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Summary

A new approach to the EU's fair use policy regarding the end of roaming charges from June 2017 was announced on September 21, 2016. This follows the European Commission's (EC's) U-turn on its original draft guidelines earlier in September 2016. In contrast to the original proposal, the EC decided that there should be no limits on duration and volume imposed on consumers when using their mobile devices abroad in the EU. Instead, the EC agreed new draft rules that would put safeguards against potential abuses in place for operators. However, before a final decision can be adopted, it is likely to face considerable resistance from the industry.

Operators are likely to challenge the draft fair use rules because they could be complex and costly to set up

The original proposal announced on September 5, 2016 stated that users would only be able to roam at domestic prices for a total of 90 days per year and for no more than 30 days at a time. It would also have introduced a cap on usage by customers on mobile contracts with unlimited data volumes. However, following backlash from consumer groups, the new approach scraps these restrictions and replaces them with a set of safeguards for operators to avoid instances of permanent roaming. Following a period of consultation, the EC expects to adopt the final decision by December 15, 2016. However, it seems likely that operators will decide to oppose the proposal.

Ultimately, the EC's goal is to prevent customers living in one country, such as Ireland, from purchasing a SIM card from another country such as Latvia, where prices are approximately 6.5 times lower. The EC wants to prevent this because the practice would result in an unsustainable model whereby the Latvian phone company would end up paying higher prices on the Irish wholesale market than what it would be earning from the customer. As a result, the new draft document focuses on establishing the residency of each EU citizen, which qualifies them to roam at domestic prices. Periodic travelers will be allowed to "roam like at home" on a SIM card from a member state that they are resident of or another member state that they have stable links with because they have a frequent and substantial presence there. Operators may ask users to provide forms of proof of residency and evidence of stable links, such as documents confirming employment or participation in recurring courses of study. Rather than clarifying the situation around the abolition of roaming charges, the new proposal seems to complicate the process for providers further. Despite the EC providing examples of "stable links" such as expats that are regularly in their home country and Erasmus students, a "frequent and substantial presence" is still generally left open to interpretation. This could make it difficult to enforce.

Meanwhile, the safeguards in the draft document allow operators to automatically check usage patterns of customers to ensure that roaming traffic does not significantly overshadow domestic use and that SIM cards are not exclusively used for roaming purposes. If operators detect such abuses, they must first inform users before they are able to apply surcharges (which cannot apply retroactively) of no more than €0.04 per minute, €0.01 per SMS, and €0.0085 per MB. Operators are also obliged to put a complaints procedure in place to handle any customer disputes on the matter. These safeguards are unlikely to be welcomed by operators, which will see this as a significant burden on them. The implementation of the safeguards could be costly and complicated, particularly in comparison to the 90-day cap proposed originally, which would have only affected 0.1% of users and would have been considerably easier to monitor.

Appendix

Further reading

"Europe's "no roaming charge" vision is blind to market realities," TE0003-000860 (July 2015)

"EU operators still see opportunity in international roaming," TE0007-000905 (May 2015)

"BEREC has a big task ahead in tackling IoT, OTT, and roaming," TE0007-001001 (March 2016)

"EC withdraws fair use policy aimed at preventing permanent roaming," TE0007-001058 (September 2016)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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