Irish operators rail against roaming cap
14-12-2006
by Ciara O'Brien

Irish mobile operators will suffer from the European Commission's proposed cap on their profitable roaming charges.

At the same time, analysts say regulating the system of roaming charges is only good news for consumers.

EU ministers are backing a proposed plan to restrict the charges mobile operators can levy on customers roaming on their networks while travelling abroad. EU Information Society Commissioner Viviane Reding wants to bring in the cap, which will see roaming charges cut by as much as 70 percent, ahead of the holiday season beginning summer 2007.

Analysts are certain the new regulations would negatively impact on revenues if they are forcibly introduced.

IDC analyst Keith Gaffney said the cap will adversly affect the revenues and profits for Irish networks. "Roaming charges are very lucrative and profitable for mobile operators and all sorts of operators in the value chain."

It is not yet known exactly how hard the mobile operators' revenue will be hit -- IDC analyst John Gilsenan said this will depend on exactly how much of the average revenue per user (ARPU) is made up from roaming charges. Irish networks aren't that keen to give away this information, which they class as commercially sensitive.

Traditionally, Irish ARPU is higher than in most European countries -- however this has been falling in recent months. Gilsenan said the proposed cap could have a greater impact on Irish networks compared to those on the Continent given our island status and location at the edge of Europe. However, without knowing exactly how much of the networks' revenues consist of roaming charges, the analyst said it would be difficult to quantify precisely how badly the networks may be hit.

The Irish operators are, naturally, vigorously opposed to the Commission's move. While Vodafone will not comment specifically on the Irish markets, it has issued a group-wide statement citing recent developments and new price plans as their main objections to the regulatory moves.

"Vodafone believes that the market and competition is already delivering much better value to customers," it said.

"Clearly, there is an on-going debate on substantial issues regarding the current proposals. Our view remains that we don't need this -- the market is already delivering better value to customers."

Rival O2 is of a similar mind: "O2 Ireland believes that there are significant competitive pressures on roaming services in Ireland and Europe, which have seen prices come down for consumers," it said.

"We believe that any intervention on international roaming is inappropriate at a time when the benefits of alliances and the enlarged footprint of operators such as O2, and its parent Telefonica, are delivering increasing benefits to customers," it continued.

"Regulatory intervention risks preventing operators from continuing to innovate in the area of pricing, which is critical to sustaining a competitive environment."

Some of the Irish networks have already made some headway on this issue, abolishing roaming charges between the UK and the Republic of Ireland for some of their customers, leading to lower bills for many mobile users -- particularly, it is hoped, for those living in Border counties, and for those who regularly travel between Britain and Ireland on business. They have also implemented specific tariffs aimed at reducing the costs of roaming, such as Vodafone's Passport price plan and O2's My Europe tariff.

However, regardless of the impact on networks, Gilsenan belives the move to tackle expensive roaming costs will undoubtedly be a welcome one for Irish mobile customers.