In the latest in our series, Arianna Andreangeli from University of Edinburgh’s Law School says Brexit could have a big impact on moves towards a digital single market
The time is coming when many start planning the next summer getaway. In addition to booking a hotel, arranging for a flight or train ticket and perhaps booking a transfer, thinking about how much it will cost to keep in touch with friends and family via ‘phone, text and social media is now an item high on every traveller’s agenda.
Nearly 30 years since the start of the process of telecommunication liberalisation at European Union level, which culminated, in 1998, with the exposure of infrastructures and voice telephony services to competition, consumers have become increasingly savvy in the way in which they manage their mobile ‘phone bills. They can count on a wide variety of providers, some of which “own” their own infrastructure—such as, in the UK, Vodafone, Three and BT/EE—and others—like, for instance Mobile4u—who, as virtual operators, “buy” access to other companies’ facilities. However, going abroad can represent an additional challenge even for the more discerning consumers: whether they rely on a contract deal or just on a pay-as-you-go Sim card–the thought of having to shoulder sometimes significant roaming charges once abroad still creates concerns to many of us. It is not just about the actual amount of charges, but more generally about an issue of transparency–in other words, what seems perhaps more worrying to many users is not knowing how high or how low these charges will be and therefore being potentially exposed to the risk of receiving a very hefty phone bill.
To ensure that the free movement of mobile telecommunication services becomes a reality without compromising in the assurance of high consumer protection standards, the EU has taken action, starting back as in 2008, to address these issues—an endeavour that has been matched by proactive action on the part of the incumbent companies. Over the past few years mobile phone service providers, in tune with the demands of travellers, have sought to adapt their business models in order to be better able to internalise roaming costs in clearer, leaner charges: however, not all customers were best served by these deals. For instance, paying £2 as a one-off charge, as advertised by, among others EE (EuroTalk and Text Unlimited), on top of normal user rates for, say, a week’s worth of data services used abroad may sound quite a good deal if one relies on a smartphone for daily use, whether to make calls or to access the internet while away. However, since the fee is payable once the phone is used for the first time from abroad, a customer could be forgiven for feeling aggrieved if he or she was charged according to his or her price plan for a two-minute phone-call plus the extra £2, just to alert Mum of one’s safe arrival.
Five years later, however, it became clear that more action was needed if the elimination of roaming charges was to become a reality. Thus, on July 1 2014 operators lost the right to levy a fee for receiving calls when their customer used his or her phone in another member states; as to making calls, they were faced with the choice of either implementing the ‘roam like at home’ policy and thereby allow their customers to use their devices anywhere in the EU at domestic rates. Or they could continue to charge, but at a cost: their clients could in fact seek out competing roaming charges in another member state for the time that they spent abroad.
In 2015 the EU Commission enacted a regulation setting up a system of price caps, aimed at facilitating the elimination of roaming fees and at improving the standards of transparency and of consumer protection across the internal market as a whole. The regulation also sought to improve the safeguards for telecom operators, by providing a “fair use” policy and a “sustainability mechanism”: consumers, on the one hand, were told that they could not benefit from “free roaming” to “abuse” their free movement rights—by, eg, downloading “anomalous” quantities of data. Telecom operators, on the other hand, were allowed to petition their regulator to be allowed to reinstate charges if “free roaming” could undermine the viability of their tariff plans.
Against this background, 30 April 2016 represented a momentous date. Following the vote of the European Parliament in October 2015, the proposal made by the Commission and adopted by the Council in July of the same year has taken effect, leading to a drastic reduction of existing caps on charges effective as for 30 April 2016 and eventually to the outright abolition of roaming fees on 30 June 2017. The change has meant a drop of €0.14 per minute of outgoing voice call (down from €0.19 to €0.05), with incoming calls being charged €0.0114 per minute, about €0.0386 less.
It is therefore clear that, thanks to action at EU level, we are truly moving toward an effectively open market for the supply of mobile telephone services: this is an extremely significant and positive achievement, for the member states, for businesses and for consumers alike, to the extent that it fits in and is directly influential to the broader Union’s commitment to creating a “digital single market” throughout the Union.
Announced in May 2015, this wide masterplan aims to establish an area without internal borders where both consumers and suppliers can, respectively, “buy like at home” and “sell like at home” digital goods and services. The strategy encompasses three pillars: the abolition of existing barriers to the free movement of these goods and services; greater investment in infrastructure to support and boost growth in this key area of the European economy; and supporting the digital economy more specifically, by boosting, among others, the free flow of data, the standardisation of protocols for the supply of digital services across Europe and the promotion of interoperability and encouraging new entrepreneurs to “make a go” of digital services in the EU.
In this context, the changes that have taken effect on 30 April 2016 are an indispensable step to contributing to open markets: in the words of Andrus Anslip, EU Commissioner in charge of the Digital Single Market agenda, by making these charges “memories of the past”, it will be truly possible for “every European to access the content of their choice, without interference or discrimination” arising from price differentials. A more integrated digital market will therefore benefit also businesses, who will be fully capable of operating and competing on a level-playing field it also showed that mobile phone operators are under considerable pressure to provide cheaper, more innovative and more efficient services.
So far so good, then? From a consumer’s standpoint it certainly seems so, thanks to one of the finest examples of EU market integration. However, another eventful date can derail this trajectory from now til June next year, at least for UK citizens and commercial entities, namely 23 June 2016. Could Brexit affect the “glidepath” toward a European digital single market?
This certainly is a key question–as the UK leaves the Union, it could be expected that these provisions, to the extent that they belong to EU law, may no longer be applicable, thus leaving British telecom operators able to “reinstate” the roaming charges again. However, would this be a “sensible proposition”?
From a political standpoint, the UK government has affirmed a strong commitment toward the full integration of the telecom services’ industry throughout Europe, the abolition of roaming charges being essential to the free flow of digital commodities between the UK and the Continent.
Already in September 2015, Ed Vaizey, then in charge of Culture and Digital economy affairs, told the House of Lords that there would be no backtracking from the abolition of roaming charges, even in the event of the UK exiting the Union. He pointed out that, as some of the current EEA states do, the UK would be fully behind continuing with these deals.
Nonetheless, very little detail was given on the way in which, would Brexit prevail, this aspect of the transition out of the EU would be resolved: would ad hoc legislation have to be enacted? Or would regulatory measures, perhaps adopted by OFCOM, suffice?
And how much could a hypothetical reversal of roaming charges deter European digital companies from entering the British market?
In a recent report, the Association of British Travel Agents expressed the concern that as a result of a “leave” vote these charges could be reintroduced, much to the dismay of UK holiday makers.
A “ray of hope” could perhaps come from the mobile phone providers themselves: as the abolition of roaming charges has been a long-term goal, they have had plenty of time in which to adjust their business models.
Accordingly, reintroducing charges may be a risky proposition in the face of strong competition which could be hard to justify—if not as a profit-making exercise.
The Digital Single Market is a challenge and at the same time an opportunity: a challenge for governments who are faced with having to deal with the transition to a borderless world.
And an opportunity for consumers, who will be “better off” not just for the economic savings but also for the prospective benefits stemming from open markets.
Politics, especially in the UK/EU compartment, may be complex. However, the undeniable economic benefits of a fully integrated telecoms market may provide the best argument yet for remaining part of the European project as a whole.
• Arianna Andreangeli, Lecturer in Competition law, Edinburgh Law School, University of Edinburgh. The author is writing in a personal capacity as independent academic