Vodafone Malta considers the capping proposals put forward last week by European Commission on roaming charges as illegal and unnecessary.
Reacting to last week’s proposals tabled by European Commissioner, Viviane Reding, aimed at reducing costs for mobile telephony while customers travel throughout the European Union, go mobile has said it is keeping a close eye on developments, while Vodafone Malta was somewhat more critical of the proposals.
A go mobile spokesperson contacted by The Malta Business Weekly said that, “Go mobile will remain true to its promise to always give its customers the better value. We are following these market developments with a keen eye and we will evaluate the various options available to us with a view to lowering our international roaming rates once these announced reductions come into play. An announcement in this regard will be made in due course.”
Vodafone Malta, however, was far more scathing in its comments, “Vodafone is of the view that the initiative is illegal as well as unnecessary. The EU Treaty protects companies and customers from arbitrary and unjustified regulation. The Commission has no legal basis for what it proposes.”
While many saw last week’s EU proposal on action to be taken as regards the heated issue of
roaming charges within the EU as a backtrack, European Commission president, Jose Manuel Barroso, described the decision as a “compromise”.
In a nutshell, wholesale charges, those paid between operators, are to be capped at no higher than 30 per cent above the base cost by summer 2007. After six months, plans to introduce a similar cap on retail prices will take effect. The Commission’s proposals will see the cost of phoning home drop to a maximum of euro0.49 per minute (approximately Lm0.21), while the cost of receiving a call while abroad will drop to euro0.16 (approximately Lm0.07)
A previous proposal that would have effectively prohibited mobile telephony operators from charging customers for receiving calls from their home countries while travelling abroad, meanwhile, has been replaced by a maximum charge.
“If allowed to work, competition is much more effective at delivering value to customers, and can do it much quicker than regulation,” a Vodafone Malta spokesperson stressed. “It is clear that the customer’s voice has got lost in Brussels today. The Commissioner’s position on what customers want has changed at least three times and still appears to lack any fundamental foundation or justification.
“Based on Vodafone’s research of traffic trends among roaming customers, the Commission has produced a price structure which has the most expensive price for the type of call most frequently made. Over 80 per cent of roaming calls are made to a number registered in the home country, so it is hard to see how this is in the interests of the majority of consumers.
“Regulation, which will have profound consequences for millions of customers and for one of Europe’s most successful and dynamic industries, has been shaped and reshaped at the last minute by internal Commission politics.”
Go mobile, meanwhile, highlighted its Travel & Talk tariff, which is aimed at simplifying roaming charges and making them more convenient. “The tariff, which was very well received by our customers, allows our customers to take their local everyday tariff abroad with them when roaming on a number of networks in Europe, the USA, Libya and Tunisia,” explains a go mobile spokesperson. “With Travel & Talk, a typical four minute call made from the UK to Malta costs just Lm0.90. Travel & Talk is today available in 26 networks in 24 countries.”
Turning to the wholesale aspect of the Commission’s proposals, Vodafone Malta said that as opposed to offering better or lighter regulation, “these proposals are the most prescriptive imaginable and would force us to withdraw the very tariffs which have delivered better value in roaming”.
“Not only is the Commission proposing to separate roaming from the other mobile services our customers buy, and we sell as an inseparable part of an overall service, but they are proposing to separate each different type of roaming call and set the exact price level of each.”
The fact that the proposals mean that no minute of any call can exceed a level which is set at ‘cost’, Vodafone Malta explains, leaves no room for the kind of competition or innovation that characterises the European mobile industry and which has been central to its success.
“The Commission is setting the same cap for every operator in every market and for every type of customer, despite the obvious differences between them.
“The Commission will now allow operators to charge to receive calls, but it still believes it is able to set the price. It obviously decided it got it wrong when it proposed to reduce the charge to zero, and we believe it has got it wrong again under the new proposals. Customers buy an overall service from their mobile operators, not just incoming calls, and tariffs should be free to reflect that.”
Vodafone Malta had equally harsh words for the retail aspect of the proposals, commenting that “retail price regulation like this has not been attempted even in monopoly markets where there is no prospect of competition”.
The spokesperson added, “services which are the product of competition, like Vodafone’s Passport – where customers pay a fixed fee for the first minute of around 70-90 euro cents and pay the home rate for every minute after that – would become illegal under the regulation, which prohibits any minute costing more than the cap.
“This is a good example of how regulation suffocates innovation and removes choice from
customers.”
