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Summary

On November 21, 2018, Brazil and Chile signed an agreement to end international roaming charges between the two countries as part of a free trade agreement. Once the agreement has been in effect for two years, all roaming fees will be reduced to zero. Zero-roaming-fees agreements are becoming more popular around the world. However, without pan-regional regulations (as in the EU) in place, the agreements can be more challenging to implement.

Without a pan-regional regulator, it can be difficult to introduce restrictions on permanent roaming

Brazil and Chile have signed a free trade agreement, which expands and updates the previous 1996 agreement. It eliminates import tariffs on the bilateral exchange of goods but also includes other non-tariff areas such as e-commerce, services, and the elimination of international mobile roaming charges. The zero-roaming-fees agreement between Brazil and Chile should ensure greater cross-border competition and integration as well as stimulating trade and tourism. Brazil is the main market for Chilean investment, estimated to be $31bn. Roaming charges will be reduced over two years, and once the implementation period has ended, roaming charges will reach zero.

This is not the first zero-roaming-fees arrangement in South America. Chile and Argentina announced at the end of 2017 that they are working toward eliminating roaming charges between the two countries by 2020, and Chile has signed an agreement with Peru to end the fees by 2020. "Roam like at home" in the EU is probably the best-known zero-roaming-fees agreement, effective since June 15, 2017, but discussions to end international roaming fees are becoming more common elsewhere too. At the seventh annual meeting of the Inter-American Telecommunication Commission, 19 countries signed up to an agreement to commit to removing roaming fees by 2022. The countries include Argentina, Brazil, Canada, Colombia, Mexico, and the US as well as several Central American and Caribbean nations. Once it has been implemented, mobile customers from the participating countries will be able to make a call, access data services, and send an SMS from within any of those countries at the same price as on their home network. Chile did not sign up to this arrangement and so has been working on separate agreements.

While roam like at home has been very successful with customers in the EU, there are concerns around how successful such arrangements are in the Americas. A large proportion of users could see a price rise to cover the cost of roaming, which would be particularly detrimental to those who do not travel and cannot take advantage of zero-fees roaming. However, operator revenues have been declining for many years now, and roaming fees constitute a very small proportion of an operator's revenue, so an increase in tariffs would be small and have a limited impact on customers' bills.

Crucially, unlike in the EU, there is no pan-regional regulatory oversight in the Americas. This makes it far more difficult to introduce pan-regional regulations. Specifically, in the EU there are restrictions in place to ensure users do not exploit the system by permanently roaming. These were outlined by the European Commission and implemented by national regulators. This issue would need to be addressed collectively in the Americas as well to guarantee that subscribers do not buy subscriptions from markets that are cheaper than their home country and then continue to use them in their home country. Each national regulator would also have to separately look to control the wholesale prices that operators charge to ensure this policy is successfully implemented.

It is also important to note, though, that some Latin American operators have already introduced offers that do not charge for roaming services to certain countries as part of their postpaid mid/top plans. América Móvil is the main operator offering deals that include roaming to a range of countries as well as including usage caps. It seems the market is already attempting to resolve the roaming debate through commercial agreements rather than by requiring regulators to legislate.

Appendix

Further reading

Impact of "roam like at home" (RLAH) regulation in the EU, GLB005-000036 (April 2018)

"'Roam like at home' in the EU is already causing price increases," TE0007-001136 (April 2017)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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