Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the outcome of the review of the functioning of Regulation (EC) No 717/2007 of the European Parliament and of the Council of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC {COM(2008) 580 final}
Date: 2008-09-23
Institutions: European Commission
Subjects: approximation of laws, communications systems, mobile phone, regulation of telecommunications, telecommunications, transmission network

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.9.2008 
COM(2008) 579 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on the outcome of the review of the functioning of Regulation (EC) No 717/2007 of the 
European Parliament and of the Council of 27 June 2007 on roaming on public mobile 
telephone networks within the Community and amending Directive 2002/21/EC 

{COM(2008) 580 final} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on the outcome of the review of the functioning of Regulation (EC) No 717/2007 of the 
European Parliament and of the Council of 27 June 2007 on roaming on public mobile 
telephone networks within the Community and amending Directive 2002/21/EC 

(Text with EEA relevance) 

CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

3.3. 

4. 

Introduction .................................................................................................................. 3 

Background .................................................................................................................. 3 

Current Regulation ....................................................................................................... 3 

Overview of the market................................................................................................ 4 

Developments since the adoption of the Regulation.................................................... 5 

Consultation process .................................................................................................... 5 

Review.......................................................................................................................... 5 

Achievement of objectives........................................................................................... 6 

Specific issues .............................................................................................................. 7 

Extension of the Regulation in time and scope............................................................ 8 

Conclusion.................................................................................................................. 11 

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1. 

INTRODUCTION 

The  completion  of  the  single  market  and  the  achievement  of  the  Lisbon  Strategy 
goals to make the EU “the most dynamic and competitive knowledge-based economy 
in  the  world”  remain  at  the  heart  of  the  European  Commission’s  objectives. 
Facilitating cross-border communications is a key enabler to ensure that these goals 
are  met.  Regulation  (EC)  No  717/2007  on  roaming  on  public  mobile  telephone 
networks within the Community and amending Directive 2002/21/EC (hereafter “the 
Regulation”)1, which entered into force in June 2007, is also a prime example of the 
Commission’s policy agenda, “A Europe of results”, which aims to bring benefits to 
all Europe’s citizens, building on the achievements that have been attained by the EU 
to date. 

The Regulation will expire on 30 June 2010 unless extended by Parliament and the 
Council on the basis of a proposal from the Commission. The Regulation therefore 
required  the  Commission  to  review  its  functioning  and  report  to  the  European 
Parliament  and  the  Council  no  later  than  30  December  20082.  The  Commission  is 
charged  with  evaluating  whether  the  objectives  of  the  Regulation  have  been 
achieved, reviewing developments in wholesale and retail charges for the provision 
to roaming customers of voice and data communication services, including SMS, and 
making  recommendations  regarding  the  need  to  regulate  those  services,  if 
appropriate, bearing in mind the interests of consumers.  

This  Communication  reports  on  the  results  of  the  Commission’s  review  of  the 
functioning of the Regulation, explains the main policy changes it proposes to give 
effect  to  its  conclusions  and  is  accompanied  by  a  legislative  proposal  for  the 
Regulation to be amended accordingly. The details and underlying reasoning can be 
found in the legislative proposal and associated Impact Assessment. As was the case 
for the Regulation itself, the legal basis for the new proposal is Article 95 of the EC 
Treaty. 

2. 

BACKGROUND 

2.1. 

Current Regulation 

The  specific  cross-border  characteristics  and  structure  of  the  intra-Community 
roaming  markets  have  made  it  very  difficult  for  national  regulatory  authorities 
(NRAs)  to  deal  effectively  with  the  lack  of  competitive  pressures  and  the  resulting 
high prices for Community-wide roaming services. The European Regulators’ Group 
(ERG), which was established to give expert advice to the Commission on regulatory 
issues with a single market dimension, acknowledged this problem and called on the 
Commission  to  act  at  European  level.  The  Commission  adopted  its  proposal  for  a 
Regulation  on  public  networks  within  the  Community  on  12  July  20063.  In  June 

1 
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3 

OJ L 171, 29.6.2007, p. 32. 
Article 11 of the Regulation. 
Proposal for a Regulation of the European Parliament and of the Council on roaming on public mobile 
networks  within  the  Community  and  amending  Directive  2002/21/EC  on  a  common  regulatory 
framework for electronic communications networks and services - COM(2006) 382, 12.7.2006. 

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2007,  the  European  Parliament  and  the  Council  adopted  the  Regulation  which 
contributed to the smooth functioning of the internal market while achieving a high 
level  of  consumer  protection,  safeguarding  competition  between  mobile  operators 
and preserving both incentives for innovation and consumer choice. 

The Commission has now completed its review of the functioning of the Regulation 
against its main objectives, which are to promote competition, consolidate the single 
market and ensure that consumers do not pay unjustifiably high charges compared to 
domestic charges when crossing a border. 

In its review, the Commission was also tasked with considering whether regulation 
for SMS and data services was necessary in the light of developments following the 
entry into force of the Regulation. 

2.2. 

Overview of the market 

The EU market for mobile roaming services can be divided into voice services, SMS 
and data services. The three segments together in 2007 accounted for €6.54 billion in 
revenues4.  This  corresponds  to  approximately  4.7%  of  the  total  EU  mobile  market. 
While  in  terms  of  revenues,  roaming  services  are  less  important  to  the  mobile 
industry  than  domestic  services,  the  roaming  share  of  an  operator’s  revenue  pie  is 
still significant and typically more attractive than other services from a profit-margin 
perspective. 

In terms of revenue, voice roaming services constituted 79.1% of the overall roaming 
market  in  2007  with  SMS  and  data  roaming  taking  the  remaining  12.3%  and  8.6% 
respectively.  Voice  and  SMS  growth  largely  reflects  the  maturity  of  these  market 
segments; growth for data roaming services is however dynamic and at least in line 
with domestic mobile data services growth. The data segment will therefore overtake 
SMS to become the second-biggest roaming segment in one to two years. 

While  prices  for  voice  roaming  have  decreased  as  a  result  of  the  Regulation,  the 
same trend cannot be seen for SMS roaming, since prices have in general shown little 
movement  over  the  past  year  despite  political  pressure  on  operators  to  act  to  avoid 
regulation.  

On the other hand, prices for roaming data services continue to be high even though 
prices  at  wholesale  and  retail  level  have  shown  a  downward  trend.  There  is  a 
particular  problem  relating  to  the  lack  of  transparency  for  data  roaming  prices  and 
the resulting “bill shocks”. Competitive prices for data roaming are essential in order 
to remove barriers to accessing mobile Internet services when crossing borders.  

4 

This  figure  is  derived  from  a  detailed  data-collection  exercise  undertaken  by  the  national  regulatory 
authorities and the European Commission. Data was collected from 27 NRAs on an individual operator 
basis and were then aggregated by means of a bottom-up approach. 

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2.3. 

Developments since the adoption of the Regulation 

After the adoption of the Regulation, the Commission worked closely with the ERG 
to  monitor  its  implementation.  The  ERG  initiated  an  extensive  data  collection 
exercise which formed the basis for two Benchmark Reports5. 

The  Commission  also  commissioned  a  study  by  independent  consultants  on  data 
roaming services and this was published on 27 June 20086. 

The Commission, on its own initiative, collected data from more than 120 operators. 

2.4. 

Consultation process 

An extensive public consultation was launched on 7 May 2008 with the Commission 
asking for comments on the review of the Regulation and on its possible extension to 
SMS  and  data  roaming  services.  39  questions  were  raised  about  the  general 
functioning of the Regulation as well as specific issues such as inadvertent roaming, 
the effect on smaller operators and domestic prices and the issue of actual vs. billed 
minutes.  45  responses  were  received.  The  non-confidential  responses  have  been 
published7. 

These responses, including the ERG’s response, were considered in the preparation 
of this review.  

In the responses to the public consultation, there was strong support for the view that 
voice regulation should be extended beyond the 2010 deadline. The ERG, individual 
NRAs,  Member  States  and  consumer  organisations  argued  for  retaining  both 
wholesale  and  retail  regulation.  Smaller  operators  also  favoured  extending  the 
duration of the Regulation, at least at the wholesale level. 

There was similar support for regulation of SMS roaming services, particularly in the 
light  of  lack  of  movement  in  retail  prices.  While  the  GSM  Association  and  most 
mobile operators were generally against the continuation of voice roaming regulation 
and  its  extension  to  data  and  SMS  roaming  services,  some  operators  came  out  in 
favour of wholesale regulation for SMS roaming services. 

With  regard  to  data  roaming  services,  there  was  near  consensus  on  the  need  to 
eliminate “bill shock” and concerns were expressed regarding high prices. 

3. 

REVIEW 

Apart from evaluating the objectives of the Regulation, and deciding on whether to 
propose regulation for SMS and data roaming, the Commission was also called upon 
to assess whether, in the light of developments in the market and with regard to both 
competition  and  consumer  protection,  there  is  need  to  extend  the  duration  of  the 

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http://www.erg.eu.int/documents/docs/index_en.htm. 
http://ec.europa.eu/information_society/activities/roaming/docs/study_data_roaming.pdf. 
Website: 
http://ec.europa.eu/information_society/activities/roaming/regulation/consult08/contributions/index_en.
htm. 

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Regulation  or  to  amend  it,  taking  into  account  the  developments  in  charges  for 
mobile voice and data communication services at national level and the effects of the 
Regulation  on  the  competitive  situation  of  smaller,  independent  or  newly  started 
operators. The Regulation further stipulates that if the Commission finds that there is 
such a need, it must submit a proposal to the European Parliament and the Council. 

3.1. 

Achievement of objectives 

The Regulation’s stated objectives were to introduce a common approach to ensuring 
that users roaming within the Community do not pay excessive prices when making 
and  receiving  calls,  thereby  contributing  to  the  smooth  functioning  of  the  single 
market  while  achieving  a  high  level  of  consumer  protection,  safeguarding 
competition between mobile operators and preserving both incentives for innovation 
and consumer choice. 

Implementation  and  the  transition  to  the  “Eurotariff”  in  particular  went  smoothly, 
with  only  a  few  exceptions  noted  by  NRAs.  The  Commission’s  monitoring  of 
implementation indicates that the obligations set out in the Regulation are being met 
and consumers have access to a Eurotariff at or below the price caps permitted by the 
Regulation. Customers have benefited from cheaper roaming tariffs for making and 
receiving  calls.  In  particular,  prior  to  the  entry  into  force  of  the  Regulation,  the 
average price for making a call was €0.7692 wh ile the price for an incoming roaming 
call  was  €0.417.  The  entry  into  force  of  th e  Regulation  meant  customers  benefited 
from lower rates for both making and receiving calls since the maximum price limits 
for  the  Eurotariff  were  set  at  €0.49  (e xcluding  VAT)  for  making  a  call  and  €0.24 
(excluding  VAT)  for  receiving  a  call.  These  have  since  been  reduced  to  €0.46 
(excluding VAT) and €0.22 (excluding VAT) respectively.  

When  the  Regulation  entered  into  force,  400  million  customers  benefited  from  the 
Eurotariff, making it the standard default tariff in the EU. Customers can also avail 
themselves  of  special  offers but  when doing  so  they  pay  on  average  approximately 
the  same  price  per  minute  as  customers  on  the  Eurotariff.  As  a  result,  consumers 
under  the  Eurotariff  on  average  save  36.4%  for  outgoing  calls  and  42.9%  for 
incoming  calls  when  compared  to  prices  for  EU  roaming  services  that  prevailed  in 
early 2007. 

The Regulation has also succeeded in improving transparency for consumers despite 
the fact that a minority of operators were unable to resolve technical problems related 
to the transparency provisions on time. Most operators, however, complied on time 
and where operators had implementation difficulties, NRAs monitored the situation 
to ensure that remedial action was taken in a timely manner. 

However, the problems such as switching costs and lack of adequate substitutability 
that  prevail  in  the  voice  roaming  market  have  remained  intact,  competition  has  not 
developed and prices have in general clustered around the caps. There is therefore a 
significant  risk  that  allowing  the  Regulation  to  expire  could  lead  to  an  increase  in 
prices.  

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3.2. 

Specific issues 

Inadvertent roaming 

Inadvertent roaming has continued to be a contentious issue in border regions. In this 
regard,  the  transparency  obligation  to  inform  customers  of  the  price  when  they  are 
roaming  has  helped  to  make  consumers  aware  that  they  are  inadvertently  roaming. 
NRAs  and  Member  States’  administrations  have  also  responded  by  working 
bilaterally to tackle the issue and several agreements have been reached.  

The  Commission  will  continue  to  monitor  the  situation  to  ensure  the  smooth 
functioning of the single market. 

Impact on smaller operators 

The  Regulation  has  ensured  that  smaller  operators  have  access  to  lower  wholesale 
roaming charges. This has had a positive effect on smaller operators, enabling some 
operators  to  introduce  some  of  the  cheapest  retail  offers  in  the  market.  During  the 
public  consultation,  one  issue  that  came  to  the  fore  is  the  difficulty  for  newly 
established  operators  to  enter  into  new  roaming  agreements  with  all  operators  in  a 
timely manner. This is important where subscribers are unable to exchange roaming 
SMS messages with subscribers of a mobile network in another Member State as a 
result of the absence of an agreement enabling the delivery of such messages.  

NRAs  are  able  to  intervene  under  Article  5  of  the  Access  Directive8  on  their  own 
initiative in order to ensure compliance.  

Traffic steering 

During  the  course  of  the  review  of  the  functioning  of  the  Regulation,  the 
Commission  has  not  identified  or  had  reported  to  it  cases  of  traffic  steering  being 
used to the detriment of consumers. Since operators’ Eurotariffs must comply with a 
maximum price limit, most operators have opted to offer the same tariff irrespective 
of the visited network being used, thus increasing price transparency for consumers 
who do not have to worry about switching manually to a cheaper network. 

Outermost regions 

From  the  Commission’s  review,  it  has  emerged  that  there  has  been  no  negative 
impact with regard to outermost regions. In this regard, it is apparent from the public 
consultation and the Commission’s contacts with the French authorities that the issue 
for  France  has  been  addressed  since  legislation  has  been  enacted  to  ensure  that 
citizens residing in the outermost regions will not be at a disadvantage when they call 
metropolitan France. 

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OJ L 108, 24.4.2002, p. 7. 

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Domestic prices 

The  Commission  has  also  looked  into  whether  there  has  been  any  increase  in 
domestic  prices  that  could  be  attributed  specifically  to  the  Regulation.  It  emerged 
that it would be very difficult to pinpoint any increase in domestic tariffs directly due 
to the introduction of the Regulation. The ERG notes that it is unlikely that domestic 
mobile  prices  will  rise,  because  they  are  the  main  focus  of  competition  for 
consumers.  The  13th  Progress  Report  on  the  implementation  of  the  regulatory 
framework also concluded that prices for mobile services continued their downward 
trend in 20079.  

Unitisation 

While  the  price  limits  in  the  Regulation  are  expressed  in  terms  of  amounts  “per 
minute”,  it  has  become  evident  that  the  billing  practices  of  certain  operators, 
whereby  they  charge  for  voice  calls  by  reference  to  minimum  periods  of  up  to  60 
seconds rather than on a per second basis, are diluting the effects of the Regulation 
and that some operators have changed their billing practices since the adoption of the 
Regulation  to  increase  this  diluting  effect.  Indeed,  the  ERG  has  estimated  that  per 
minute  billing  practices  add  around  24%  to  a  typical  retail  bill  for  calls  made  and 
19% for calls received using the Eurotariff.  

3.3. 

Extension of the Regulation in time and scope 

Voice 

As  can  be  seen  above,  the  fundamental  problems  which  existed  prior  to  the 
Regulation still remain. There is some competition but these offers have made only 
small inroads into the market. 

While voice roaming services may be an important source of revenues and profits for 
a mobile operator, from the point of view of consumers prices for voice roaming are 
only one element of a larger mobile bundle and are a less important element of the 
bundle than, say, domestic voice, domestic SMS or a handset subsidy. This limits the 
ability of operators to use attractive roaming prices as an effective tool for customer 
acquisition.  Furthermore,  the  presence  of  switching  costs  and  the  lack  of  adequate 
substitutability for voice roaming once the customer is abroad reduce the degree of 
expected competition.  

The  unitisation  issue  (per  minute  billing),  as  described  above,  has  shown  that 
operators  have  exploited  a  perceived  latitude  in  the  drafting  of  the  Regulation  to 
maximise their returns to the detriment of other operators (at the wholesale level) and 
consumers.  A  common  set  of  rules  regarding  unitisation  of  Eurotariff  bills  is 
therefore needed to further strengthen the single market and provide a common level 
of protection to consumers. 

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COM(2008) 153, 19.3.2008. 

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The proposal  

1. 

Extension of voice wholesale and retail regulation up to 2013 

The Commission is proposing to extend the Regulation by a further three years from 2010 to 
2013  to  ensure  that  consumers  are  not  charged  excessive  prices  while  providing  sufficient 
time  for  competition  to  develop.  The  maximum  levels  of  the  Eurotariff  for  both  calls  made 
and calls received will continue to decrease annually in a linear fashion during the extended 
period of validity of the Regulation10.  

To  try  and  facilitate  further  competition,  the  Commission  has  sought  to  provide  a  greater 
margin at the retail level by reducing wholesale rates more aggressively. This should increase 
the scope for operators to compete on price at the retail level, thereby maximising the chances 
that a properly competitive market will emerge. 

To  tackle  the  unitisation  issue,  at  the  retail  level  operators  will  be  required  to  bill  their 
customers  on  a  per  second  basis  subject  only  to  the  possibility  to  apply  an  initial  charging 
period of 30 seconds for calls made. No initial charging period is justified in the case of calls 
received.  Similarly,  operators  should  charge  each  other  on  a  per  second  basis  for  the 
wholesale provision of regulated roaming calls. 

SMS 

Prices  for  roaming  SMS  services  have  shown  little  movement  over  the  past  years, 
despite  political  pressure..  The  average  price  for  an  SMS  while  roaming  in  the  EU 
has  only  decreased  marginally  from  29  cents  in  the  third  quarter  of  2007  to  28.5 
cents  in  the  first  quarter  of  2008.  Moreover,  there  seems  little  prospect  of  prices 
decreasing significantly in the future on the basis of industry action alone, given the 
responses from operators to the public consultation. 

The Commission, in its review, has concluded that the levels of both wholesale and 
retail  charges  are  not  justified  by  the  underlying  costs  and,  as  in  the  case  of  voice 
roaming services, there appears to be insufficient competitive pressure on operators 
to bring prices down. 

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The  wholesale  charge  for  making  a  call  will  decrease  from  26  cents  prevailing  on  1  July  2010  to  23 
cents, 20 cents and 17 cents respectively. The price cap for the Eurotariff for making calls will decrease 
from 43 cents to 40 cents, 37 cents and 34 cents respectively while the price cap for receiving calls will 
decrease from 19 cents to 16 cents, 13 cents and 10 cents respectively. 

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The proposal 

2. 

Extension  to  include  regulation  of  SMS  roaming  at  wholesale  and  retail  levels 
up to 2013 and improved transparency 

The Commission is proposing to extend the Regulation in scope by proposing a price cap at 
both wholesale and retail levels for SMS roaming11.  

The Commission is also proposing that customers should be automatically alerted, by means 
of  a  message  service,  each  time  they  enter  a  Member  State  other  than  their  own,  to  basic 
personalised  pricing  information  that  applies  to  the  sending  of  an  SMS  message  by  that 
customer in the visited Member State. 

Data roaming services 

Prices for data roaming services were already high when the Commission proposed 
the  Regulation  in  2006.  However,  the  situation  has  become  more  marked  over  the 
past  year  with  the  advent  of  high-speed  internet  access  or  mobile  broadband 
particularly for laptop users. This has led to the problem of bill shock for users who 
are  accustomed  to  flat-rate  tariffs  at  home  but  can  be  charged  on  a  per-MB  basis 
while  roaming.  Concerns  over  the  level  of  charges  for  such  services  indicate  that 
action is necessary in particular to improve transparency and eliminate bill shock, in 
the interests not only of consumers but also of the mobile operators.  

Moreover, the persistence of particularly high wholesale charges for such services on 
non-preferred  networks  is  caused  by  traffic  steering  difficulties  leaving  operators 
with  no  incentive  to  decrease  wholesale  prices  unilaterally  since  traffic  would  be 
received  irrespective  of  the  price  charged.  This  constrains  the  ability  of  home 
operators  to  predict  their  wholesale  costs  and  to  provide  their  customers  with 
transparent  and  competitive  pricing  packages.  A  wholesale  safeguard  price  limit 
should therefore be set that will decrease exorbitant wholesale prices but still be high 
enough not to distort competition or prevent its development. 

The proposal 

3. 

Increasing transparency and introducing a wholesale safeguard mechanism up 
to 2013 to combat bill shock for data roaming  

The Commission is proposing measures to ensure that roaming customers are kept adequately 
informed  of  the  charges  that  apply  for  data  roaming  services  by  means  of  an  automatic 
message.  

By  1  July  2010  at  the  latest,  operators  must  also  provide  customers  with  a  facility  to  set  a 
financial limit in advance for their data roaming.  

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The wholesale charge that should apply for roaming SMS from 1 July 2009 should not exceed 4 cents 
per  message  on  average  between  any  two  operators  which  reflects  wholesale  costs  actually  incurred. 
From the same date, the retail charge for a roaming SMS should not exceed 11 cents, ensuring both a 
fair return for operators as well as consumer protection. 

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The Commission is also proposing that in order for operators to be able to adopt transparent 
pricing  arrangements  with  the  assurance  that  they  can  anticipate  with  more  certainty  their 
wholesale costs, a safeguard wholesale price limit on data roaming services should be set at a 
level which does not exceed €1 per MB  on average between any two operators. 

4. 

CONCLUSION 

Despite the results achieved by the Regulation, the dynamics of the roaming market have not 
changed  sufficiently  since  the  introduction  of  the  Regulation  to  enable  the  Commission  to 
recommend that the Regulation be allowed to expire in 2010. 

To  improve  the  smooth  functioning  of  the  single  market,  it  is  proposed  to  extend  the 
Regulation to include SMS and data roaming services. Prices for roaming SMS services have 
shown little movement over the past years and there seems little prospect of prices decreasing 
significantly  in  the  future  on  the  basis  of  industry  action  alone.  Concerns  over  the  level  of 
charges  for  data  roaming  indicate  that  action  is  necessary  in  particular  to  improve 
transparency and eliminate bill shock. 

The  Commission  is  proposing  wholesale  and  retail  regulation  for  voice  and  SMS  roaming. 
The proposal aims to maximise the chances that a competitive market may finally emerge by 
increasing the maximum margins between wholesale and retail charges. It is also proposing to 
further  protect  consumers  who  are  overcharged  through  per-minute  billing.  However,  it  is 
proposing  a  different  approach  for  data  roaming  services  given  the  specific  nature  of  the 
problems  encountered.  In  particular,  it  has  considered  that  bill  shocks  are  unacceptable  and 
urgent action is necessary both to improve transparency and to remove exorbitant wholesale 
prices which lead to appreciable distortions of competition.  

Roaming markets exhibit unique characteristics which justify exceptional measures. Given its 
exceptional  nature,  this  intervention  should  therefore  be  time-limited  so  as  to  expire  on  30 
June  2013.  The  Commission  will  continue  to  monitor  the  development  of  the  intra-
Community  roaming  market  and  proposes  a  further  review  with  a  report  to  the  European 
Parliament and the Council in 2011.  

It  is  the  Commission’s  intention  to  do  its  utmost  to  assist  the  European  Parliament  and  the 
Council  in  reaching  an  agreement  on  the  abovementioned  elements  in  the  shortest  possible 
timeframe to ensure that European users of mobile communications services can benefit from 
these proposals by the summer of 2009. This is important to meet citizens’ expectations of the 
EU and ensure that Europe delivers results for its citizens. 

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