18 April 2007

EU roaming price caps ... the carriers respond

I have blogged about these price caps before. They seem destined to pass at this point according to most news reports. This article points out an interesting response that some carriers are (apparently) developing:
Visitors to Europe may find they have to pay increased roaming charges as a result of price caps being imposed on calls within the EU.

According to analysts at Informa, a number of European mobile operators say they will increase the wholesale prices they charge non-European operators whose customers roam onto their networks, to "compensate for the loss of revenues resulting from the new European price caps".


Apparently, this is not without precident:
Mark Newman, an Informa analyst, said: "What we are beginning to see here is the emergence of a two-tier market for roaming services. With the new price caps and the emergence of pan-European groups, such as Vodafone, Telefónica O2 and Orange, Europe is going to start resembling a single market in terms of retail prices. When people want to use their phones outside of their countries or regional groupings, they will pay a substantial premium."

Newman pointed to the example in India, where domestic operators charge foreign operators 30 times the wholesale rate they charge other local carriers. He said European operators may demand a reduction in these fees, or may retaliate with a punishing reciprocal arrangement if cuts are not forthcoming.


Does this surprise you? How does this compare with the market activities of US carriers? Do you think this will boost the market for unlocked GSM phones?

Update (2007-04-19): According to this article, the Austrian operator mobilkom will raise their rates in response to this new price regulation.

Update (2007-04-23): Here is another article that expands on the previous one.

Update (2007-05-08): This article in BusinessWeek highlights just how difficult it is to reach an agreement on price, especially when there are heterogeneous usage patterns.

Update (2007-05-18): The deal is done. See this.

2 comments:

Srividya said...

Dear Sir,

There was a discussion on Roaming Price Caps in Europe in comparison with that in the US, at the Cybertelecom Newsletter last week. I am sure you followed them too :)

This post was informative, as it made me go back to those newsletters and recap what I read last week.

Thank you,
Srividya Ramachandran

wholesale caps said...

Newman pointed to the example in India, where domestic operators charge foreign operators 30 times the wholesale rate they charge other local carriers. He said European operators may demand a reduction in these fees, or may retaliate with a punishing reciprocal