The European Commissioner every telecoms executive loves to hate is at it again – Viviane Reding will today propose further legislation to cap mobile phone prices: further reductions to call prices and also this time for SMS and mobile internet data charges. These proposals follow rules put in place in 2007 to limit call charges for calls made abroad.
So what should be made of this? The BBC and the Irish Independent give the standard line – that legislation in this area will help consumers, although the BBC erroniously says it’s the EP doing this, not the Commission. On the other side BERR and Ofcom in the UK have got their attack in first (as reported by The Guardian), yesterday voicing their concerns about the Commission proposals and how this could lead to an increase in call charges for poor domestic consumers. This UK government position also states that a 2011 start date, as hoped by the Commission, is too optimistic. T-Mobile and Vondafone share the UK government concerns – no comment on that.
But let’s take a step back here. What essentially is going wrong? The way the mobile telephone market is structured in Europe is, well, not enough of a market. Each country has 3 or 4 operators that partially compete and partially collude, with national regulators to keep an eye on them. When you take your phone away from your home country you’re completely stuck. Most of the time you have no choice over the network you connect to, and all of them charge a hugely inflated rate.
Let’s make a comparison: driving a car and filling it up with fuel. This would mean that if you filled your car at Shell stations they gave you a decent price for fuel. You can’t use Esso, BP or your local supermarket station. Then when you go once a year on holiday in your car you can fill it up at any station you want to, only all of them charge you four times as much for a litre of fuel as the locals pay for the same fuel. Sounds silly? Well, that’s more or less how the mobile market is in Europe.
So what does the Commission do? Well it cannot force changes to the market. It cannot create a proper EU-wide telecoms regulator as the Member States would cry foul. But it can manage to make the populist decision to cap prices, nevertheless leaving the problems with the market essentially unchanged. Better than nothing I suppose, but far from satisfactory.