Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on roaming on public mobile networks within the Community and amending Directive 220/21/EC on a common regulatory framework for electronic communications networks and services COM(2006) 382 final — 2006/0133 (COD)
Date: 2006-10-26
Institutions: European Economic and Social Committee
Subjects: approximation of laws, communications systems, mobile phone, regulation of telecommunications, telecommunications, transmission network

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Official Journal of the European Union

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The transfer of activity and of know-how can only be
if the legal framework is clearly defined and legal

3.3
successful
certainty is ensured.

— to find a legal solution to the issue of the ownership of the
system and of the intangible and tangible assets, which must
be transferred to the European Supervisory Authority.

3.4
The aim of the proposal is precisely to establish this legal
framework and to ensure this legal security on the essential
issues, which are:

— the taking-over of the Joint Undertaking's activities for the
development phase, which does not currently fall within the
European Supervisory Authority's remit;

— the possibility that

the European Supervisory Authority

might be able to carry out research activities;

3.5
The proposed Regulation meets these requirements and
the Council's clear willingness to avoid any organisational
overlap, which would be both pointless and costly, must be
welcomed.

3.6 With regard to another legal aspect, which is not directly
the Council should
related to the Regulation in question,
consider the issue of the launching States' international liability
for the satellites in the GALILEO constellation.

Brussels, 26 October 2006.

The President of the

European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and of the Council on roaming on public mobile networks within the Com-
munity and amending Directive 220/21/EC on a common regulatory framework for electronic
communications networks and services

COM(2006) 382 final — 2006/0133 (COD)

(2006/C 324/19)

On 4 September 2006 the Council decided to consult the European Economic and Social Committee, under
Article 95 of the Treaty establishing the European Community, on the abovementioned proposal.

On 12 September 2006 the Committee Bureau instructed the Section for Transport, Energy, Infrastructure
and the Information Society to prepare the Committee's work on the subject.

Given the urgent nature of
the European Economic and Social Committee appointed
Mr Hernández Bataller as rapporteur-general at its 430th plenary session, held on 25 and 26 October 2006
(meeting of 26 October), and adopted the following opinion by 131 votes to seven with 12 abstentions.

the work,

to access

to information through its

right
transparency
measures, and defending their economic interests by introducing
a mechanism applying maximum price limits for the provision
of roaming services for voice calls between Member States at
retail and wholesale level.

1. Conclusion and recommendations

The Committee shares the views of

1.1
the Commission
which, in the light of the high prices that mobile users pay for
the ‘international roaming’ service on their mobile handsets, has
presented a proposal for a regulation to provide a harmonised
legal basis for action to facilitate the completion of the internal
market for electronic communications and, at the same time,
put citizens at the centre of Community policy.

The proposal is necessary and proportionate, and raises
1.2
the level of consumer protection by effectively extending their

1.3
in its
The Committee would prefer the Commission,
review of the functioning of the regulation, to base its ensuing
proposals on the ‘calling party pays’ principle. and the ‘home
pricing’ principle under which the prices paid by roaming custo-
mers are similar to those applied by their home network.

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2. Introduction

The Commission has been expressing its concern at the
2.3
high prices of roaming for mobile users travelling in Europe
since the end of the last decade, through a number of initiatives:

Europeans' increasing mobility outside their own coun-
2.1
tries and,
in particular, within the EU, has generated an
increasing need to ensure telephone communication through
the ever-growing numbers of mobile handsets. Users' ability to
make and receive calls when travelling abroad, thanks to agree-
ments between the operators in different countries, is known as
‘roaming’.

2.1.1
This involves services provided by a national mobile
network operator (visited network) to a mobile operator in
another country (home network). The market usually comprises
the following services:

— to mobile operators of another Member State or a third

country of access from a mobile location;

— to mobile operators of another Member State or a third
country from which calls are made from a mobile location;

— to mobile operators within a Member State or a third
country from which data is being transmitted from a mobile
location;

— to mobile operators within a Member State or a third
country of transit of both voice calls and data transmission
to users of mobile or
international
networks.

fixed, national or

2.1.2
It is estimated that almost 150 million Europeans are
already using this service, either when on holiday or, to a much
greater extent (accounting for some three-quarters of the total),
for work purposes.

2.2
Roaming unarguably offers economic and social benefits
to users, but has also been repeatedly criticised by users,
consumer organisations, regulatory authorities and politicians
on account of its prices, which are much higher than those paid
for national calls. Critics also point out that roaming prices are
far from transparent for end users; they are unjustified in view
of the costs involved in providing the service, and vary widely
between countries and operators: broadly speaking, prices range
from EUR 0.20 paid by a Finnish user calling home from
Sweden, and EUR 13.05 paid by a Maltese user in Latvia.
According to several studies of the sector, operating companies
are earning some EUR 8.5 billion a year across the EU for this
service, representing between 3 % and 7 % of their turnover —
and which is still rising.

— In mid-1999, the Commission decided to carry out a sector
enquiry
roaming
services, and opened proceedings against certain mobile
operators in the United Kingdom and Germany.

covering national

and international

— After establishing,

in 2002, the regulatory framework for
electronic communications (1), the Commission Recommen-
dation of 11 February 2003 (2) on relevant product and
service markets within the electronic communications sector
included the national wholesale market
for international
roaming on public mobile networks among the relevant
services for the purposes of ex ante regulation.

— In May 2005, the European Regulators Group (3) noted that
retail charges were very high without clear justification; that
this appeared to result both from high wholesale charges
in
levied by the foreign host network operator and also,
many cases, from high retail mark-ups charged by the custo-
mer's own network operator; that reductions in wholesale
charges were often not passed through to the retail
customer; and that consumers often lacked clear information
on the charges for roaming.

(1) Directive 2002/21/EC of 7 March 2002 on a common regulatory
framework for electronic communications networks and services, the
‘Framework Directive’ (OJ L 108 of 24.4.2002, p. 33). The following
were also adopted on the same day: Directive 2002/19/EC on access to,
and interconnection with, electronic communications networks and
associated facilities, the ‘Access Directive’ (OJ L 108 of 24.4.2002, p. 7);
Directive 2002/20/EC on the authorisation of electronic communica-
tions networks and services, the ‘Authorisation Directive’ (OJ L 108 of
24.4.2002, p. 21); and Directive 2002/22/EC on universal service and
users' rights relating to electronic communications networks and
services, the ‘Universal Service Directive’ (OJ L 108 of 24.4.2002,
p. 51). Directive 2002/58/EC of 12 July 2002 concerning the proces-
sing of personal data and the protection of privacy in the electronic
communications sector (OJ L 201 of 31.7.2002, p. 27) should also be
added to this list.

(2) Commission Recommendation of 11 February 2003 on relevant
product and service markets within the electronic communications
sector susceptible to ex ante regulation in accordance with Direc-
tive 2002/21/EC of the European Parliament and the Council on a
common regulatory
communication
networks and services — C(2003) 497, OJ L 114 of 8.5.2003, p. 45. It
identifies 18 markets which are presumed to have been defined in
accordance with the provisions of Community law.

framework for

electronic

(3) See Commission Decision 2002/627/EC of 29 July 2002 establishing
the European Regulators Group for Electronic Communications
Networks and Services (OJ L 200 of 30.7.2002, p. 38), as amended by
Commission Decision 2004/641/EC of 14 September 2004 (OJ L 293
of 16.9.2004, p. 30).

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— In October 2005 the Commission drew attention to the
problem of high international roaming charges and the lack
of price transparency by publishing a consumer information
website that not only corroborated the fact that charges are
in many cases manifestly excessive, but showed a variation
in prices across the Community that could not be justified
for calls with the same characteristics.

— The European Parliament, in its resolution of 1 December
2005 (4) on European electronic communications regulation
and markets 2004, welcomed the Commission's initiative on
transparency in the international roaming sector and called
on the Commission to develop new initiatives in order to
reduce the high costs of cross-border mobile telephone
traffic.

— In December 2005, the European Regulators Group alerted
the European Commission to its concern that measures
being taken by national authorities would not resolve the
problem of high prices, noting that roaming creates a clearly
exceptional
instance where an apparent case of consumer
detriment is not prospectively solved simply by applying the
above-mentioned framework.

— In March 2006 the European Council noted the importance
for competitiveness of reducing roaming charges,
in the
context of the need for focused, effective and integrated
information and communication technology (ITC) policies
both at European and national level, in order to achieve the
renewed Lisbon Strategy goals of economic growth and
productivity (5).

the European institutions,

In spite of the clear diagnosis provided by the criticisms,
2.4
the measures
the initiatives of
adopted by some Member States and even the reductions in
charges made by certain operators, it has not yet been possible
to adopt effective and speedy measures to achieve a substantial
and harmonised reduction of roaming prices in the EU.

2.5
After examining various regulatory options and their
consequences, on 12 July 2006 the Commission eventually
presented a proposal for a regulation on roaming on public
mobile networks in the EU, which seeks to limit the prices that
operators can charge each other for handling mobile calls, and
the price charged to the user for making and receiving such
calls outside their home country but within the European
Union. The regulation would amend the present framework
regulation for electronic communications, laid down by Direc-
tive 2002/21/EC.

(4) EP Resolution 2005/2052 (INI).
(5) Communication to the Spring European Council — Working together
for growth and jobs — A new start for the Lisbon Strategy, COM(2005)
24 of 2.2.2005 and the Presidency Conclusions of the Brussels Euro-
pean Council, 22-23 March 2005.

3. The Commission's proposal

The Commission's purpose with the proposed regulation
3.1
is to establish a harmonised, objective, coherent and propor-
the
tionate legal basis which facilitates the completion of
internal market in electronic communications,
is in keeping
with the renewed Lisbon Strategy for promoting growth and
employment through greater competitiveness, and responds to
the Commission's associated i-2010 initiative.

Such a basis would enable maximum limits to be set for
3.2
the charges applied by terrestrial mobile operators within the
European Community for the provision of roaming services for
voice calls between Member States regarding both wholesale
charges between network operators, and the retail charges of the
original provider. The maximum price limits would have to take
account of the different elements involved in making an interna-
tional roaming call (including overheads, signalling, call origina-
tion, transit and termination) and the differences in the under-
lying costs of providing the service.

Under the ‘European Home Market Approach’, the aim is
3.3
to ensure a high level of protection for users of public mobile
telephone networks travelling within the Community, while
safeguarding competition between mobile operators, allowing
them to differentiate the products they offer and to adapt their
pricing structures to market conditions and consumer prefer-
ences.

3.4

Price limits are to be set as follows:

— Wholesale prices for calls made to a destination within a
visited country cannot be more than twice the Community
average mobile termination rate for mobile network opera-
tors designated as having significant market power. The
average mobile termination rate is considered to be a reliable
benchmark, as these termination rates are already subject to
regulatory supervision in accordance with the 2002 regula-
tory framework for electronic communications, and should
be determined by reference to the principle of cost-orienta-
tion.

— For calls made from the visited country back to the home
country or a third Community country, the price may not
be more than three times the above-mentioned average rate.

— At retail

the applicable wholesale limit

level, for the same categories of roaming call, a
limit of 130 % of
is set,
excluding VAT but including any fixed elements associated
with the provision of regulated roaming calls, such as call
set up charges or opt-in fees. The price limits laid down for
retail charges for making regulated roaming calls will take
legal effect six months after the entry into force of the
proposed measure, so that service providers can make the
necessary adaptations.

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— The proposal also sets a limit of 130 % of

the average
mobile termination rate for the charges paid by roaming
customers for receiving calls when in a Community country
other than their home country, excluding VAT but including
any fixed elements associated with the provision of regulated
roaming calls, such as call set up charges or opt-in fees.

3.5
The draft regulation also addresses the need for price
transparency, by introducing an obligation upon mobile provi-
ders to give personalised information on retail roaming charges
to their roaming customers on request. This information is to
be free of charge, and customers may choose whether to receive
the information by Short Message Service (SMS) or orally over
their mobile telephone. Mobile providers will also be obliged to
provide information on roaming charges when subscriptions are
taken out, on a periodic basis and when there are substantial
changes to roaming charges.

The pricing requirements of

3.6
the proposed regulation
should apply regardless of whether roaming customers have a
pre-paid or a post-paid contract with their home provider, to
ensure that all users of mobile voice telephony may benefit
from its provisions.

The draft regulation gives the national regulatory autho-
3.7
in line with their
to enforce compliance,
rities the power
existing roles under the Community regulatory framework for
electronic communications. As well as being responsible for
communicating the average mobile termination rate,
to be
published on a regular basis by the Commission, they are also
given the task of monitoring developments in retail and whole-
sale prices for the provision of voice and data communications
services, including SMS and Multimedia Message Service (MMS),
to mobile customers when roaming in the Community. This
applies in particular to the outermost regions, in order to assess
viability and recovery of costs by operators and, where appro-
priate, to determine the penalties for infringement.

3.8
The measures necessary for the implementation of the
regulation should be adopted in accordance with Council Deci-
sion 1999/468/EC of 28 June 1999 laying down the procedures
implementing powers conferred on the
for the exercise of
Commission (6). The period laid down in Article 5(6) of Deci-
sion 1999/468/EC is three months. The Commission is to be
assisted by the Communications Committee set up Article 22 of
Directive 2002/21/EC.

4. General comments

The Committee appreciates

the effort made by the
4.1
Commission to lay down a legal basis enabling the adoption of
effective measures to reduce charges for roaming on mobile
voice telephony services in Europe. It is worth noting that the
Commission calculates that a reduction of up to 70 % in
roaming prices would be possible, representing a saving for
consumers of some EUR 5 billion.

4.1.1
The Committee considers that the proposed measure
brings a high level of consumer protection in two ways: firstly
in terms of their economic interests, by reducing roaming costs;
and secondly, by increasing price transparency by means of
promoting users' right to access to information. It agrees with
the criteria which have prompted the Commission to present
this proposal, which it supports.

4.2
The Committee is also aware of the difficulty in reaching
agreement on these measures to reduce roaming prices, given
the reluctance of certain regulatory authorities and operators.
The main criticisms have been that the Commission's proposal
goes too far along the regulatory path; there has not been
enough consultation with the relevant actors; the deadlines for
application are too short, not allowing operators to adjust; the
companies involved should be given an opportunity to practice
self-regulation; action could have been taken on retail prices but
not wholesale charges; the initiative could be particularly preju-
dicial to operators in countries with large numbers of visitors,
or could have the unwanted effect of generating higher prices
for other telecom services and jeopardising future investment
needs for the development of electronic communications (3G,
broadband, etc.).

4.3
On the other hand, it should be pointed out that tele-
phone operators' earnings are so high that their economic viabi-
lity is guaranteed even with a reduction in roaming rates, as
recognised in operators' own sectoral studies.

4.3.1
The choice of a regulation is justified since, while the
efforts to reduce roaming prices on the part of some operators
are recognised, experience shows that such initiatives fail to
guarantee either the rapidity or the degree of harmonisation
required for a solution to the problem.

3.9
The proposal provides for a review of the regulation after
two years. This means that if at that time market developments
show that the regulation is no longer required, the Commission
will consider proposing its repeal, in line with the principles of
better regulation.

(6) OJ L 184 of 17.7.1999, p. 23.

4.3.2
The Committee considers that a regulation is needed,
as it can then be applied directly by the Member States. This
makes it preferable to simple market self-regulation or measures
that Member States might themselves adapt, given the transna-
tional character of roaming. This is a cross-border issue which
national regulatory authorities are unable to tackle.

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4.4 Moreover, the possibility in the future of creating virtual
operators points to the dangers of adopting different decisions
the EU, which could compromise the
for different parts of
overall
telecommunications
development
throughout Europe.

electronic

of

4.5
Together with all the above points, the EESC regrets that
the Commission's measures to bring an end to the excessive
charging for this service by operators fall far short of users'
expectations, and indeed short of
the
Commission itself had originally envisaged.

the measures

that

to the new situation, and calls for this delay to be

adapt
removed.

It

is however considered more reasonable for

the
4.8.2
proposed regulation to include a number of
transitional
measures for a period of six months, introducing measures to
offset the imbalances which might result for some operators
from the implementation of the regulation, especially in the
new Member States — provided that such transitional arrange-
ments are not discriminatory towards consumers in these coun-
tries.

The Committee believes that

the aim should be to
4.6
remove all differences
in roaming-related charges between
Member States, without undermining whatever competition
may develop between the products offered by the different
operators. In practice, this means customers pay the same price
as in their home country, regardless of where they are (the
‘home pricing’ principle). The goal of domestic and roaming
price parity is not achieved with the draft regulation, in spite of
the reduction in charges.

4.7
The proposed regulation sets limits on the prices to be
paid by roaming customers for calls received, but does not
abolish such payments, as long demanded by user companies
and consumers, and as the Commission had originally envi-
saged. The Committee believes that future efforts should be
directed to introducing the ‘caller pays’ principle, which is fairer.

4.8
The Committee regrets that the Commission has not
assessed the possible social impact on employment of adopting
this measure, and hopes that its implementation will not under-
mine either employment or working conditions in the sector:
on the contrary,
it hopes that the expectations raised by the
European Social Agenda (7) can be upheld.

4.8.1
The Committee views the six month delay before the
entry into force of the retail charge limits — the price paid by
final users — to be excessive, given that operators can easily

Brussels, 26 October 2006.

4.9
The Committee hopes that the implementation of the
regulation will not lead to an adjustment in mobile charges,
whereby certain operators, under specific circumstances, attempt
to recover costs by increasing their gains from other services.
For this reason,
it must be ensured that the mechanisms for
setting wholesale and retail charges cover all service costs.

4.9.1
However, given the highly dynamic nature of the elec-
tronic communications market, the Committee agrees with the
Commission's intention to review the functioning of the regu-
lation no later than two years after its entry into force. In the
planned report,
include its reasoning
regarding the continued need for regulation or the possibility of
its repeal, in the light of developments in the market and with
regard to competition.

the Commission must

4.9.2 When the functioning of the regulation is reviewed, its
impact on employment and working conditions, and on opera-
tors' investment, must be assessed in order to identify the conse-
quences.

4.10
The Committee believes that the opportunity provided
by the adoption of the regulation should be used to resolve
other roaming-related problems, apart from unfair pricing of
services, such as the equally unfair activation of
roaming
services in border areas between EU countries.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(7) COM(2005) 33 final. Communication from the Commission on the

Social Agenda.