From the BBC:
A European Union (EU) law to abolish roaming charges for people using mobile phones abroad comes into force today [15 June 2017]. The new rules mean that citizens travelling within the EU will be able to call, text and browse the internet on mobile devices at the same price they pay at home.
I'm always wary about govt intervention in such matters, but in this instance, fair play to the EU, I can't see a downside.
We know that the price which people are willing to pay exceeds the actual cost of the satellites, or else mobile companies would not be prepared to pay such huge amounts of money for the radio spectrum. The surplus is 'unearned' income or rent. The question is, who gets the surplus - best is the government (as licence fees, quasi LVT); next best is the consumer (via capped prices) and worst is letting private companies collect it.
This has been a long time coming, from The Guardian, three years ago:
Roaming charges for using a mobile phone abroad will be abolished from December 2015 in proposals expected to be voted through the European parliament on Tuesday, but operators have warned that bills could rise domestically to pay for the change...
... a coalition of networks representing 45m consumers has warned that the legislation is so badly designed that the cost of domestic calls could rise to pay for it.
"There is a risk that domestic tariffs for European consumers will increase," according to the roaming coalition. "Roaming might not be subject to surcharges anymore, but the overall level of tariffs would increase, and non-roaming customers might effectively foot the bill for roaming customers."
Yeah right. We've covered that - prices are set by what consumer is willing to pay, not by costs. Domestic users are prepared to pay £x and not a penny more. They don't care what other people pay and for what.
The mobile companies have had years advance warning that this would happen, so if they are right, they would have been nudging up prices in anticipation. Have they?
Nope. Prices have been drifting downwards for years, see recent Ofcom report.
Disclaimer - I've no downer on mobile phones and mobile phone companies, they are brilliant. While they share a monopoly, between themselves they appear to be highly competitive. It's the landline people who take the piss.
Dark thoughts
3 hours ago
18 comments:
It is a price control. In some way it will fail.
L, to a large extent the mobile phone companies were a cartel. They could all charge high prices for roaming because they all charged high prices for roaming. I suppose the amount of money involved wasn't large enough for any of them to break ranks. "The market" isn't very good at controlling cartels and monopolies.
B. Sooner or later one would break ranks...
B. Agreed re markets and monopolies. History is replete with examples. If rewards were big enough we should expect an oligopoly to transpose into a monopoly in similar manner to a Standard Oil.
P156. B said mobphoncos are a cartel. I do not agree with that - on the evidence that exists. A cartel is consequent upon collusion to overcharge or otherwise defraud the public. Banks yes. Mobile Phone Co's. No. See this table
https://en.wikipedia.org/wiki/List_of_United_Kingdom_mobile_virtual_network_operators
However in some countries mobile is a monopoly - real or with one dominant provider. Mexico springs to mind. But even there there are many more than one carrier. See here
https://en.wikipedia.org/wiki/Category:Mobile_phone_companies_of_Mexico
I am entirely unconvinced by the monopoly and / or cartel arguments.
L, I don't think mobile phone companies are a cartel, except for when it comes to roaming charges. If they are not a cartel, the are acting like a cartel. No-one is breaking ranks because the market for roaming is not big enough to make it worthwhile.
B. Correct. But sooner or later one company would've broken ranks and made cheap roaning part of its deal.
I just renewed my deal and it's gone down from £9.80/month to £9. On top of this, my data went from 2.25GB to 3GB and 250 mins has gone to 1050. So in other words clearly no impact on the magic tap of roaming charges getting turned off.
I'm not sure whether they are a cartel or not.
But gradually falling prices means that their threat was empty, which is the main point.
> Lola
"...it will fail" could be. You could see an industry split with low budget mobile phone sims only working domestically.
Roaming charges are not just a sur charge from the phone company for an extra service, they start from inter operator wholesale charges between telecom operators who are not partners. When call from abroad you are not connected to your mobile provider's network. You are connected to a different network and they charge your provider.
D. I was going to make that point in your second paragraph.
As to 'sim only deals' - yes. Mrs L. is on just such a deal. We bought the 'phone and she gets a very cheap sim and excellent roaming service - better than mine in fact.
Din, it might well be that national providers rip each other off on a mutual basis, but they won't be able to any more. The gains and losses cancel out.
L, doesn't that sort of disprove your own point?
MW. No. Market forces will make networks do deals. Why wouldn't they.
FWIW the barriers to entry for mobile comms are much lower than fixed line comms.
"FWIW the barriers to entry for mobile comms are much lower than fixed line comms."
They wouldn't be if BT Openreach was nationalised, which it should be, as it has a land-based monopoly.
L, I'm very wary of shouting "market abuse" etc, but surely the acid test is whether non-roaming charges go up or not?
> M W
Agreed , the Telcom operators can sort it out, UK telecom "Pebble network" offers domestic roaming between networks in the UK.
MW. Not necessarily 'go up'. How about not 'go down'?
L, that's the problem, how will we know whether price declines would be any different without ban on roaming charges?
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