The EU's obsession with cutting roaming charges is not going to help Europe's comms industry, says a note from researcher Strand Consult. It thinks the industry has not done enough to promote itself to politicians looking for a popular move to justify themselves. A decade ago, the EU accounted for one-third of the world’s communications capital investment. That number has plummeted to less than one-fifth today
In the event of a common European charge for mobiles, it says, the revenue loss from the average roaming customer will likely be marginal. “The bigger impact comes from the policy’s unintended consequences, that of the creation of a new market for “mobile arbitrage”, the sale and speculation of SIM cards and mobile services from low cost EU countries to high ones. It’s no secret that the EU is hardly a physical single market, let alone a digital one.”
Just looking at price differentials between cars gives an insight to the challenge of creating a single market, it says Car producing countries such as Germany, Sweden, Spain, and France encourage their sale with little tax on cars while Denmark marks up the price by 180%. The EU demanding a single price for cars would be welcomed by consumers but met with outrage by governments. Yet the cost of a car is a larger expense both in upfront and maintenance costs than telecommunications is for consumers.
The current EU proposal will probably not be adopted before EU elections in late May. The new commissioner that replaces Neelie Kroes (pictured) will likely not support the proposal either, or at least not in the current form. While Europe's operators might not necessarily be impacted if the proposed rules are not enacted, there is no indication that a new governmental regime will create an environment that encourages investment. Europe's operators will hold back on their investments in the uncertain political climate, it warns.
“If EU leaders cared so much about consumers, why don’t they address the expenditures that drive the greater part of consumer income, such as housing, fuel, transportation, food, and clothing? Consumers even spend more on discretionary vacations than they do on telecommunications. EU prices, even with roaming fees, fall well below the 5% of gross domestic income per income threshold suggested by the ITU. The only explanation is that the telecom industry has not done a good enough job to explain to politicians and the public they tremendous value of telecommunications,” it concludes.