of 3.69€c/min (which is presumably not loss-making), Spain (2.81€c/min against a market price of 2.73€c/min) and France (2.79€c/min against 2.74€c/min); the maximum average wholesale roaming price for voice in all MS is currently 3.91€c/min (the price in Croatia), compared to TERA's estimated maximum wholesale cost of 4.20€c/min (in Malta). Based on the evidence above, we conclude that it would be appropriate to consider a maximum wholesale roaming cap for voice of 4€c/min in all MS, as this acts as a safeguard cap, leaving some margin for negotiations in several instances while ensuring cost recovery according to several estimates. While this maximum lies somewhat below TERA's estimated maximum cost for wholesale roaming voice services (€4.20c/min in Malta)), it is nonetheless above the maximum cost estimated using an alternative approach based on current LRIC mobile termination rates (€3.81c/min), as explained in Section 5 of the accompanying Review SWD. It is also noteworthy that current average wholesale prices for unbalanced traffic in the highest cost country (Malta) are reported to lie appreciably below this envisaged cap level. Moreover, this cap level is appreciably above the second highest cost estimate of TERA (3.22€c/min in Sweden) and slightly above the maximum average wholesale roaming voice price for unbalanced traffic currently effective in all MS (€3.91c/min). In this regard, we actually considered in the accompanying Review SWD that the assumptions made on the applicable termination rates in 2017 are likely to be relatively conservative. In addition, divergences across the Union in this respect are foreseen to decrease, in particular through the prospect of measures taken in accordance with the Regulatory Framework aiming at ensuring consistency of regulatory approaches. In the meantime, taking into account the specific regulatory framework applicable to roaming (where the visited network can levy a maximum charge for wholesale roaming services that also includes other regulated inputs provided by third operators such as termination services), where the competent national regulatory authorities are requested to address any dispute that could arise on the level of rates levied by third operators to inputs necessary for the provision of wholesale roaming services (or on the rates for other inputs required by a visited operator), such authorities should be obliged to seek the assistance of BEREC in resolving the dispute. This procedure will be potentially relevant at least as long as significant divergences remain in the regulatory treatment across Member States, leading to a hypothetical – but in our view improbable - risk that a significant imbalance between the price of the regulated input and that recovered through the wholesale roaming charge could result in a given visited operator being unable to recover its aggregate wholesale roaming costs. In Figure 10 below we compare the cost estimates for data services based on TERA's cost model against effective average wholesale roaming prices for unbalanced traffic in the 29 countries considered. The evidence on TERA's estimates of total wholesale roaming data costs and average wholesale roaming data prices for unbalanced traffic in Figure 10 shows that the cost estimates are well below the current average wholesale roaming prices for data in all MS. The highest estimated cost is in MT, at 0.67€c/MB, while estimated costs in the great majority of Member States, as well as Norway, lie below 0.4€c/MB. In order to assess an appropriate wholesale price cap for data roaming services, we have also taken into consideration other factors, in particular: the sensitivity analysis conducted by TERA Consultants on its estimated data roaming costs (described in more detail in TERA's report). This sensitivity analysis shows that the unit data roaming costs could be slightly above the level estimated under their baseline scenario by about 0.1€c/MB under certain assumptions regarding, for example, the cost allocation rule (Erlang vs Mbps); domestic wholesale prices for data provided by MVNOs to the Commission show that domestic wholesale prices for data present significant variations between MS but are usually below 0.8€c/MB (as described in more detail in the accompanying Review SWD, section 6.5.4). In light of the above, we conclude that it would be appropriate to consider a maximum wholesale roaming cap for data of 0.85c€/MB in all MS. Such a level would reflect the role of the legislative maximum as a safeguard cap, would give sufficient assurances of cost recovery for all visited operators for the provision of wholesale roaming data services, would leave significant room for further commercial negotiation with most visited networks, including in many of the countries with the greatest positive balance of incoming over outgoing roaming traffic (Spain, Greece, Cyprus, etc.), and would at the same time represent a very significant reduction by reference not only to the current wholesale cap but also the currently observed wholesale market prices. As will be seen below, such a safeguard level – even if applied without any commercial discounts – gives assurances of sustainability for visiting operators which are not significantly different from those under a cap system more precisely tailored to the cost estimates for individual countries. In the accompanying Review SWD we noted that Malta is the only country for which the unit cost for wholesale roaming voice services estimated using the TERA cost model (i.e. 4.2c€/min) is above our proposed wholesale roaming price cap for voice under Option 3 (i.e. 4c€/min). In Table 5 below we show that any potential loss on voice from a wholesale roaming price cap of 4c€/min would in any event be recovered through the margin on data services, where the 0.85 c€/min wholesale price cap is well above the cost estimated using the TERA cost model for wholesale roaming data services in this country (i.e. 0.67c€/MB).

In the case of SMS, we explain in section 5.8 of the accompanying Review SWD that we consider it appropriate to use a maximum wholesale roaming cap of 1€c/SMS based on the evidence from current wholesale roaming SMS prices for unbalanced traffic. We therefore conclude that the wholesale price caps that should be considered under Option 3 are as follows: voice: 4€c/min; SMS: 1€c/min; data: 0.85€c/MB. Below we assess RLAH's sustainability for operators against these caps. RLAH objective assessed with country-level data In Option 3, RLAH is applicable from 15 June 2017 with wholesale roaming prices capped at 4 €c/min, 1 €c/SMS and 0.85 €c/MB. The effective, net, wholesale cost of providing retail roaming services is generated only by the outbound roaming traffic in excess to the inbound roaming traffic. For balanced traffic, wholesale revenues generated by incoming roamers effectively balance wholesale payments for domestic customers who periodically travel outside the operator's domestic network.



Table 6 shows the average net annual wholesale cost of the outbound unbalanced part of RLAH at Option 3's EU wholesale roaming caps level for retail roaming providers, per country (in euros in column (a) and as % of Annual Retail Revenue Per User, ARRPU , in the last column). For countries (or services within the country) with net inbound roaming traffic, the net wholesale cost of RLAH is set at zero in Table 6 . The amount of roaming consumption considered in the simulation is based on the assumption that roamers would consume abroad in the EEA like at home (RLAH assumption). The roaming consumption is therefore obtained by multiplying, for each country, the average daily domestic consumption of voice, SMS and data in the country by the average number of days abroad in the EEA of citizens of the country. The average daily domestic consumption itself is a forecast for 2017 based on 2014 consumption and growth forecast used in the cost model study. Table 6 does not separate out the RLAH retail revenues, which, within the overall ARRPU, serve to cover the net wholesale cost of roaming services.

The level of outbound imbalance established by BEREC on the basis of 2013 and 2014 operators' data collected in autumn 2015 has a determining impact in this simulation. By using the cap level, Table 6 provides an estimate of the cost of RLAH in the absence of any discount rate from the cap. With discounted rates, the effective cost of RLAH under Option 3 will likely be lower than presented in this table. Moreover, it should be noted that RLAH retail revenues corresponding to roaming consumption in line with domestic consumption patterns would still need to be taken into account before drawing conclusions. For example, for countries whose residents spend 10-11 days abroad per year on average, such RLAH retail revenues would be expected to correspond to around 3% of mobile ARRPU. Under Option 3's wholesale roaming caps, no country stands out with a net wholesale RLAH cost above 5% of ARRPU. The situation may be more difficult for MVNOs and more generally for operators with a very large excess of outbound over inbound roaming traffic because these operators do not benefit from hosting roaming traffic in return. Setting EU wholesale roaming caps at 4 €c/min, 1 €c/SMS and 0.85 €c/MB would therefore meet the objective of the present initiative to ensure that national wholesale roaming markets function in such a way that, from 15 June 2017, retail roaming surcharges may be sustainably abolished for all or virtually all operators in the EU in order to avoid distortions on the home markets. RLAH objective assessed with operator-level data In line with our assessment of Option 2 above, we have also conducted analysis on the sustainability of Option 3 at the operator level (as indicated above when describing our assessment in Option 2, we only present here the final results, additional details on our approach can be found in Annex 4).

Sustainability % Positive sustainability <1% 1-3% 3-5% >5% Option 3 – Single EU-wide cap 88% 5% 2% 5% 2% Note: the row adds up to more than 100% due to rounding. Table 7 above shows that Option 3 results in higher percentage of operators with a positive sustainability (88%), compared to Option 2 (66%). This result is driven by the fact that in Option 3 the wholesale price caps are sufficiently low to ensure that they are below the retail prices in the great majority of EU countries, thereby minimising the potential for a negative retail roaming margin for mobile operators that are net senders of roaming traffic (i.e. have higher outbound than inbound roaming traffic). Cost recovery at wholesale level As shown above, the wholesale roaming caps set under this option are largely dictated by the costs of providing wholesale roaming services in the higher-cost countries for the respective component services. Each cap is above the estimated costs in virtually all EEA countries, is close to such levels in all countries, and is in any event set at a level to allow all visited operators to recover their overall costs of provision of the three component wholesale roaming services. This level also leaves economic space for most visited operators to engage in wholesale competition below the caps. We expect a fair potential for competitive negotiation for most operators, as evidenced under the current regime. Even if RLAH obligations may give visiting operators less margin for manoeuvre, there remain a number of parameters in which they can make their traffic volumes more attractive to host operators in return for lower prices where the latter can still recover costs and make a margin on bigger volumes. For countries whose estimated costs are closer to the EU voice cap set in this option, the margin allowed by this option's data cap in these countries is more than adequate to ensure aggregate cost recovery on wholesale provision in these countries. Reciprocally, for countries whose estimated costs are closer to the EU data cap set in this option, the margin allowed by Option 3's voice cap in these countries achieves a similar effect. Altogether, this option ensures aggregate cost recovery at wholesale level for all countries. Setting EU-wide caps at an average cost level across EEA countries or at the level of the lower-cost country is not considered as this would not ensure cost recovery by efficient operators in all EEA countries. Permanent roaming As noted by operators in reply to the public consultation, ensuring that the costs of providing wholesale roaming services are recovered mitigates the risk of unwanted permanent roaming. In addition, the Roaming Regulation provides that the obligation of providing wholesale roaming access upon reasonable access (Article 3) may be lifted by the visited operator should the wholesale roaming access seeker use this access for other purposes than providing retail roaming services to its roaming customers while periodically travelling. Implementation costs Option 3 does not involve any additional implementation costs for public authorities compared to the current situation since the new EU caps are simply set at a lower level than they are today. Under this option, NRAs monitor and supervise compliance with the new EU wholesale roaming caps as they have done with current EU wholesale roaming caps. Implementation costs for mobile operators should be limited to the adjustment of the billing system for wholesale roaming services with the new values of the EU caps. Digital Single Market Under Option 3, the above simulations show that the potential non-sustainability of RLAH remains exceptional, i.e. in cases of operators based in a few countries, with outbound-only roaming traffic and paying at the cap level. This outcome is without prejudice to what the detailed sustainability applications will be, in accordance with the methodology to be set out in the forthcoming Commission implementing act, and without prejudice to how many of them will actually be filed by operators and accepted by NRA if this option is chosen. Option 3 therefore achieves widely sustainable RLAH in the EU contributing to the DSM specific goal of making borders meaningless for the use of mobile services within the EU. It does so by imposing single EU-wide caps, thereby not artificially fragmenting the wholesale roaming market (in which commercial negotiation can still find the appropriate price level in cases where wholesale providers' costs are below the safeguard caps). 6.4.Option 4: set country-specific wholesale roaming caps Wholesale price caps considered in Option 4 In section 5 of the accompanying Review SWD, we have presented cost estimates for wholesale roaming services based on an analysis of different sources of information, namely: the TERA Consultants' cost model; an alternative approach to estimate the costs of wholesale roaming voice services based on national mobile termination rates; and

retail unit prices in MS from a Commission study on retail prices in the EEA. In Table 4 above (section 6.3) we present final cost estimates for wholesale roaming services in each of the 29 countries (28 MS and Norway) considered in TERA Consultants' cost model. As we describe in the accompanying Review SWD's section 5, these cost estimates include: the total wholesale roaming costs estimated by TERA (including network costs, roaming-specific costs and the impact of seasonality on roaming costs), as discussed in section 5.4 of the accompanying Review SWD; an allocation for the termination rate that the visited network operator needs to pay the terminating network operator for terminating a call on its network, as discussed in section 5.5 of the accompanying Review SWD; and an allocation for the transit costs that the visited network operator needs to pay for routing a call to the terminating network operator or to send data traffic back to the home network, as discussed in section 5.6 of the accompanying Review SWD. Under Option 4 we consider wholesale price caps based on the cost estimates presented in Table 4 above (section 6.3). RLAH objective assessed with country–level data The effective, net, wholesale cost of providing retail roaming services is generated only by the outbound roaming traffic in excess to the inbound roaming traffic. For balanced traffic, wholesale revenues generated by incoming roamers effectively balance wholesale payments for domestic customers who periodically travel outside the operator's domestic network. Based on operators' data from the autumn 2015 data collection, BEREC has calculated, for each EEA country, the distribution of outbound roaming traffic across all destination countries in the EEA. However, the (reciprocal) distribution of inbound roaming traffic received by a given EEA country from