Ovum comment: International roaming legislation

Yesterday, in Luxembourg, the Council of Ministers of the European Union unanimously adopted the much talked about legislation to cap international roaming fees. Like the coach of a football team losing 0-1 at half time, Commissioner Reding told those assembled that Europe is waiting for their action and called on the Council to show its ability to deliver to its citizens. The regulation is due to come into force on 30 June 2007.

Ovum research analyst Matthew Howett comments:

In announcing the verdict of the 27 member states, Commissioner Reding spoke of a great day for Europe and her desire to make the internal market work. However, this piece of legislation is not without controversy. It marks the first time in its history that the European Commission has intervened in limiting retail prices and sets a record for the speed at which it was implemented. Whilst diverting from the principle of only regulating at a wholesale level we don't see this as setting a worrying precedent for the future but more of a one off desire to fix a market that for too long has failed to function competitively.

What has surprised many is the absence of any regulation on SMS and data where it appears the same market failure exists. However, the Commission has committed to monitoring these services over the next 18 months and will not hesitate to step in here too if the market does not initiate lighter forms of self regulation and show it can bring prices down.

Operators and lobbyists were partially successful at softening the blow of this legislation having insisted on an opt-in clause. But let us not be fooled. Reding was prepared to move from her initial hard-line position because she considered core elements had been preserved. This is certainly a style that we have gotten used to from the Commissioner. With first class negotiation skills, Reding will initially take the most ambitious stance knowing that after compromising she will get the deal she really wants.

Further compensation (potentially billions of euros) to operators may yet come with increased GSM spectrum flexibility and the Commission's plans to reform today's slow and bureaucratic spectrum policy. We will know more in October when the Commission is scheduled to announce its revision to the EU framework.

Whilst making it known that she had done all in her power for now, Reding couldn't resist one last opportunity for intervention. When questioned on possibly bringing forward the date of publication in the Official Journal of the EU she joked 'if it were in my hands, it would have already been published'. Her resolve to bring in this legislation couldn't have been better illustrated.

Matthew Howett is a research analyst for the [email protected] advisory service, based in London.