Subject: [NEXTEL-1] International Telecommunications Users Group (INTUG)

From: [email-masked]
Date: Wed, 27 Aug 2003 12:20:41 -0400

Greg,

Here is some intersting data on international roaming. I'm sure you have probably
seen most of this.
Be patient most of us here in the USA are unfamiliar with the inner workings.
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INTERNATIONAL ROAMING CHARGES:
OVERCHARGING AND COMPETITION LAW

Ewan Sutherland1
International Telecommunications Users Group (INTUG)
[email-masked]

Back to Vol. 25, No. 1/2 (February/March 2001)

Abstract:

International roaming is a major technical achievement of the GSM
standard. Initially users were impressed by the technical facility that a
mobile phone would work initially across the European Union (EU) and in
many other countries, and with a tri-band phone, in North America.
Estimates of the market size at the end of 1999 were in the range of US$
1,000 million, with continuing rapid growth. However, users quickly
realised that the costs of international roaming were far higher than could
be justified. At a time when fixed telecommunications costs and prices
were falling, the prices for mobile roaming were spiralling out of control.
The response from user organizations has been to withdraw phones, to
forbid their use abroad and to encourage alternatives, such as phone-cards
and visits to local offices. A series of surveys by INTUG in 1999 and 2000
gathered comparative data on international roaming charges in Europe.
The results showed price variances of two to ten times for the same or a
similar call. This data has attracted the interest of the Competition
Directorate-General of the European Commission and a formal
investigation has been initiated. A decision is expected in late-2000, which
could have influence outside the EU, since the principles of competition
law, and the terms of international roaming agreements are similar around
the world. The indications are that the complexity of the charges, the
backroom negotiations and other factors demonstrate that this is very far
from being a competitive market. As the GSM Association begins to
create a Global Roaming Forum to prepare for 3G (UMTS) roaming, it is
clear that a more open and competitive regime is essential if the prices are
to be driven down to reasonable levels. That in turn is necessary if we are
to see the innovations in uses necessary for the next stage of the
development of the mobile telecommunications industry and
mobile-Internet convergence.

Keywords: Mobile, GSM, 3G Mobile, roaming, INTUG, pricing

Introduction

Since the late 1990s users of mobile telecommunications have been concerned by the

apparently arbitrary and invariably complicated charges for international roaming.
GSM
operators make little effort to inform their customers of the charges they will
incur when
abroad. Checking the accuracy of bills from published information ranges from the
difficult to the impossible. The charges seem to have no relationship to the
underlying
costs, to best practice or to other telecommunications charges. Coverage is also
incomplete, with problems moving from the GSM networks to others, notably in the
USA, Japan, South Korea and parts of South America.

The International Telecommunications Users Group (INTUG) comprises national
associations of telecommunications users, large corporate users and individuals
interested in telecommunications such as academics, consultants and lawyers. One
its
activities has been to undertake surveys of charges for the use of
telecommunications
services, such as the cost of international versus national leased lines and more
recently in broadband local access.2 In late 1998 INTUG began to examine
international
roaming prices and then undertook formal surveys in 1999 and 2000.

GSM roaming services were originally and remain today very attractive to business
users. This emulated the success and the attractiveness of roaming on the earlier
Nordic Mobile Telephone (NMT) system used in Scandinavia. Business subscribers
bought mobile telephones expecting to use this feature and it has become part of
everyday business life first in Europe and then beyond. Today, there is a growing
market
for consumer roaming, including pre-paid cardholders.

National Regulatory Authorities (NRAs) however have paid little attention to
roaming
users, either their own residents when they are in foreign countries or foreign
subscribers visiting country of the regulator. In some cases it may not be their
explicit
responsibility, in others over-pricing of roaming services may be seen as a
necessary
and rather obscure evil, while operators build up their businesses. One option
available
to them is to address the worst cases on a bilateral basis between NRAs.

Competition has been very limited. Countries have often been slow to license
second,
third and fourth operators. The operators often create an appearance of rivalry in
the high
street, but with little real competition behind it. One potential class of
competitor, the
Mobile Virtual Network Operator (MVNO), has made slow progress. Sense
Communications was so long delayed in Norway that it failed. In the United
Kingdom,
OFTEL took a decision to wait, which unfortunately was used by other regulators as
an
excuse for procrastination.3 Nonetheless, there are now two MVNOs in the UK.
However, they are really joint ventures: One-2-One with Virgin, and Orange with
Energis,
targeting consumers and business users respectively.

GSM Roaming now extends from Greenland, by way of Europe, Africa, Asia and across
the Pacific to South America spanning more than 120 countries and two or three
times
that many networks. The new GSM Global Roaming Forum (GGRF) brings together
networks using different technologies, including CDMA and looking to third
generation
technologies.4 In doing so it raises many complicated issues concerning contracts,

tariffs, regulation and privacy.

The technicalities of GSM roaming

A GSM telephone will automatically detect the various networks available when it
is
switched on. In the home country it will ignore other networks and connect with
the
operator, which provided the SIM card. National roaming is used while one operator
has
not completed its national coverage. This will also happen with UMTS customers
roaming on GSM networks until the completion of UMTS networks.

Upon entering a foreign country the GSM handset detects the available networks.
This
usually happens automatically with the telephone displaying prominently the name
of
the new network. The automatic selection can be checked by the user and changed to

any of the available and permitted networks. A permitted network is one with which
the
user's home operator has a roaming agreement. A preferred network is usually a
corporate partner. Each time the phone is switched off or loses its signal it will

automatically reconnect. It will disregard any previous preferences unless the
user sets
the phone to manual selection of networks.

Unfortunately, most users do not know how to change networks. Moreover, given the
complexities of the tariffs (see below), they are highly unlikely to know which
network
they should select for a particular type of call and a specific time of day.

The vast majority of GSM networks use a Calling Party Pays (CPP) system. However,
when roaming in another country the GSM user also incurs costs for incoming calls,
to
cover the cost of an international call from the home country to the roaming
country. In a
few cases it is cheaper for the person being called to refuse the call and to call
back,
because the charge to the roamer is greater for an incoming call than for a
roaming call
back to the person calling. To make this saving requires a detailed knowledge of
the
charges and also for the number of the incoming call be displayed on the handset.

With the use of a dual band telephone, roaming can be on both the 900 or 1800 MHz
networks. Roaming can be achieved in the USA, but the use there of a variety of
competing technologies presents special difficulties. Although the initially
complicated
arrangements are being simplified, it can require a special and more expensive
tri-band
handset for use on the 1900 MHz band or the hiring of a local phone into which is
placed
the user's GSM SIM card. At present there are no solutions for GSM subscribers
wanting to roam in Japan and South Korea.

The industry agreements behind GSM roaming

GSM roaming was made possible by the Memorandum of Understanding (MoU) signed
in 1987.5 The European Union supported the creation of the MoU, both to ensure a
common standard across the fifteen member states and to encourage trans-European
networks.6 The previously fragmented standards and markets had made it difficult
for
European manufacturers to sell their mobile telecommunications systems to other
countries. The success for Nokia, Ericsson and other manufacturers has been
considerable. The standards for GSM have been developed and maintained by the
European Telecommunications Standards Institute, but transferred recently to the
3GPP.7

In order to provide roaming services, the various GSM operators have entered into
roaming agreements negotiated commercially, on a case-by-case basis by the pair of

operators concerned. A few brokers negotiate such contracts on behalf of
operators, for
example, Comfone, Mach and Roameo.8

The key agreements to facilitate international roaming for GSM operators are the
Standard Terms for International Roaming Agreement (STIRA) and, more recently, the

Inter-Operator Tariff (IOT). Use of the IOT is facilitated by the Transfer
Accounting
Protocol version 3 (TAP3) which became available to operators in July 2000, after
several
months delay.

In some respects the goals of the GSM Association in creating these agreements are

entirely admirable, seeking to simplify arrangements between operators. This is
entirely
understandable given that there are now thousands of such agreements. Any
substantial
operator is likely to have up to two hundred such contracts.

STIRA simplifies the negotiation of roaming agreements by providing a framework
and
tariffing principles. As such it provides economic and technical benefits. The
problem is
that there are also very negative effects. By using a retail-plus pricing model,
the users
end up bearing very high charges. The operator providing the roaming service
charges a
certain fee, usually a quite expensive tariff perhaps with a further profit margin
added.
The home operator then adds a mark-up to this charge by between 10 and 25 per
cent.
Both operators make substantial profits and neither has an incentive to reduce the

prices or the profit margins.

Given that the structure of the tariff is determined by the roamed operator it can
be quite
alien to the visitor. A TeleDanmark Mobile customer, accustomed to billing in one
second units, might be surprised to discover that KPN Mobiel (Netherlands) bills
by the
minute, which can make a critical difference on short calls. A TeleNor customer,
understanding the "peak" period to be from 09:00 to 18:00, would be surprised to
find in
the UK roaming on Vodafone that it is from 06:00 to 20:00, while French operators
additionally designate Saturday mornings as peak times. Where a large operator
might
be expected to have negotiated a discounted price, this seems to be missing from
the
market.

The introduction of the IOT allegedly provided for much greater flexibility in the
charges
to individual operators. However, it remains too early to know if this is the
effect in
practice. To become effective it will require operators to use TAP3.

In some respects IOT/TAP3 seems a misguided approach, since what it seeks to do is

improve the efficiency of transmission of information between operators. As such
it at
least supports and even encourages complexity. The catch is that no mechanism has
been devised to help the roaming user first discover and then comprehend the
complexity of the tariffs. It would be much easier if the handset could pick the
cheapest
option or if the tariff was set to a simple flat fee. There is no reason why a
user could not
just buy unit 100 minutes of roaming for use across the European Union. Given that

handsets select roaming operators in a relatively predictably way, it should be
possible
to arrive at flat fees using a weighted average of operator tariffs in a foreign
country.

One of the peculiarities of the GSM roaming market is that only licence holders
are
allowed to enter into roaming agreements. A result of this seems to be an enhanced

level of interest in GSM licences in places such as Iceland and Lichtenstein. It
does not
seem to matter where you have a licence or even if you operate a real network.
There
would appear to be no technical reason why other operators, given certain systems,

could not engage in roaming. This form of discrimination severely limits
competition in
the market and may not comply with competition law.

European Commission sectoral investigation

Some preliminary results from the INTUG Roaming Charges Survey were given at a
mobile telephony conference in March 1999. Some of the issues raised by this study

were published by Communications Week International on 15 March 1999. They were
also picked up in a study for the European Commission by Analysys/Squire Sanders
and Dempsey.9 The final version of the INTUG Survey was published in November
1999.10 The March conference had been attended by officials from the European
Commission and they evidently took an interest in the topic. A second survey was
published in September 2000.

The Competition Directorate General of the European Union launched an
investigation
into the telecommunications sector on 27 July 1999, covering markets for leased
lines,
local access and GSM international roaming charges:

The Commission has received a number of complaints that roaming
charges continue to be extremely high, as well as complaints concerning
collusion on roaming rates, and refusal to deal at national and international
level. In November 1999, the International Telecommunications Users
Association (INTUG) completed a study comparing roaming retail tariffs
with retail tariffs for mobile calls without roaming. The INTUG study
indicates that for mobile consumers the difference in price between
roamed and non-roamed international mobile calls to the same destination
within the EU can be up to 500%. There appears to be no convincing
technical explanation for such differentials at retail level, which suggests
that the underlying wholesale markets are not competitive either.11

Work by the Commission began when questionnaires were sent to operators and
national competition authorities in January 2000.12 Both in November 1999 and
February
2000 there was press coverage of the results of the ITUG Survey. The outcome of
the
Commission inquiry is now expected in late 2000.

All negotiations for roaming agreements, MoU, STIRA, IOT and the associated
practices
within the European Union fall under the very strict terms of Articles 81, 82 and
86 of the
Treaty of Amsterdam (textually unchanged from the original Treaty of Rome). These
outlaw cartels and empower the European Commission to consider, to approve (with
or
without undertakings) or to proscribe "concentrations". They also oblige the
Commission
and the Member States to take extreme care when granting special rights. They have
to
ensure that operators cannot use their GSM licences as a lever in other markets or
to
determine market share or to fix prices or to impose unrelated contract terms. It
would
seem, prima facie, that the agreements and practices associated with roaming are
in
breach of competition law.

Similar anti-trust legislation is in force in many countries and competition
authorities
should look at the matter. The Federal Communications Commission, the US
Department of Justice and the US Trade Representative are one such group. They are

noted for their aggression where they believe American businesses are being
disadvantaged or US consumers, even if only when travelling abroad, are being
"ripped
off". Moreover, US operators must comply with Truth in Billing in respect of their
charges
for roaming.

If there had been any doubt about the lack of competition in the market for
international
mobile services, this was removed by the poor response to a Request for
Information
(RfI) for pan-European roaming services from the Wireless SIG of the European VPN
Users Association (EVUA).13 This was an attempt to solicit interest from suppliers
in
providing borderless services to a range of very large corporate customers. It was

estimated that they owned around three-quarters of a million handsets and were
spending around two billion Euro per year on mobile telecommunications. The
results
were initially disappointing, with few players able to make any substantial
offering either
in terms of coverage or savings. Eventually, offers were forthcoming including
those from
Mint Telecom, IMC-Worldcell, RSL and GTS Group.14 The major operators, such as
Vodafone and the France Telecom Group (including Global One and Orange) are, at
this
time, remarkably reluctant to make available the necessary services, discounts and

technical facilities. It seems there was reluctance to break away or be seen to be
first to
break away from the established practices.

The 1999 Review

On 12 July 2000 the European Commission launched its regulatory package of five
directives, one regulation and a decision. The process leading up to this had
involved
many published studies and a sequence of consultation exercises. It was all
commendably open and will continue through the remainder of 2000 and into 2001
under
the co-determination and conciliation procedures of the Treaty of Amsterdam.

There were preliminary debates in the European Parliament and in June 2000 a
Report
on the 1999 Communications Review drafted by Wim van Velzen, MEP, was adopted.
This identified the high charges for international roaming as a subject for
concern:

… the high roaming prices and the higher prices for calls from the fixed
network to the mobile network than from the mobile network to the fixed
and than calls from the mobile network to the mobile network are clear
examples of market imperfections; the Commission should consider
possible ways of lowering those prices to acceptable and transparent
levels; in so doing, however, the Commission should, if at all possible,
avoid regulatory intervention in the mobile communications market, which
has grown freely;15

As part of the debate, ECTA and INTUG organised a seminar in the Parliament on the

future regulation of mobile telecommunications.16

One of the key changes being made concerns Significant Market Power (SMP), the
threshold used to decide which operators are to be subject to more stringent ex
ante
regulation.17

The existing definition is a market share of twenty-five per cent, but this will
be moved to
a competition law definition of dominance. Many NRAs have used regulation of
operators
with SMP to open markets and to improve the provision of services. Users and
alternative carriers have had good reason to be thankful for regulation based on
SMP.
However, the central issue is not SMP itself, but rather the transition to a
competitive
market.

Using the competition law criterion for dominance in order to impose ex-ante
regulation
is not necessarily a step towards stronger reliance on competition law. It could
prolong
the transition to full reliance on competition law, and may impede the operation
of
competition law in the sector. There seems to be confusion between the application
of
competition law to the sector and the inappropriate use of certain competition law

terminology to create new regulation. In competition law dominance per se is not a

problem, it only becomes an issue where there is abuse. Imposing ex ante
obligations
on operators found to be dominant is not applying competition law, it is just
another
name for regulation. The real test for ex ante regulation should be whether there
is
effective competition, which requires an examination of each market. If the level
of
competition is unacceptable and if it is due to a market failure or the behaviour
of the
players, that can justify administrative regulation of the operators in the
market.
Operators would continue to be bound by competition law in terms of Articles 81,
82 and
86 of the Treaty.

One procedural problem arises, since a new definition would be open to legal
challenge,
which could take several years to resolve. During that time NRAs would be
effectively
impotent in the face of SMP operators. This is something which many users and
smaller
operators consider to be too horrible to contemplate. Uncertainty is of benefit
only to
established players who can pay for and can sit out the legal proceedings. It is
to the
enormous disadvantage of new or potential entrants, who will be unable to enter
the
market and may go bankrupt waiting to enter the market.

A central question in the regulation of telecommunications is the regulatory
regime for
mobile operators. A very strong case can be made that mobile operators demonstrate

"joint dominance" in terms of Article 82 of the Treaty. However, there have been
no
cases brought against telecommunications operators and until the courts have ruled
on
this matter it cannot be certain. An analysis of joint dominance is given by the
Commission in its Notice on the Application of the Competition Rules to Access
Agreements in the Telecommunications Sector: framework, relevant markets and
principles.18

The proposed Directive on Universal Service and Users' Rights contains a
requirement
for mobile number portability in all member states. At present this is available
only in
some and is being made available in others, but very slowly. Mobile number
portability is
a prerequisite for competition in the mobile telecommunications market. Without
this
users are locked into their existing suppliers and can change operator only with
considerable disruption and expense.

It also imposes the contractual right to "up-to-date information on all applicable
tariffs".
This will require operators to make available detailed information about roaming
charges
in order that their customer can manage their use and confirm the accuracy of
their bills.

Roaming prices

The data for this survey were gathered and analysed by INTUG Europe directly
through browsing the web sites of the GSM operators and through telephone calls
made
to customer service centres. The two largest GSM operators were selected in each
of
the member states of the European Union, with the exception of Luxembourg and the
addition of Norway. Norway is a member of the European Economic Area and falls
under
identical competition law to the European Union, through that treaty.

The model call selected was of 2 minutes and 15 seconds. The cost was calculated
in
Euro, excluding VAT. Where different charging schedules existed, the business
subscription was used. Pairs of calls were compared, those from country A to
country B
looking at the charges to a domestic subscriber in country A and a visiting
subscriber
from country B. In order to calculate the cost of this call, the following data
were
gathered:

call set-up charge (if any)
call charge per minute at peak time
times when peak charges apply
unit of time used for charges

It is often difficult to obtain information on roaming prices, as these are not
always
provided on web sites.19 Enquiries were made by electronic mail messages,
telephone
calls and faxes to customer care numbers.

Operators do not seem to act in the spirit of customer care and may breach of a
number
of European Union directives, including those on Unfair Contract Terms and
Consumer
Protection. The Proximus web site contains one of the most telling and severe of
warnings.20 When downloaded in July 2000 it provided data from November 1999 with
the following warning (also available in French and in Flemish):

The version of the brochure that you can download here, was
published in November 1999. The prices quoted in the
brochure are merely given as information and depend on the
foreign networks as well as on the current exchange rates.
Belgacom Mobile N.V./S.A. can in no way be held
accountable for any changes or discrepancies. Belgacom
Mobile N.V./S.A. can not guarantee the availability of
services offered abroad. Foreign operators may decide to
change them without prior notice.

For more information about calling to and from abroad,
please refer to our ProxiWorld page.

Given that Proximus customers have no access to information on foreign operators’
charges it is hard to know what they are expected to do. The customer has a
contract
only with Proximus and can reasonably expect Proximus to comply with European and
Belgian telecommunications and consumer protection legislation. Certainly Proximus

will have no hesitation in billing the customer for any roaming calls. It is not
at all clear
that this sort of disclaimer is fair or reasonable.

However, Proximus is not alone in this. Most operators disclaim some measure of
responsibility, especially against currency fluctuations and changes of tariffs by
other
operators.

Another potential source of information for the user is the foreign operator.
Given that the
home operator adds a percentage to the IOT it is impossible for the foreign
operator to
tell the visiting roamer what the charges will be. In some cases the mark-up
varies
according to the nature of the contract and tariff with the home operator.
Consequently,
the only realistic source of information has to be the home operator.

In the case of the two Greek operators, Panafon and TeleSTET, neither provides
information for customers. Their respective web sites describe roaming but offer
no
roaming prices. Telephone calls to their customer care numbers received the answer

that they merely added a charge to the amount levied by the foreign operator,
something
about which they were ignorant. However, they could provide the prices their
networks
charged to visiting foreigners, but without the mark-up that the home network
would add.
Neither Telecom Italia Mobile nor Telecel (Portugal) provided roaming information.

Without an accurate tariff it is difficult to see how a customer could verify or
dispute a
telephone bill. To be told that a charge was what a foreign operator asserted was
the
cost, plus a mark-up, is insufficient. Clearly this raises questions of compliance
with
national legislation on pricing information and on accuracy of billing.

There are two obvious approaches to pricing which are replication of charges in
the
roaming country and flat pricing.

The data for calls between Denmark and Ireland are given below (see tables 1 and
2).
Since 1999 the roaming prices have risen and become much more closely aligned.
There is now little variation for a Danish subscriber in Ireland in the four
possible
combinations. The mark-up over the cost for the Irish subscriber is in the range
70 to 80
percent. Prices for Irish subscribers in Denmark have declined sharply.

Table 1 - Denmark and Ireland prices in Euro (1999 in brackets)

Calling to Denmark from Ireland
EirCell
Esat Digifone
Danish subscriber
Sonofon
2.14 (1.85)
2.21 (2.11)
TeleDanmark Mobil
2.14 (2.05)
2.21 (2.12)
Irish subscriber
non-roaming
1.25 (1.74)
1.24 (1.57)

Source: INTUG Europe data.

Table 2 - Denmark and Ireland prices in Euro (1999 in brackets)

Calling to Ireland from Denmark
Sonofon
TeleDanmark Mobil
Irish subscriber
EirCell
1.95 (2.80)
1.36 (2.90)
Esat Digifone
1.02 (2.20)
0.87 (1.96)
Danish subscriber
non-roaming
n/a (1.42)
0.93 (1.37)

Source: INTUG Europe data.

The surcharge of over 100 per cent seen in 1999 has almost disappeared in the case
of
Esat Digifone customers, though Eircell customers are still paying a surcharge of
forty
per cent. This seems to be moving in the correct direction and reflects the sharp
drop in
international call prices in Denmark.

There are a number of plausible factors which would explain variations in costs:

marketing strategies of operators
costs of access to international circuits
volume of traffic
ease of negotiating roaming contracts
comparative economic costs (labour, capital, etc)
international exchange rates
licence fees (especially initial charges)

Nonetheless, the variations in roaming charges are so considerable as to require
further
study and explanation.

Figure 1 shows the average roaming charges for the specimen call for the
operators. Variations since 1999 can,
in part, be accounted for my currency fluctuations for those countries not
participating in the Euro. Figure 2
shows, for the purposes of comparison, the average cost of international calls
made while in the home country. It
shows some marked reductions from 1999.

Taking a wider comparison of tariffs it is possible to see just how variable the
prices are. Table 3 shows
prices per minute for telephone calls from France to Belgium. Each country has
three GSM operators,
though not all have roaming agreements. Prices for roaming customers are two to
three times the
prices for home customers. However, compared with popular calling cards used in
callboxes, the ratio
is much higher and when compared with Viatel, a low-cost provider, the ratio is a
factor of ten. These
are adjoining countries, with French an official language in Belgium. Mobistar is
a member of the
France Telecom Group.

Third generation roaming

Roaming on third generation networks is intended to be as global as possible.
Since there are five
frequency bands approved for IMT-2000 and three different technologies, it could
require a very
sophisticated handset. One proposed solution is the software defined radio, though
this could require
the user to pay for an expensive handset. In remote, mountainous and polar regions
access to mobile
telecommunications may require the use of satellite services and special handsets.

If the present complexity of pricing for roaming is not eliminated, then it could
become even more
intolerable, once more advanced services are added.

A number of technical solutions are possible for voice telephony. For example,
least cost routing could
be performed by the handset, using information downloaded from an operator or a
third party. Some of
the existing standards, including GSM, allow for the real-time display of the cost
per minute or the
cumulative cost of a call on the LCD panel.

It is expected that location-based services will play an important role in third
generation services. These
are of two types, commercial and emergency services. In the case of a call to
emergency services
numbers, then such location information as is available must be passed on,
overriding any privacy
concerns. It can assist the emergency services in arriving speedily at the correct
location. Commercial
services will require an opt-in before user location data is passed to anyone and
with an additional
override function which can be used to block the location being passed on a
one-off basis. This
becomes very complex when roaming. Logically and legally, the jurisdiction for
data protection is the
country being visited, rather than the country from which the roamer comes.
However, the roamer may
not know the nature of the data protection regime in force or its consequences.
Indeed, the service
providers may not be aware of the location of the roamer. It is essential that the
privacy of users must
be protected seamlessly.

In m-commerce there will be a default URL or its equivalent and a limited range of
options. This raises
issues which are familiar from long established competition law on airline
customer reservation
systems and television electronic programme guides. It will be necessary to
regulate carefully the
provision of such services to ensure that there is a competitive market. If the
default setting can be
changed by a third party, then it opens issues of security and creates a real
danger of "slamming",
especially when abroad.

A number of operators have already tried to achieve what has been called the
"walled garden", where
users will only be able to access the range of services provided by the operator.
Competition and
regulatory authorities seem to be taking a robust view that this is
anti-competitive.

The user needs to be in control and no change or additional charge should occur
without a warning and
a positive acceptance by the user in a language acceptable to the user, not
necessarily the local
language.

Conclusion

The costs of international roaming are a very serious concern to consumers and
businesses, and are
being inadequately addressed by the industry. Politicians and regulators, at least
in Europe, have
become more alert to the problem and action is beginning to be taken to introduce
the necessary
elements of competition. Businesses have increased their pressure on operators to
deliver
cost-effective global services. Nonetheless, operators seem loathe to lower
international roaming
charges.

Further, GSM operators have made it remarkably difficult for customers to
ascertain the prices of
roaming telephone calls. Moreover, information provided may be inaccurate,
incomplete or only
approximations. Compiling the data for INTUG surveys proved to be far from
straightforward. The
provision of information is inadequate and in some instances could be considered
in breach of
consumer protection and telecommunications laws. The next stage will be to compare
the cost of real
calls with the published tariffs, once the bills for July roaming calls are sent
out.

Overhead and operating costs are incurred in roaming and these should be
recovered. However,
consumers are clearly being over-charged and sometimes by considerable amounts.
Setting aside
roaming, it would appear that some and probably many GSM operators are charging
very high prices
for international calls from their domestic networks. There appear to be generally
substantial mark-ups
on the cost of international calls and only limited pressure to reduce them.

The problem of high charges arises from the nature of the licences and the manner
in which the
operators have sought to exclude competition and to obtain the maximum leverage.
Competition law is
directly applicable because operators are jointly dominant. In the European Union
and European
Economic Area there are considerations from the allocation by the state of special
rights, in the form of
GSM licences. Further issues arise from merger control with groups such as
Vodafone, France
Telecom and DTAG building their pan-European and global companies.

There is no evidence of the effects of competition in roaming charges, largely
because of the industry
structure, in which services are tied to networks. These in turn require licences,
which governments
have used to shore up dominant incumbents and to encourage the growth of new
businesses. Recently
they have become a means to raise money. The simplest means to introduce
competition would be to
license Mobile Virtual Network Operators (MVNOs).

The outcome of the EC's Competition Directorate General investigation will go a
considerable way in
helping to increase competition and to understand the position. It is an
interesting test of the
application of competition law to telecommunications. The INTUG study was
undertaken in Europe both
to contain its scale and because there was an audience for it, in the European
institutions. The
recommendations are reproduced in the Appendix. It would be possible to do this on
a global level, but
there is nowhere to take such a complaint. Thus, it would need to be addressed
country by country.

Roaming on third generation networks is fast approaching, the first services will
be rolled out in 2001.
Arcane roaming charges will have to be eliminated, it will be necessary to avoid
slamming and other
abuses when arriving in foreign countries, and consumer protection against
extremely complicated
privacy issues must be insured. Finally, the possibility for services, which are
truly global in scope
must be created.

References

European Commission (1997) Communication on the further development of mobile and
wireless communications. COM (97) 217 final

European Commission (1998) Communication on the implementation and functioning of
the mobile communication frequency directives. COM (98) 559

European Commission (1997) Communication: Results of the public consultation on
the
Green Paper on the convergence of the telecommunications, media and information
technology sectors. COM (97) 623

European Commission (1997) The Convergence of the Telecommunications, Media and
Information Technology Sectors, and the Implications for Regulation Results of the
Public
Consultation on the Green Paper. COM (99) 108

Council of the European Union (1990) Council Recommendation of 9 October 1990 on
the
co-ordinated introduction of pan-European land-based public radio paging in the
Community (90/543/EEC; OJ L310/23, 09.11.90)

European Union (1996) Directive 96/2/EC of 16 February 1996 regarding mobile and
personal communications. (OJ L 20/59, 26.01.96)

European Union (1997) Directive 97/33/EC of the European Parliament and of the
Council
on Interconnection in telecommunications with regard to ensuring Universal Service
and
Interoperability through application of the principles of Open Network Provision
(ONP).

European Commission (1999) Discussion Document. The 1999 Review: the regulatory
principles.

European Commission (1999) Explanatory note: on tariff principles for fixed to
mobile
calls originating from the fixed network of an operator notified as having
significant market
power.

European Commission (1998) Green Paper on Radio Spectrum Policy in the context of
European Community policies such as telecommunications, broadcasting, transport,
and
R&D.

European Commission (1994) Green Paper on a common approach in the field of mobile

and personal communications in the European Union. COM (94) 145, 27.04.94

http://www.tpeditor.com/contents/2001/sutherland.htm

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