International roaming charges: over-charging and competition law

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$ 1000 million, with continuing rapid growth. However, users quickly realized 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 2–10 times for the same or a similar call. These data have 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.