EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 23.9.2008 
SEC(2008) 2490 
  
COMMISSION STAFF WORKING PAPER 
 
accompanying the 
Proposal for a 
 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
 
amending Regulation (EC) No 717/2007 on  roaming on public mobile telephone 
networks within the Community and Directive 2002/21/EC on a common regulatory 
framework for electronic communications networks and services 
 
SUMMARY OF THE IMPACT ASSESSMENT   
 
{COM(2008) 580 final} 
{SEC(2008) 2489}  
 
EN 2   EN EXECUTIVE  SUMMARY 
1. B ACKGROUND  
The European Commission must review the functioning of the Roaming Regulation and 
report to the European Parliament and the C ouncil before 30 December 2008. In its report, the 
Commission is required to assess whether th e objectives of the Roaming Regulation have 
been achieved and whether there is need to extend its duration and/or to amend it. The European Parliament and Council also charged the Commission specific ally with reviewing 
developments in wholesale and retail charge s for roaming data communication services, 
including SMS and MMS, and, if  appropriate, including recomme ndations regarding the need 
to regulate these services. 
This impact assessment (IA) report examines options arising from the Commission's review 
of the functioning of the Roaming Regulation. In particular it examines the possible extension 
of its duration beyond its current expiry date of  30 June 2010 with regard to voice roaming 
services and the possible extension of its scope  to cover SMS roaming and/or packet data 
roaming services. On 1 September the Impact Assessment Board provided comments on this document which have been taken into account. 
2. D
EVELOPMENTS SINCE THE ADOPTION OF THE ROAMING REGULATION  
The Roaming Regulation entered into force on 30 June 2007 and the Commission services 
already commenced preparations for the review  of the functioning of the Roaming Regulation 
in the Autumn 2007. Implementation and the transi tion to the 'Eurotariff' in particular went 
smoothly, with only a few exceptions noted by National Regulatory Authorities (NRAs).  
In association with the Commission, the Euro pean Regulators Group (ERG) initiated an 
extensive six-monthly data collection exercise which has formed the basis for two Benchmark 
Reports. Under this reporting exercise, it was found that prices at retail and wholesale levels 
have not varied sufficiently from the maximu m allowed ceilings to conclude that these 
markets are now competitive. The Report also  identified an issue with the way many 
operators bill for roaming services on a per-mi nute basis as opposed to actual time consumed.  
The reports also demonstrate that there appears to have been little movement in prices for 
SMS roaming services in most Member States, at the retail and wholesale levels. Also, for 
data services, the average data price per MB sh ows a diverse picture where the differences in 
price between countries remain large, and some countries still have very high average prices.  
2.1. Public consultation 
The European Commission launched a wide -ranging public consul tation on 7 May 2008 
asking for comments on the review of the Ro aming Regulation and on the possible extension 
to SMS and data roaming services. While mo st operators are agai nst extension of the 
regulation of voice roaming services, most NR As and Member States and some smaller 
operators and consumer groups be lieve it should be extended.  
 
EN 3   EN On the issue of per-minute and per-second billing operators generally believe that this should 
be left to the market to resolve while the ER G and consumer groups belie ve that urgent action 
is needed to deal with what they  call the ‘hidden charge’ issue.  
The ERG noted that there appears to be little movement in SMS retail roaming prices up to 
April 2008. They have therefore recommended th e introduction of a price cap on the average 
wholesale SMS roaming rate, and the amendment of the Eurotariff obligation to include an 
offer of SMS roaming at a retail rate not gr eater than a specified maximum cap. Consumer 
organizations have also expre ssed themselves in favour of SM S regulation at both wholesale 
and retail level. On the othe r hand, the GSM Association and mobile operators, with some 
exceptions, are generally ag ainst such regulation.  
With regard to data roaming, there was almost a general consensus on the desire to eliminate 
‘bill shock’. Consumer organisations have also  expressed themselves in favour of regulation 
at both wholesale and retail levels. The ERG believes that formal and immediate regulatory 
action is required to improve transparency and eliminate bill shoc k. The GSM Association 
and the majority of operators have expresse d themselves against pr ice regulation although a 
number of operators support regu lation at the wholesale level.  
2.2. Other developments 
The Commission services have remained open to  contacts with intere sted parties throughout 
the process. The Commission also commissione d a study by independent consultants which 
was published by the Commission on 27 June 2008.  
Commissioner Reding warned the industry in Fe bruary 2008 at the GSM World Congress in 
Barcelona that prices for SMS and data roami ng needed to be reduced by July 2008 in order 
to avoid regulation. Commissioner Re ding also wrote to the CEOs of all mobile operators in 
the European Union on 4 June 2008, requesting information on their price offerings for SMS 
and data roaming services in the EU, as well  as on transparency measures taken for those 
services, as at 1 July 2008.  
All NRAs have provided the operator-specific da ta which was gathered by them as part of 
their general monitoring activities. This comprehensive data has enabled the Commission Services to construct an economic model whic h provides estimates of the impact of the 
current Regulation as well as the economic impact of the policy options set out in this report.  
3. PROBLEM
 DEFINITION   
3.1. Voice Roaming 
Even though consumers have benefited from lower voice roaming charges, the evidentiary 
record since adoption of the Regulation indicate s that the structural problems with the voice 
roaming market have remained intact. In its  response to the public  consultation, the ERG 
confirms that the fundamental problems which ex isted prior to the current Regulation remain. 
3.2. Voice billing unitisation 
The Regulation imposes price limits on intra-Community voice roaming services which are 
expressed in terms of a specified monetary am ount expressed on a "per  minute" basis.. The 
relevant provisions of the Regul ation did not however specify e xplicitly what should be the 
 
EN 4   EN minimum units of time by reference to which the prices for wholesale and retail roaming 
voice services were to be calculated. The ERG benchmark data report for September 2007–
March 2008 estimated that per-minute bil ling practices add on average around 24% to a 
typical retail bill for calls made and 19% for calls  received using the Eurotariff. The different 
billing unitisation practices employed by m obile operators seriously undermines the 
consistent application of the Eurotariff. 
3.3. SMS 
Similar to the situation for voice services, one of the reasons for high SMS roaming prices is 
the fact that when choosing a mobile operato r, consumers do not take these prices into 
consideration. As a result, consumers often onl y become aware of the high prices charged 
when the service is used. Community SMS roami ng prices have an impact on millions of EU 
citizens. SMS services are particularly used by younger consumers. The level of the wholesale 
charges for sending an SMS while roaming with in the Community does not appear to be 
justified by the underlying costs an d there appears to be insuffi cient competitive pressures on 
operators to bring prices down.  
3.4. Roaming packet switched data services 
Concerns as to the level of charges for data roaming services were raised in the political 
discussions that preceded th e adoption of the Regulation. Wh ile there have been some 
positive developments, prices for EU-wide data roaming services at both wholesale and retail 
levels are unjustifiably high when compared to the charges for the equivalent domestic 
services and to the underlying co sts of providing the se rvices and frequently  give rise to the 
problem of bill shock. The persistence of high wholesale charges for data roaming services 
(particularly on non-prefe rred networks) resulting inter alia  from traffic steering limitations 
results in an extreme variation in wholesale co sts. These excessive wholesale charges lead to 
distortions of competitive conditions which unde rmine the smooth functi oning of the internal 
market. 
4. OBJECTIVES 
The general objective of EU action is to promot e the further development of the single market 
for electronic communications services, wh ich include voice telephony, SMS and data 
services, for users of public mobile telephone networks for EU -wide roaming services when 
travelling within the Community. In concrete terms, the objective is to ensure that prices paid by users of public mobile telephone networks fo r EU-wide roaming services when travelling 
within the Community are not unjustifiably highe r than the charges payable by that user when 
calling, sending SMS or data within  the consumer's home country.  
5. ALTERNATIVE
 POLICY  OPTIONS 
This IA considers alternative approaches to targeted regulat ion such as self-regulation, co-
regulation and soft law. However, in light of the partic ular nature of the problems identified it 
is concluded that these options are not feasible (see Chapter 5). 
Options for regulation are evaluated in accordan ce with the following criteria: Effectiveness; 
Competition; Efficiency; Consistency; Coherence.  
 
EN 5   EN 6. VOICE  ROAMING  POLICY  OPTIONS 
A number of policy options are considered for voice roaming. This includes no policy change 
which in this case would mean that the Regul ation would expire on 30 June 2010. However, it 
is concluded that there is a significant risk that  the underlying lack of competitive pressures in 
the voice roaming market would tr anslate into a return to higher retail and wholesale prices if 
the pricing obligations in the Regulation were  to disappear on its expiry in 2010. For this 
reason it is concluded that the Regulation should be extended beyond 2010 for three years to 30 June 2013.  
The transparency measures for voice roaming se rvices are an indispensable element of the 
current Regulation. However it is considered th at transparency measures alone will not be 
effective.  
It is further concluded that the regulation s hould be extended at both wholesale and retail 
level. Without wholesale regulation there is a ri sk of disrupting the orderly functioning of the 
roaming market by putting smaller operators at a dramatic competitive disadvantage. Equally, if regulation is applied at wholesale level only, it is likely that the consumer will not see the 
benefits in the form of lower retail prices.  
This IA then considers options for the struct ure of extended voice regulation, specifically 
whether there should be a glide path  for reductions in the levels of  the current price ceilings at 
wholesale and retail levels and, if so, the magn itude of such reductions. It is concluded that 
these ceilings should continue to  decline to reflect anticipated reductions in costs. It is 
concluded that the most effective approach is to set a glide path which continues the linear 
decline inherent in the current regulation at the retail level while allowing for bigger 
reductions at the wholesale level to reflect for ecasted reductions in costs. This approach is 
pro-competitive as it gives greater flexibility for competition.  
7. BILLING
 UNITISATION  POLICY  OPTIONS 
The divergent approaches applicable to the billi ng of roaming calls create different conditions, 
thereby undermining the consistent application of the Eurotariff and distorting competitive conditions in the single market. It is therefor e appropriate for the Regul ation to harmonise the 
obligations on mobile oper ators in this regard.  
The options for addressing this issue include no  policy change, a move to strict per-second 
billing, modified per-second billi ng and adjusting the le vels of the caps. It is concluded that 
modified per second billing is the most effec tive approach as it means that consumers will 
generally only be charged for what they consume while allowing operators to recover 
reasonable call set-up costs and flexibility to di fferentiate their offers by means of a maximum 
30 second charging interval at the commencement  of the call. Incoming calls and wholesale 
calls should be charged on a strict per-second basis.  
8. SMS
 POLICY  OPTIONS 
As in the case of voice roaming, a variety of opt ions to address the problems identified in the 
SMS roaming market are considered. However, the discrepancy between domestic SMS prices and SMS roaming prices remains unjustif iably high. Despite recent strong calls from 
 
EN 6   EN the European Commission and national regulators  for significant price reductions, there has 
been relatively little movement in the market.  
Transparency measures for SMS roaming services  are considered essential. However, it is 
considered that transparency measures alone will  not be effective to address these problems.  
To regulate only at wholes ale level would assume that market  forces would be sufficient to 
guarantee a substantial pass-through of wholesal e reductions to the retail level within a 
relatively short period. Conversely,  without wholesale regulation th ere is a risk that smaller 
operators could suffer margin squeeze becaus e they may face relatively high wholesale 
charges while their reta il prices are capped.  
As for voice, it is considered that a combination of transparency measures  as well as retail and 
wholesale regulation would ensure an effec tive outcome. This view is supported by ERG 
which believes that the wholesale SMS charges ar e not justified by costs to the host operator.  
The Commission services conclu de that the Regulation shoul d be amended to include 
regulatory measures at wholesale and retail leve ls as well as transparency for SMS roaming 
services with effect from 1 July 2009 fo r a period of four years to 30 June 2013.  
The IA examines three options for regulation of wholesale and retail SMS roaming charges. 
The first is proposed by the Dani sh national regulatory  authority (NITA) a nd is a cost-based 
model while the other options were proposed by ERG. The NITA m odel proposes 3.48 cents 
at retail levels and 0.8 cents at wholesale le vel. The first ERG opti on proposes a cap at 15 
cents at retail level and 8 cents  at wholesale level. The second ERG option proposes 11 cents 
at retail level and 4 cents at wholesale. While the NITA approach has much merit it is 
considered that it would pr oduce price ceilings which are too aggressive for practical 
application in almost all Member States. 
At wholesale level, the second option is pr eferred over the first ERG proposal because it 
provides a better reflection of the wholesale costs actually incurred while at the same time proving greater flexibility than the approach advocated under the NITA proposal. At retail 
level, the second ERG proposal is clearly pr eferable from a consumer perspective.  
9. DATA
 ROAMING  POLICY  OPTIONS 
The continuing discrepancy between domestic da ta prices and roaming data prices remains 
high with a diverse pattern acro ss Member States, leading to the ongoing possibility of ‘bill 
shock’ for consumers. Lack of transparency re mains a key problem and it is far from certain 
that recent efforts by some operators to enhance transparency for this service will ensure that the problem of ‘bill shock’ is eliminated in all Member States. Therefore, while regulatory 
intervention should be treated cau tiously, it is considered that the 'no policy change' option is 
not feasible.  
It is concluded that two measures  in particular should be requir ed to address transparency: the 
provision of basic price inform ation is essential for consumer s and should be proposed as a 
regulatory measure. Equally, allowing the consum er to choose cut-off limits would provide a 
very effective tool for dealing with the proble m of bill shock and should therefore also be 
proposed.  
 
EN 7   EN The possibility of regulation at re tail and wholesale levels is also  carefully considered in this 
IA. High wholesale charges (particularly on non- preferred networks), combined with traffic 
steering difficulties for data roaming, are distor ting competitive conditions and causing a lack 
of predictability for operators in relation to their wholesale costs. A wholesale safeguard cap 
would eliminate these excessive charges while allowing competition to play in the rest of the wholesale market. Such a ceiling needs to be sufficiently low to address the 'bill shock' 
problem while being sufficiently above some cu rrent market offers to avoid disruption of 
competitive forces.  
It is therefore considered that wholesale regulation (in combination with transparency 
measures) is necessary. The period of regulation is ali gned with that of voice and SMS i.e. up 
to 30 June 2013.  
It is considered that retail price regulation should not be in troduced given the likelihood of 
competitive pressure arising from potential substitute services in the market.  
10. E
VALUATION AND MONITORING  
Extension of the mobile roaming regulation will  continue to be monitored very closely both 
by the NRAs and the Commission. The Commission se rvices consider that  data collection of 
similar scope and frequency should continue to  be carried out during the time span of the 
proposed extension. NRAs will be asked to co llect data on retail an d wholesale voice, SMS 
and data roaming services ever y six months. Evaluation of the effectiveness, efficiency and 
relevance of the roaming regulation will be carried out towards the end of its three-year duration as part of th e review exercise.