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.

Private incentives and public networks

This article does a good job articulating the problems that any major redesign of the Internet will face. Quoting the article:

Commercial and policy interests will likely play a bigger role this time as researchers explore "clean slate" designs that scrap the Internet's underlying architecture to better address security, mobility and other emerging needs.

*snip*

Participants in a new network also could include law-enforcement officials, who are already demanding that Internet service providers retrofit the existing network to ease wiretapping of Internet-based phone calls. Governments around the world, including the United States, also could seek ways to block porn and politically sensitive Web sites - and better identify those who distribute the forbidden.

Do you think that one of the reasons that we see an incremental approach to upgrading the Internet has to do with what is possible given the divergent interests of the heterogenous stakeholders? What does the redesign effort have to do with the "Next Generation Networks" that are being widely touted?

Small MVNOs

This article in BusinessWeek is interesting.

Update (2007-04-01): You might enjoy Om Malik's take on this story

Is this the first step in the separation of the mobile wireless business into wholesale and retail? Are there network effects associated with subscribership levels that would mitigate a widespread fragmentation of the retail market?

Disruptive technologies in wireless

In this article in Forbes, Clayton Christiansen (of "The Innovator's Dilemma" fame) makes the case that WiFi-based hot spots could be disruptors for today's 3G networks.

Do you agree with his analysis? How do municipal networks figure into this? Do you think his advice to carriers is sound? If so, how would that be sold to shareholders?

Mobile rates in Europe

Mobile rates in Europe are much higher in the US.

While comparisons are always challenging, a simple comparison is to look at individual plans allowing around 450 minutes. Vodafone Germany charges 69.95 Euro (approx US$ 90) for a package offering 480 minutes in the home region. A 450 minute plan from Cingular in the US is $39.95. A 400 minute plan from O2 in the UK costs 30 pounds (about $60 US).

International roaming rates are notoriously high. So last summer, the EU signalled that they were going to take action and cap rates. This press release provides some details, and an interesting chart in the back that compares the various proposals that are being considered.

A couple of questions come to mind that you might wish to engage in:

• Why are mobile rates so much higher in the EU than the US?
  
• Is capping prices on roaming charges the right way to go?
  
• If not, what are the alternatives?
  
• What does the table in the press release reveal about the loyalties of the Commission, Parlaiment and Presidency, respectively based on their rate preferences?