Non-Europeans will pay for EU price control approval, says new research
Roaming price levels for non-Europeans travelling in Europe are likely to rise following the European Parliament's approval of new retail price controls, according to new research.
A number of European mobile operators are said to have told Informa Telecoms & Media - publisher of a new report on the roaming sector - Global Mobile Roaming: Business Models and Forecasts in the Evolving Environment - that they will increase the wholesale prices (IOTs) that they charge non-European operators whose customers roam onto their networks. This is to offset the loss of revenues resulting from the new European price caps. On average, retail prices are set 20% above the wholesale rate.
Until now, operators have been free to set their own wholesale prices for roaming services. Some operators set much higher wholesale price levels than others. It is quite normal for two operators on a single route - for example between Germany and India - to charge each other different prices for calls made by their customers on each others' networks.
"Some of the highest wholesale prices are levied by operators in developing markets for whom inbound roaming is a key source of income," says Mark Newman, co-author of the report. "In India, for example, wholesale roaming prices are up to 30 times more expensive than the retail price that Indian operators charge their own customers for making the same call," he adds.
But faced with lower revenues from their European roaming business, operators in Europe will now start to seek reciprocity in wholesale price arrangements. And if operators outside Europe refuse to reduce their wholesale roaming charges, the European operators will increase their own wholesale charges.These higher charges will be passed on to non-European customers.
"What we are beginning to see here is the emergence of a two-tier market for roaming services," says Newman. "With the new price caps and the emergence of pan-European groups such as Vodafone, Telefonica/O2 and Orange, Europe is going to start resembling a single market in terms of retail prices. Countries such as the U.S.A and India already have national roaming markets where people can make calls on other operators' networks without incurring higher charges. The same is also beginning to happen in Greater China. However, when people want to use their phones outside of their countries or regional groupings they will pay a substantial premium."
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