MuniWireless

The European Regulator Group (ERG), an organization that brings together the 34 national regulators of the European Union, recently published its second report on wholesale and retail charges for cellular communications in Europe. The ERG acts as a central point for collecting data from each country’s telecom regulator. This report gives a clearer picture of the effects of regulations on the price of cellular calls in Europe over the past two years. At a recent press conference in Europe, Daniel Pataki, president of ERG, highlighted the efforts of the ERG to achieve “fair and predictable prices for all”.

Reaching fair and predictable prices

The results of the survey published in the report show a slow decrease in roaming prices for voice and SMS over the one year period from April 2007 to March 2008. Pataki said: “Considering roaming services that are not currently subject to price regulation, ERG observes that average wholesale and retail prices for SMS roaming services have varied little over the last year. Average prices for inbound wholesale data roaming services appear to be on a downward trend and the distribution of prices seems to have narrowed for quarter four 2007 and quarter one 2008 compared with quarters two and three 2007. Average retail prices are more heterogeneous, however, with a wider distribution of prices and with some countries still experiencing very high prices. The overall ERG trend is downwards, nonetheless”.

€0.45 to call and  €0.21 to receive a calls within Europe

The survey shows that the average price for making voice calls within the EU has dropped significantly in all countries since the implementation of the mandatory price caps, from €0.698 in Q2 2007 to €0.444 in Q1 2008. It remains below the regulated tariff of €0.49 a minute. For calls received, on average the prices also dropped significantly from €0.345 in Q2 2007 to €0.208 in Q1 2008, below the regulated tariff of €0.24. On wholesale prices for voice, the regulation has had a significant impact, as the EU/EEA average has decreased by around 46% from €0.462 in Q2 2007 to € 0.249 in Q1 2008, with bigger drops in some individual countries.

For SMS, which is not regulated, the average price has remained relatively stable, from €0.294 in Q2 2007 to €0.285 in Q1 2008. Wholesale SMS average price did not change over the period, around €0.16. Roaming data services prices, retail and wholesale, have dropped but remain fairly high with large gaps for some countries. Almost for free in Denmark or Sweden, the retail price of a MB can reach €6 in France or €12 to 14 in Italy, Slovakia or Luxembourg. The EU average retail price for one MB is €2.055 in Q1 2008.

SMS price to drop from €0.15 to €0.11

For Pataki, voice roaming needs more competition, SMS prices remain too high, several times over the cost of provision, and data subscriptions are still too expensive: “Bills can be extremely high, sometimes not affordable”.  He recommended some universal measures because most people don’t understand the tariffs. Companies should adopt some common practices, for instance, showing consumption in monetary units in real time and not only in time units. He recommended maintaining existing voice regulation and adjusting wholesale and retail caps to reflect cost reductions.

On the SMS side, he advocated regulations at both retail and wholesale level with a price cap between €0.11 and €0.15. He will also suggest reviewing the regulation for data roaming and will propose obligatory transparency measures to give subscribers better control of their bills.

The ERG report will be submitted to the European Parliament for discussion and further decision by the end of this year.

Background on the European Regulator Group

The European Regulator Group (ERG) is a European organization that brings together the national regulatory authorities of 34 countries of the European Community. Among other advisory activities, the ERG has been at the forefront of tackling the issue of high prices for international roaming services in Europe. By enabling the cooperation and sharing of experiences amongst European telecom regulators, it ensures the consistent application of the European regulatory framework.

In 2005, ERG undertook a study of international roaming which concluded that the EC Regulatory Framework was not providing the necessary tools for national regulators to handle some problems identified in their own countries, especially for roaming. After several reports and surveys, propositions made to Viviane Reding (the European Commissioner for telecoms), and significant debates, regulations placing caps on wholesale and retail charges were implemented in Europe (decision taken by Commissioner Viviane Reding), under the control of each local regulator, which entered into effect in September 2007).

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About the author

Alain Baritault is the Editor in Chief and co-founder of Cités Numériques, a French publication for elected officials and technology decision makers in the French municipalities, territories and the national government. He has been a journalist, analyst and columnist based in Silicon Valley for the past 20 years covering technology and business for French magazines and newspapers as 01 Informatique, La Tribune, Sciences et Vie Micro and l’Informaticien. Along with his press activities, he has been an analyst and consultant for French companies, organizations and local governments focused on emerging technologies as wireless technologies and all technologies related to mobility. He is also following the emerging ultra high speed broadband market in France. Previously Alain was Editor of several French computer magazines as Decision Informatique and Temps Micro. He has an MBA and post-graduate degree (DEA) from University Paris 9 Dauphine.