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back to article EU digital tsar 'Steelie' Neelie Kroes: Telcos must adapt to losing roaming cash

Europe's digital tsar Neelie Kroes has been defending her call for greater integration of telcos across Europe, and appears to be arguing that what she described as "artificial" lowered roaming revenues should not hinder the telcos' greater investment in European infrastructure. Neelie's plan is to get rid roaming charges across …

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FAIL

the unelected VP of the European Commission

The European Commission has to be approved by a majority of the elected representatives of the European Parliament. Yes, at the moment it's an "all or none" approval but it is no less democratic than many appointments by national governments.

Roaming was never part of spectrum licensing so operators cannot really complain about losing its revenue. In fact, they've known for over 10 years that it was coming and have fought a very successful rearguard action to keep milking it as long as they have. Removing roaming was always inevitable as it is an impediment to single market as enshrined in the Treaty of Luxembourg. In this it is similar to the charges imposed by banks on customers using cash machines in other countries or making payments: SEPA payments and cash withdrawals are may not cost more than they do in customers' home countries.

Why on earth should OTT operators be treated differently than anything else? Why on earth should be they subject to punitive tax? If operators cannot make money on data then they should raise their prices. OTT services are the ultimate form of free-market arbitrage, undercutting high tariffs in inefficient markets.

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Anonymous Coward

Charlie Clark above has said it all (including the comment on the slightly daft remark about the EC).

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Who elected the members of OfCom and the other regulators in the UK?

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Ofcom Liberal?

In the wrong sense.

Maximise licence revenues and avoid the cost and complexity of actually protecting any spectrum user except high paying Mobile Operators.

Ofcom are more "political" than EU, but it's "Sir Humphry's" politics. Not the wishes of the public, parliament or what is good for the UK as a whole.

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Re: With less money you will do more

They'll likely to do more by investing in more profitable parts of the world.

Sorry, as much as we might hate it, they are there to make a profit.

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Re: With less money you will do more

>>> Sorry, as much as we might hate it, they are there to make a profit.

Yes, and regulations are in place to make sure they make a profit by creating products and services users are willing to pay for, not by creating cartels and monopolies that force users into submission.

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Re: With less money you will do more

> Yes, and regulations are in place to make sure they make a profit by creating products and services users are willing to pay for, not by creating cartels and monopolies that force users into submission.

Well, I'd argue that the regulator has no place in forcing suppliers to create products that users are willing to pay for. That is what the market place should do. I'd agree whole heartedly that the regulator should be stopping monopolies and prosecuting those involved in cartels.

My point was that at a time when mobile companies are being asked to invest heavily in new infrastructure, they as companies, will focus there investment where is will reap the maximum return on that investment.

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Anonymous Coward

Doesn't pushing for "greater integration of telcos across Europe" an effective way to raise the barrier to entry into the market?

How will that improve competition?

Maybe its something in the way the articles are presented, but I keep getting the impression that Kroes doesn't understand competition.

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Neelie's plan

"Neelie's plan is to get rid roaming charges across Europe by forcing operators to scrape them altogether."

If they scrape them altogether, won't charges increase? They should be scrapping them!

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It's already too watered down

My understanding is a network can allow the user to port their nr to another network and use it on another sim for the duration of the holiday. This is such an onerous option that I can see some networks offering it knowing full well that take up will be low and they can continue to screw people for roaming charges. I hope my understanding is wrong.

All these networks have large backbones. Many networks are partially or fully owned subsiduaries of the same parent(s) any way (Telefonica, Vodafone, Hutchison, T Mobile etc.). If it costs any money to host each other's calls or data then it's mostly pennies and I'm sure that in many cases it is cancelled out or partly offset by people roaming in the other direction.

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Re: It's already too watered down

Indeed, Three now offer use of their networks in all countries where they exist - for example I can use my phone in Sweden or Hong Kong and basically it's as if I was still in the UK with my calls (to UK numbers) and data usage just coming off my monthly allowance, or charged at normal home rates. Why the Oranges, T-Mobiles and Telfonicas can't also do this I don't know, though I suggest it's more a matter of "won't" rather than "can't".

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Re: It's already too watered down

Exactly.

Networks charge each other when people roam. When you roam using the same network they don't charge each other but they still charge you.

3 is the only one so far not practising this new kind of highway robbery.

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Re: It's already too watered down

EE are the exception in that although the brands T-Mobile and Orange are in that stable they are entirely separate from any other T-mobile and Orange networks and have to negotiate with each business.

Telefonica, Vodafone and 3 in the UK are better placed as they own the firm, as it were.

Currently mobile telephony in Europe is in dire straits, the UK is fairly healthy in comparison, and if they are squeezed on costs there will less choice not more. Why innovate if every time to you try the government is there with it's cap in hand? I wonder if any of the operators in the UK would have introduced new services if they knew that Ofcom were going to reward them for their innovation by quadrupling their spectrum fees?

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Bah!

Kudos for the picture of Doctor Pinder-Schloss.

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Bill Ray

Your comment is just stupid.

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Shareholder Payouts

She's got a point. Telcos throughout the West have a real bad habit of paying out to shareholders then leaning on governments to pony up funds when they want to expand. The telcos want an 'open market' but want the government to open it for them.

As long as you're taking tax breaks and taking government funds and incentives you are not playing in an open market. You're playing in a taxpayer subsidized market and that just isn't the free market at all. They're trying to have it both ways and only the customer loses.

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Re: Shareholder Payouts

Yes: Vodafone is a case in point. When it took over Mannesmann in 2000 (incidentally, at the time it also claimed that the future was mobile only), it did so by issuing new shares and thus diluting the value of existing shares <strikethrough>significantly</strikethrough> incredibly. The sum involved was some € 300 bn. I think the new shares issued was something like 100 per every man, woman and child in the UK - I may have the figures wrong here but the it's something like that. But not to be content with stiffing existing shareholders, who in the end approved the deal, the massive debt incurred through this money creation was routed through the usual accounting tricks to reduce the amount of tax paid. In effect British taxpayers funded the takeover and the champagne and cocaine habits of not a few investment bankers.

Unfortunately, too many companies treated the spectrum auctions as licences to print money.

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Happy

Thanks Bill

I had this terrible nightmare that 'Steelie' Neelie was grabbing my shareholders from between my legs. Feeling better now. Holders of shares tend to play around with holding and not holding of shares. Some do well and some do not, and there is no way it could be different. As you can phone within the EU, charging for roaming is an additional cost for the telcos within the EU. We pay for that in excess although it is not technically more expensive for the telcos. What about the US then, can you reach anybody with a cell phone anywhere, have you got roaming charges between states, and if not, who forgot about the holders. Very concerned.

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Re: Thanks Bill

Things are significantly worse for customers in the US. Yes, you generally don't have to pay roaming charges, but call and data charges are sky high and even include paying to receive calls.

Roaming doesn't exist but until a few years ago it was not uncommon to have to buy a new phone if you went somewhere that your network didn't cover. It wasn't even a question of whether roaming would have been expensive, it wasn't technically possible all the networks had mutually incompatible networks: Verizon was on CDMA, Sprint/NextTel on IDEN, AT&T on GSM and CDMA, MetroPCS on its own stuff and only T-Mobile wholly embracing European / world standards from the onset. Even now I'm not sure if the LTE networks are compatible with each other.

As a result some shareholders have done very well out of low levels of competition and high-tariffs:

From AT&T's 2Q report:

This marked the 18th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU

ARPU in Europe has been in terminal decline for most of this millenium and that despite the smartphone boom. And, no, this hasn't been due to regulatory burdens, just straight competition.

If you do have an American phone then roaming charges to other countries in the same free trade area, NAFTA, remain extortionate.

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Expect to see data prices jump

Since the networks usually compete on the line rental price and voice and text aren't a way of generating lots of revenue these days I only see one outcome. Expect data prices to start moving to US levels once this legislation gets pushed through. In fact even if not expect it anyway.

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grim reapers

SFR message to me last time I was traveling from Paris to Germany: "Your SFR data in Germany: 5€/ day for 15MB. That's 341€ euros for a GB, you +=&# and I can't even have a full GB.

They follow it up with this GREAT offer: 5€/day for 100MB. Still 100€ the GB - what a bargain! And by the way, trying to subscribe to this option does not even work. The SMS comes back with a "cannot activate offer" message.

Then, they also have a 7-day plan with 200MB for 15€. That is 75€ the GB. Still in the "insulting" category in my book, way above "pricey" or "expensive".

And here is what happens if you do not pay up: 0.54€/MB which is 553€ the GB !!!!!

What is the reason SFR can get away with insulting its customers in this way ? They have an agreed cartel monopoly with the other telcos - which is forbidden by law and punishable with hefty fines.

They should be happy the the european commission is giving them early warnings or is talking to them at all, otherwise than in a prison visiting room.

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Happy

What about in-country roaming?

It's often been said that the best way to ensure that you have a decent mobile signal is to use a SIM from another country, as that gives you access to ALL the networks, not just the one you subscribe to. Combine this with the abolition of roaming changes, and the logical conclusion is that we should all get our phones from any country EXCEPT our own......unless of course the network operators decide to offer home country roaming - something that they have consistently refused to do (and which Ofcom has refused to make them do!).

So - might the abolition of EU roaming charges finally give the operators an incentive to share their networks?

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