REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the review of the wholesale roaming market
Date: 2016-06-15
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: European Economic Area, consumer protection, mobile phone, price regulations, regulation of telecommunications, single market, telecommunications policy, telephone charges, transmission network, wholesale trade

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 15.6.2016  COM(2016) 398 final   REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the review of the wholesale roaming market {SWD(2016) 200 final}  
 
 
1.  INTRODUCTION 

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  introduced 
binding maximum retail and wholesale roaming charges. 

The ultimate objective of these measures was to ensure that market forces would achieve a 
single market for mobile communication services in which no differentiation exists between 
national and roaming tariffs; accordingly, the Commission was required to verify whether the 
measures achieved this objective1. However, although wholesale and retail roaming charges 
decreased following the adoption of these measures, differences remained between roaming 
and  national  tariffs.  For  this  reason,  given  that  eliminating  differentiation  between  national 
and roaming retail tariffs is an important part of an effective and functioning telecom single 
market,  the  Commission  considered  it  necessary  to  take  further  measures  to  pursue  this 
objective. 

The  elimination  of  roaming  surcharges  was  reaffirmed  as  a  general  policy  objective  in  the 
Commission’s Digital Single Market Strategy which includes it as an important element for 
creating the right conditions for digital networks and services to flourish2. 

In  2015,  the  European  Parliament  and  the  Council  adopted  Regulation  (EU)  2015/21203, 
which entered into force on 29 November 2015 and, inter alia, amended Regulation (EU) No 
531/20124 (the Roaming Regulation). Regulation (EU) 2015/2120 introduced the abolition of 
retail roaming surcharges in the Union from 15 June 2017, subject to fair usage of roaming 
services and allowing for the possibility for operators to apply for a derogation in exceptional 
cases where a roaming provider is not able to recover its overall actual and projected costs of 
providing regulated roaming services from its overall actual and projected revenues from the 
provision  of  such  services.  This  new  regulatory  regime  for  retail  roaming  services  in  the 
Union is referred to as the ‘roam-like-at-home’ (RLAH) regime in this report. 

However,  Regulation  (EU)  2015/2120  did  not  provide  for  measures  on  the  wholesale 
roaming market, because additional investigation of market conditions was necessary. 

For the abolition of retail roaming surcharges to be sustainable throughout the EU, national 
wholesale  roaming  markets  in  the  EU  need  to  be  competitive  and  to  deliver  wholesale 
roaming charges that enable operators to sustainably offer retail roaming services without any 
additional charges.  

Since  a  wholesale  roaming  market  functioning  properly  is  a  precondition  for  achieving  the 
RLAH regime, the Roaming Regulation entrusted the Commission with the task of reviewing 

1 See in particular Article 19(2) of the original wording of Regulation (EU) No 531/2012, which called upon the 
Commission  to  make  appropriate  proposals  if  differences  between  roaming  and  national  tariffs  had  not 
approached zero. 
2 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social  Committee  and  the  Committee  of  the  Regions,  A  Digital  Single  Market  Strategy  for  Europe, 
COM(2015)192final, 6.5.2015. 
3 Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 laying down 
measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ 
rights  relating  to  electronic  communications  networks  and  services  and  Regulation  (EU)  No  531/2012  on 
roaming on public mobile communications networks within the Union. 
4Regulation (EU) No 531/2012 of the European Parliament and of the Council of 13 June 2012 on roaming on 
public mobile communications networks within the Union.  

2 

 
 
 
                                                            
the wholesale roaming markets and making appropriate proposals to enable the abolition of 
retail roaming surcharges in the Union from 15 June 20175.  

This report presents the results of the Commission’s wholesale roaming review. In section 2 
of the report, the Commission analyses the functioning of wholesale roaming markets in the 
Union  under  current  Regulation.  In  section  3,  it  presents  its  proposal  on  how  to  enable 
through measures at wholesale level the abolition of retail roaming surcharges in the EU from 
15 June 2017.  

In order to gather the necessary evidence for this review, the Commission:  

 

in cooperation with the Body of European Regulators for Electronic Communications 
(BEREC), collected comprehensive data from operators in autumn 20156;  

  commissioned an external study to estimate the costs of providing wholesale roaming 

a 

12-week 

public 

consultation 

from 

26 November 2015 

to 

services7;  
  organised 

18 February 20168.  

This report is accompanied by a legislative proposal to amend the Roaming Regulation. The 
details and underlying reasoning of this proposal can be found in the legislative proposal9 and 
associated impact assessment10. The detailed methodology and results of the analysis of the 
functioning  of  wholesale  roaming  markets  in  support  of  this  report  can  be  found  in  the 
accompanying staff working document (SWD)11 

2.  FUNCTIONING OF THE WHOLESALE ROAMING MARKETS IN THE EU 

In accordance with Article 19 of the Roaming Regulation, the Commission has assessed the 
following12:  

 
 
 

the developments in competition in the retail roaming markets;  
the costs of providing wholesale roaming services in the EU; 
the degree of competition in national wholesale markets. 

The Commission has also assessed the anticipated impact of the retail RLAH obligation on 
the functioning of wholesale roaming markets. 

5 In accordance with Article 19 of the Roaming Regulation. 
6 The data collected were analysed in collaboration with the Commission's Joint Research Centre (JRC). 
7  European  Commission,  Assessment  of  the  cost  of  providing  wholesale  roaming  services  in  the  EEA’,  Final 
report, study conducted by TERA Consultants, to be published. 
8  A  summary  and  the  full  synopsis  report  of  the  results  of  the  public  consultation  are  available  here: 
https://ec.europa.eu/digital-single-market/en/news/summary-report-public-consultation-review-national-
wholesale-roaming-markets-fair-use-policy.  In  addition  to  questions  on  the  wholesale  roaming  review,  the 
public consultation included two sets of questions on fair use policy and the sustainability mechanism provided 
for in the Regulation. The Roaming Regulation confers implementing powers on the Commission on these two 
topics. 
9  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 
10  Commission  Staff  Working  Document  Impact  Assessment  accompanying  the  Proposal  for  a  Regulation 
amending Regulation (EU) No 531/2012 as regards rules for wholesale roaming markets 
11  Commission  Staff  Working  Document  accompanying  the  Report  from  the  Commission  to  the  European 
Parliament and to the Council on the review of the wholesale roaming market 
12 The other elements for the review set out in Article 19 of the Roaming Regulation have been considered by 
the  Commission  in  assessing  the  most  appropriate  regulatory  measures  (see  section  3  below  and,  for  more 
details, the accompanying Impact Assessment). 

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2.1. Competition developments in retail roaming markets 

BEREC  analysis13  shows  that  there  have  been  some  important  developments  on  the  retail 
roaming markets recently, with domestic offers proposing more affordable roaming prices to 
customers. However, as noted by BEREC, most of the new, RLAH-like, retail roaming offers 
are not real RLAH offers in the sense of the Roaming Regulation, i.e. covering the whole of 
the  Union  for  no  additional  surcharge  (no  add-on)  within  fair-use  limits.  In  addition,  these 
developments are unevenly distributed across Member States. 

At  the  current  levels  of  competition  in  wholesale  roaming  markets,  the  retail  markets  have 
not  been  capable  of  delivering  full  Union-wide  RLAH.  Potential  technological  and  service 
developments like the spread of over-the-top services and embedded SIMs do not constitute a 
full  and  operational  substitute  for  retail  roaming  services  so  far14.  Therefore,  their  current 
market  pressure  has  remained  limited,  and  this  does  not  seem  likely  to  change  in  the  near 
future. 

2.2. Assessment of the cost of providing wholesale roaming services 

Assessing the costs of providing wholesale roaming services is a delicate and complex task. 
There is no unique method to analyse and assess those costs and each method implies a large 
set  of  choices  and  assumptions  with  both  merits  and  limitations.  In  recent  years,  national 
regulatory  authorities  (NRAs)  have  acquired  a  solid  experience  in  cost  modelling  for  the 
purpose  of  regulating  termination  rates  taking  into  account  Commission  Recommendation 
2009/396/EC on the regulatory treatment of fixed and mobile termination rates in the EU15. 
The external study built on this experience and developed a cost model that takes countries’ 
specific  features  into  account  as  much  as  possible16.  For  that  purpose,  NRAs  provided  the 
contractor with detailed information on their respective cost models as well as country input 
data.  In  addition,  the  study  used  data  from  operators  on  costs  that  are  specific  to  roaming 
services,  such  as  roaming  operational  and  management  costs,  roaming  financial  and  data 
clearing costs, roaming negotiation and contract management costs.  

While a certain degree of uncertainty necessarily remains over the cost estimates provided by 
the  cost  model,  they  provide  a  useful  benchmark,  which  may  be  used  in  conjunction  with 
other  data  sources  and  observations,  in  particular:  effective  wholesale  roaming  charges 
observed  on  the  market,  domestic  retail  and  wholesale  prices,  and  for  voice,  national 
regulated mobile termination rates (MTRs). 

Based on these different data sources, the cost of providing wholesale roaming services in the 
European Economic Area (EEA) can confidently be assumed to be below 4 €cent/minute17, 1 
€cent/SMS and 0.85 €cent/MB, including transit costs borne by the visited operator. 

On the specific issue of the impact of seasonality on the cost of providing wholesale roaming 
services, a number of Member States explicitly stressed, in a joint political declaration made 
when Regulation (EU) 2120/2015 was adopted, the need to ‘take into account the impact of 

13 BEREC Report on the wholesale roaming market, BoR(16)33, February 2016, section 2.3. 
14 See section 4 of the accompanying SWD. 
15 Commission Recommendation of 7.5.2009 on  the Regulatory Treatment of Fixed and Mobile Termination 
Rates in the EU, C(2009)3359final 
16 See section 5 of the accompanying SWD. 
17  The  cost  estimate  for  voice  provided  by  the  cost  model  is  slightly  higher  than  4  €cent/minute  in  Malta. 
However, this estimate is at odds with the average wholesale roaming charge for unbalanced traffic reported in 
2015 by operators of this country (3.7 €cent/minute).  

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seasonality  on  the  cost  structure  of  the  service  providers  operating  in  tourist  areas’18.  The 
impact  of  roaming  seasonality  was  carefully  analysed  in  the  study  using  the  best  available 
data to quantify it19.  

Due  to  massively  increasing  domestic  demand  for  data  services,  the  needs  of  networks  to 
support domestic users tend to exceed the summer seasonal peak only a few months after that 
peak, and in any case before it recurs the year after. Accordingly, since networks are already 
being  dimensioned  and  expanded  to  cope  with  this  general  upward  trend,  any  peak  due  to 
seasonal roaming flows does not seem to provoke any generalised increase in network costs 
due to data roaming under RLAH conditions. 

While seasonality-related costs are not negligible for voice services in some countries20, the 
effective  impact  of  seasonality  on  the  estimation  of  the  upper  bound  of  wholesale  roaming 
costs  in  the  EEA  remains  small.  This  is  because  countries  where  seasonality  effects  are 
assessed  as  the  highest  (Croatia,  Greece,  Spain,  Bulgaria)  are  not  among  the  higher  cost 
countries  for  voice  origination  services  (Malta,  Sweden,  Netherlands,  Latvia).  The 
seasonality effects measured in the higher cost countries for voice are smaller. 

2.3. Degree of competition in wholesale roaming markets in the EEA 

Wholesale roaming markets display a number of market failures which have been described 
in the past21. Wholesale roaming markets have an oligopolistic character: in order to provide 
roaming services to its customers, an operator can buy wholesale roaming services from only 
three  to  four  operators  in  a  given  country,  and  some  of  these  operators  may  be  difficult  to 
avoid for network coverage and capacity reasons. Operators have only imperfect substitutes 
at the wholesale level as well, a situation that a previous report ordered by the  Commission 
already  analysed22.  Wholesale  roaming  agreements  are  generally  driven  by  the  amount  of 
traffic  that  the  visiting  operator  is  able  to  offer  during  bilateral  negotiations.  The  main 
negotiation  driver  in  bilateral  roaming  agreements  is  the  amount  of  inbound  and  outbound 
traffic that can be balanced between each pair of operators, rather than the final price agreed 
for  the  unbalanced  part.  Mobile  virtual  network  operators  (MVNOs)  and  smaller  operators 
with low volumes of traffic usually obtain no, or only limited, discounts from the maximum 
wholesale roaming charge provided in the Roaming Regulation. 

To reduce the excessive wholesale roaming charges resulting from this not fully competitive 
market,  these  charges  have  been  capped  by  successive  Union  regulations.  These  caps  are 

18  ‘As  well  as  all  the  situations  where  there  are  significant  traffic  imbalances  related  to  seasonality  issues  or 
resulting from different travel patterns across Member States, which is likely to be accentuated by the expected 
surge in demand resulting from the elimination of the surcharges’; see Doc 12279/15 of 29 September 2015. 
19 Quarterly data on roaming traffic from BEREC, data provided by some NRAs and operators, monthly data on 
nights spent by non-residents by country from Eurostat. 
20 The theoretical estimation exercise is particularly difficult given the localised impact of seasonal peaks (and 
similarly  localised  impact  of  counterbalancing  effects),  possible  congestion  mitigating  techniques  and  the 
limited granularity (in geography and time) of available data. Potential extra costs for seasonal peaks for some 
countries are spread over all users (domestic and roamers) due to significant seasonal in-country displacement to 
touristic areas and due to the compensating effect of roamers on capacity usage in metropolitan areas during the 
summer holiday season. 
21  European  Commission,  Impact  assessment  of  policy  options  in  relation  to  the  Commission  review  of  the 
functioning of Regulation (EC) No 544/2009 of the European Parliament and of the Council of 18 June 2009 on 
the  Community,  COM(2011)407final, 
roaming  on  public  mobile 
SEC(2011)871final) 
22 WIK-Consult (2010), Study on the Options for addressing Competition Problems in the EU Roaming Market, 
SMART 2010/018, December, p. 20-23. 

telephone  networks  within 

5 

 
 
                                                            
currently set at 5 €c/min, 2 €c/SMS and 5 €c/MB by the Roaming Regulation. The effective 
degree of competition in wholesale roaming markets as currently regulated has been assessed 
during this review23. 

Evolution of wholesale roaming charges since 2007 

The  evolution  of  wholesale  charges  for  voice  and  SMS  roaming  services  has  been  very 
closely  aligned  with  the  successive,  decreasing  wholesale  charges  caps  set  at  Union  level 
since  200724.  In  the  case  of  wholesale  roaming  charges  for  data,  market  prices  have  been 
substantially  lower  than  the  successive  caps  over  the  2009-2015  period  (the  first  wholesale 
roaming data charge cap became applicable in 2009). 

Roaming traffic flows in the EEA 

linguistic,  cultural  and  economic 

Observed  patterns  of  voice  roaming  traffic  between  EEA  countries  reflect  to  some  extent 
links  between  countries25. 
particular  historical, 
Inbound/outbound roaming traffic ratios for the three mobile services (voice, SMS, data) tend 
to  confirm  a  north/south  divide  in  Europe  between  high-tourism  southern  locations  and 
lower-tourism  northern  locations.  However,  this  divide  is  not  systematic.  Cyprus,  Greece, 
Malta and Spain stand out  as  very pronounced net receivers of roaming  traffic for all three 
services,  while  Ireland,  the  Netherlands,  Norway,  Slovakia  and  the  UK  are  pronounced  net 
senders. Some countries, such  as  France, Italy, Latvia, Lithuania  and Sweden, have  a  more 
balanced situation. 

Functioning of wholesale roaming markets 

Stakeholders widely acknowledged in the public consultation that any competitive dynamics 
on  the  wholesale  roaming  markets  in  the  EU  are  essentially  linked  to  existing  Union 
wholesale  roaming  charges  caps,  which  provide  a  starting  point  for  price  negotiations  in 
bilateral roaming agreements. Without regulation at Union level, wholesale roaming charges 
would  be  higher  than  they  are,  as  evidenced  by  unregulated  wholesale  roaming  charges 
applied  in  the  Union  before  the  regulating  measures  were  enacted  and  outside  the  Union 
currently. Due to the market failures described above, the wholesale roaming market would 
still exhibit structural problems if the regulation would be removed. 

As  regards  regulation  at  Union  level,  the  review  shows  that,  while  national  wholesale 
roaming  markets  show  a  certain  degree  of  competition  in  all  Member  States26,  in  certain 
national  wholesale  roaming  markets  the  observed  prices  are  substantially  above  estimated 
costs. Only the unbalanced part of roaming traffic experiences some price competition (prices 
for the balanced part usually remain close to the cap level). However, those prices are usually 
well above domestic wholesale prices (where these are known) by an amount that cannot be 
justified by roaming-specific costs. Group operators with a footprint in several countries can 
steer  traffic  within  their  networks  and  internalise  wholesale  roaming  costs.  Also,  they 
typically  negotiate  wholesale  roaming  charges  with  other  operators  at  group  level,  so  that 
members of the group get more attractive terms and prices from the group’s higher volume 
commitments.  In  contrast,  a  number  of  market  players,  in  particular  smaller  operators  with 

23 See section 6 of the accompanying SWD. 
24 International roaming BEREC Benchmark Data Report April — September 2015, BoR(16)28, February 2016. 
25 BEREC Report on the wholesale roaming market, BoR(16)33, February 2016, section 2.4. 
26  In  particular,  wholesale  roaming  prices  for  unbalanced  traffic  have  been  below  the  caps  in  recent  years, 
though still significantly in excess of most operators’ estimated production costs. 

6 

 
 
                                                            
smaller  traffic  volumes  and  MVNOs,  do  not  generally  benefit  from  wholesale  roaming 
charges substantially lower than the caps. 

In  general,  operators  whose  outbound  roaming  traffic  (largely)  exceeds  inbound  roaming 
traffic  seek  to  minimise  the  wholesale  charges  to  be  paid  to  visited  networks  for  providing 
retail  roaming  services  to  their  subscribers.  They  therefore  favour  low  wholesale  roaming 
charges.  In  contrast,  operators  whose  inbound  roaming  traffic  (largely)  exceeds  outbound 
roaming traffic seek to maximise their revenues from providing wholesale roaming services. 
They therefore favour higher roaming charges. 

Depending on their respective positions and bargaining power in bilateral wholesale roaming 
negotiations,  operators  expressed  different  perceptions  of  the  effective  functioning  of 
wholesale roaming markets in the public consultation27.  

Certain  historic  incumbents,  operators  with  a  large  footprint  and  generally  operators  with 
large inbound roaming  traffic argue that wholesale roaming  markets are competitive on the 
grounds that wholesale market charges are often below the current regulatory caps.  

Other  operators,  in  particular  smaller  ones,  MVNOs,  and  operators  with  large  outbound 
roaming traffic, argue that prices available to them on the wholesale market are at or close to 
the current caps, but in any case substantially above costs and far too high for their respective 
domestic  charging  models  to  be  sustainable  once  retail  roaming  surcharges  would  be 
abolished in June 2017.  

MVNOs  also  argue  that  wholesale  charges  they  have  to  pay  for  roaming  are  a  multiple  of 
wholesale tariffs they pay domestically to their host mobile network operators, which shows 
that  even  if  mobile  network  operators  do  compete  to  offer  domestic  wholesale  services  to 
MVNOs, they apparently do not actively compete to offer them wholesale roaming services. 

2.4. Anticipated impact of the retail RLAH obligation on the functioning of 

wholesale roaming markets 

The retail RLAH obligation may affect the functioning of the wholesale roaming market in 
different  ways.  An  RLAH-triggered  increase  in  roaming  traffic  may  contribute  to  reducing 
wholesale roaming charges due to economies of scale. In contrast, the obligation on the home 
operator  to  provide  RLAH  to  its  customers  could  exacerbate  and  aggravate  the  structural 
differences  and  imbalances  in  market  players’  relative  negotiating  positions  in  bilateral 
roaming negotiations. This would strengthen further the negotiating position of net receivers 
of roaming traffic and weaken that of net senders.  

In  addition,  under  RLAH,  the  visited  operator  may  attempt  to  recover  part  of  the  lost 
revenues  on  its  retail  roaming  arm  (as  home  operator)  through  higher  wholesale  roaming 
charges.  In  other  words,  the  potential  risk  of  distortion  of  competition  and  investment 
incentives  in  domestic  and  visited  wholesale  markets  stemming  from  the  introduction  of 
RLAH will strongly depend on how the wholesale market will work when RLAH would be 
applicable. 

27  The  public  consultation  was  open  from  26  November  2015  to  18  February  2016  on  the  following  page: 
https://ec.europa.eu/digital-single-market/news/public-consultation-review-national-wholesale-roaming-
markets-fair-use-policy-and. 

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3.  THE PROPOSAL TO TACKLE THE IDENTIFIED ISSUES ON THE WHOLESALE ROAMING 

MARKET 

3.1. The remaining obstacles to the functioning of RLAH 

By establishing the obligation to charge retail roaming services at domestic prices (no more 
retail  roaming  surcharges)  subject  to  the  fair  use  policy  of  these  services,  Regulation  (EU) 
2015/2120  has  introduced  the  substance  of  a  new  retail  regime  for  regulated  roaming 
services.  This  is  the  RLAH  regime,  which  has  so  far  hardly  been  offered  across  the  Union 
under the current conditions of wholesale roaming markets. 

Indeed,  while  retail  pricing  of  roaming  and  domestic  services  is  aligned  by  regulation,  the 
provision of retail roaming services does not use the same wholesale inputs as retail domestic 
services. This is because providing retail roaming services requires by definition the use of a 
different (visited) network. These wholesale roaming inputs therefore need to be bought on 
the market by the visiting operator, including a number of costs specific to roaming (i.e. not 
incurred in providing domestic services).  

To  ensure  that  the  retail  roaming  services  can  be  provided  at  domestic  retail  prices,  it  is 
necessary for wholesale roaming inputs to be available at a price that makes providing RLAH 
generally possible for the visiting (home) operators while ensuring that the visited operators 
can recover the costs of providing these services. 

Fully  competitive  national  wholesale  roaming  markets,  which  would  make  prices  directly 
linked to the marginal costs of visited networks, would clearly facilitate the sustainability of 
RLAH. However, the analysis shows that wholesale roaming markets do not always function 
in this manner and that the future RLAH obligation is by itself highly unlikely to lead to well-
functioning  wholesale  roaming  markets  that  would  enable  the  provision  of  RLAH  in  the 
Union by 15 June 2017. 

In light of the problems summarised in this report, additional measures are necessary in order 
to  regulate  the  wholesale  roaming  markets  in  order  to  enable  the  provision  of  RLAH  in  a 
sustainable way. 

A Union-wide approach would further avoid a situation where individual Member States take 
divergent  approaches  to  deal  with  the  problem  of  high  wholesale  charges.  Such  a  situation 
would  create  obstacles  to  the  internal  market  since  roaming  services  providers  would  be 
treated differently in their home country (as visited network operator) and in the country in 
which they are offering retail roaming services (as visiting network operator). 

Indeed, in an RLAH context, the lack of consistent regulatory approaches between national 
wholesale  markets  could  actually  create  distributive  distortions  unrelated  to  costs  among 
operators and ultimately among consumers. The reason for this would be the following dual 
interests at wholesale level:  

  on  the  one  hand,  visited  networks  need  to  cover  the  costs  of  providing  wholesale 
roaming services and appropriately invest in their networks to accommodate roaming 
traffic;  

  on  the  other  hand,  visiting  operators,  which  may  not  cover  their  costs  of  providing 
retail roaming services via regulated  retail roaming charges any more under RLAH, 
need to avoid margin squeeze.  

8 

 
 
The  risk  of  margin  squeeze  could  potentially  result  in  higher  prices  on  domestic  markets 
(waterbed  effect)  and/or  the  refusal  to  provide  retail  roaming  services,  at  least  for  certain 
retail customers. 

Further regulation at Union level is therefore necessary to deliver wholesale roaming charges 
lower than the ones in place and closer to the underlying costs. This would enable RLAH in 
2017  while  maintaining  the  sustainability  of  domestic  charging  models.  Therefore,  the 
Commission is presenting a legislative proposal to the European Parliament and the Council 
accompanying this review report. 

3.2. Stakeholders’ views 

Almost  all  operators  responding  to  the  public consultation28  agree  that setting  price  caps  at 
Union  level,  applicable  in  all  Member  States,  is  the  most  appropriate  approach  to  continue 
regulating wholesale roaming markets in the RLAH context29. 

Operators  are,  however,  divided  as  regards  the  level  of  these  caps  that  would  enable 
sustainable  RLAH.  Only  28 %  of  responding  operators  (certain  historic  incumbents  and 
operators with a large footprint, and generally operators with large inbound roaming traffic) 
are  of  the  view  that,  under  the  current  rules,  the  functioning  of  the  wholesale  roaming 
markets  would  deliver  RLAH  in  2017.  By  contrast,  53 %  (smaller  operators,  MVNOs,  and 
operators with large outbound roaming traffic) consider that this would not deliver RLAH in 
2017. The proportion of operators which do not know (18 %) is significant, while only one 
operator thinks that it depends on the Member State. 

Mobile  operators  are  split  along  the  same  lines  as  to  whether  the  RLAH  obligation  will 
increase or decrease competition on the wholesale roaming market30. Operators defending the 
current  caps  argue  that  this  obligation  will  increase  competition  on  wholesale  roaming 
markets. By contrast, operators defending lower caps argue the opposite. 

As to the most appropriate regulatory measure at wholesale level in order to enable RLAH in 
2017, 28 % of responding operators consequently favour keeping current caps unchanged or 
removing any wholesale regulation, against 58 % who think that wholesale roaming charges 
caps should be lowered. 

National  regulatory  authorities  and  governments  express  views  similar  to  those  of  the 
operators  in  their  countries.  Large  inbound  roaming  countries  consider  that  national 
wholesale  roaming  markets  function  well,  while  large  outbound  roaming  countries  take  the 
opposite  view.  Finally,  consumers  and  consumer  associations  are  cautious  in  expressing 
views on wholesale roaming markets since they are not directly involved in these markets. 

3.3. The legislative proposal 

Home market perspective 

Distortions affecting competition and investments on the home operator’s domestic markets 
mostly  depend  on  the  risk  of  margin  squeeze  due  to  high  wholesale  roaming  charges 

28  For  a  detailed  analysis  of  the  results  of  the  public  consultation,  see  Annex  2  to  the  accompanying  impact 
assessment. 
29  Only  4  out  of  the  40  mobile  operators  responding  to  the  consultation  (including  two  respondents  from  the 
same company) argue that lifting wholesale regulation would be the best approach. 
30 See section 7 in the accompanying SWD. 

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compared  with  domestic  retail  prices  that  can  be  applied  to  the  end-user,  in  particular  for 
smaller/net outbound operators. Simulations at country level and operator level31 show that if 
wholesale  roaming  charges  caps  are  maintained  in  2017  at  the  current  level,  RLAH  will 
probably  not  be  reconcilable  with  domestic  charging  models.  This  would  undermine  the 
sustainability of domestic charging models for at least 20 % of the operators in the analysed 
sample  and/or  in  at  least  six  Member  States.  This  is  not  in  line  with  the  Roaming 
Regulation’s  objective  of  enabling  RLAH  in  the  Union.  Nor  is  it  compatible  with  the 
exceptional  character  of  the  sustainability  derogation  possibility,  which  assumes  that  the 
domestic charging model is sustainable under RLAH for all or virtually all operators in the 
Union, for the benefit of their customers. 

In  addition,  wholesale  roaming  revenue  opportunities  are  expected to  increase  considerably 
with  the  increase  in  roaming  volumes  in  the  RLAH  context  and  the  corollary  decrease  in 
underlying  wholesale  roaming  unit  costs.  This  is  likely  to  lead  to  substantial  and  growing 
transfers  from  outbound  operators  to  inbound  operators  if  wholesale  roaming  caps  are 
maintained at today’s level. 

As briefly summarised in section 2.4 above, it is not expected that this issue would be solved 
by  a  unique,  unidirectional,  positive  effect  of  the  RLAH  obligation  on  competition  on 
wholesale roaming markets. It is unlikely that RLAH volumes by themselves will contribute 
to a general decrease of wholesale roaming charges of a magnitude that would reduce the cost 
of RLAH to a sustainable level, especially for countries where this cost is high in comparison 
to domestic revenues. New business models and negotiation dynamics among operators may 
evolve with the establishment of RLAH. However, there is a risk that the negotiating position 
of  the  net  sender  of  roaming  traffic,  including  the  weaker  market  players  on  wholesale 
roaming markets, would in fact deteriorate further due to the obligation to impose RLAH. In 
the absence of countervailing measures, this risk cannot be excluded. At the same time, it is 
legitimate to set safeguard caps at a level enabling operators with greater Union coverage or 
greater traffic volumes to derive commercial advantages from the possibility of internalising 
costs within the group or from negotiating better terms with visited operators who have some 
margin for negotiation relative to their own underlying network costs. 

In  conclusion,  enabling  RLAH  in  the  Union  in  2017,  while  maintaining  the 
sustainability  of  domestic  charging  models  for  all  or  virtually  all  operators,  requires 
further regulation of wholesale roaming markets so that they deliver lower charges than 
today.  By  providing  a  lower  starting  point  for  negotiations,  lower  caps  are  expected  to 
deliver lower wholesale market charges than today. 

Visited market perspective 

With  regard  to  the  risks  for  competition  and  investment  incentives  in  visited  markets,  the 
functioning  of  roaming  markets  should  ensure  cost  recovery.  This  is  in  order  to  preserve 
incentives  to invest  in visited networks and  avoid  distortion of domestic competition  in  the 
visited markets caused by regulatory arbitrage of operators using roaming access remedies to 
compete in otherwise competitive domestic visited markets. 

On  the  first  aspect,  the  cost  estimates  and  the  information  gathered  on  current  wholesale 
prices on the market show that current wholesale roaming charges are well above underlying 
costs, in particular for data services. 

31 See section 6.2 in the accompanying impact assessment. 

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On  the  risk of  regulatory  arbitrage, one  should first  of  all  take  into  account  that the  visited 
operators are empowered to include conditions to prevent permanent roaming or anomalous 
or  abusive  use  of  wholesale  roaming  access  on  the  basis  of  Article  3(6)  of  the  Roaming 
Regulation. In this latter regard, contractual terms in wholesale roaming agreements may be 
used to discourage such practices; usually this is done by excluding permanent roaming from 
any  price  discount.  The  existence  of  a  difference  between  discounted  and  non-discounted 
wholesale roaming charges, hence between maximum charges and possible negotiated prices, 
is therefore a crucial element enabling operators to control such practices. Also in this case, 
the  proposed  measures  have  been  assessed  against  this  risk  and  the  possible  measures 
available to reduce this risk. 

In conclusion, there is scope for further reducing wholesale roaming charges caps from 
the  current  level,  in  particular  for  data  services,  while  keeping  the  caps  above 
underlying costs in all countries. 

New Union wholesale roaming charges caps 

In  assessing  the  measures  necessary  to  enable  RLAH  in  2017,  the  Commission  has 
considered the policy objectives set out in the Roaming Regulation:  

i. 

ii. 

enable  a  sustainable  abolition  of  retail  roaming  surcharges  for  all,  or  virtually  all, 
operators in the Union, avoiding distortions on the home markets;  

ensure  cost  recovery  at  wholesale  level,  preserving  incentives  to  invest  in  visited 
networks and avoiding distortion of domestic competition in the visited markets.  

The Commission has therefore sought to minimise the possible cases in which operators 
would  rely  on  the  possibility  to  obtain  a  derogation  for  sustainability  reasons  by 
reducing  the  level  of  Union  wholesale  roaming  charges,  while  keeping  the  caps  above 
underlying costs in all countries (see section 2.2). 

The sustainability assessment derogation foreseen in Article 6c of the Roaming Regulation is 
based on two tests:  

  a country-level estimation of the average cost of RLAH for retail roaming providers 

(home operators) compared with their average revenues;  

  a sustainability test at (home) operator level32.  

The  two  tests,  based  on  partially  different  sets  of  available  data,  are  complementary  and 
indicative tests of the level of sustainability of domestic charging models with the wholesale 
roaming charges included in the proposal. The operator-level test in particular is not meant to 
be an accurate prediction of the actual number of possible sustainability derogations. These 
will have to be assessed by NRAs with much more data from operators which will actually 
apply for such derogation than is currently available to the Commission, and on the basis of a 
method to be further laid down in a forthcoming implementing act. 

As  a  result  of  this  analysis,  the  Commission  proposes  to  set  maximum  regulated 
wholesale roaming charges at 4 €c/min, 1 €c/SMS and 0.85 €c/MB. In the Commission’s 
view, this level:  

32 Based on operators’ data collected in autumn 2015 in collaboration with BEREC for the wholesale roaming 
review. 

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  ensures  the  recovery  of  costs  of  providing  wholesale  roaming  services  by  visited 

operators;  
leaves space for competition below the cap;  

 
  keeps investment incentives in the visited markets;  
  may act as a safeguard against unwanted permanent roaming or anomalous or abusive 
use  of  wholesale  roaming  access  and  the  potentially  resulting  national  market 
distortions.  

On the retail side, this level of charges should enable RLAH to be sustainably provided by 
virtually  all  operators  in  the  Union,  including  operators  with  less  bargaining  power  on  the 
wholesale roaming markets. At the same time, operators with wider Union reach will not be 
deprived of the possibility to derive advantages from this commercial strategy. 

Additional measures 

The Commission also proposes to allow the visited and visiting operators to agree together to 
opt out of the regulated cap in favour of an unregulated level, e.g. capacity-based pricing or 
any other pricing method. The analysis shows that this could bring a positive impact for the 
wholesale  roaming  market,  in  particular  in  the  initial  phase  of  RLAH  when  there  is 
uncertainty about demand evolution. 

Finally, the specific price regulation applicable to roaming entails that an overall Union cap 
applies  to  a  composite  product  which  may  also  include  other  wholesale  access  and 
interconnection inputs, including in particular those subject to national or, potentially, cross-
border  regulation.  In  this  regard,  divergences  across  the  Union  in  the  regulation  of  these 
inputs  are  foreseen  to  decrease,  in  particular  through  the  prospect  of  additional  measures 
taken in accordance with the Framework Directive aiming at ensuring greater consistency of 
regulatory approaches.  In the meantime any dispute between visited network operators and 
other operators on the rates applied to those regulated inputs necessary for the provision of 
wholesale roaming services should be addressed taking into account the opinion to be issued 
by BEREC, in accordance with the specific regulatory obligations applicable to roaming, the 
Framework Directive and the Specific Directives.  

Review 

The  Commission  proposes  to  review  the  measures  adopted  by  the  co-legislators  two  years 
after 15 June 2017 and to empower BEREC to collect the data necessary for that review. 

The Commission intends to do its utmost to assist the European Parliament and the Council 
in  reaching  an  agreement  on  the  proposal  in  the  shortest  possible  timeframe  so  that 
consumers  of  mobile  communications  services  can  benefit  from  RLAH  starting  from 
15 June 2017.  This  is  important  to  meet  the  public’s  expectations  and  ensure  that  the  EU 
continues to deliver concrete results for them. 

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