International Mobile Roaming: Competition, Economics and Regulation

37 Pages Posted: 10 Jun 2010

See all articles by Ewan Sutherland

Ewan Sutherland

University of the Witwatersrand, LINK Centre

Date Written: May 31, 2010

Abstract

International mobile roaming has been subject to market interventions since the 1990s, first requiring operators to be provide customers with roaming, then trying to limit the increasing prices, that were seemingly immune to the effects of competition. The European Commission, in trying to improve the wholesale roaming market, caused the introduction of a system of non-discriminatory prices that were not subject to competition but instead to low levels of price transparency and with incentives to increase prices. While the operators achieved economies of scale by foreign acquisitions, they failed to abolish roaming surcharges, because of commitments made to obtain merger approvals from the European Commission. The originally random selection of a roaming operator in foreign country was gradually brought under control by a range of traffic direction technologies, allowing the negotiation of discounts. However, the inter-operator relationships seem frozen, seldom changing partners, demonstrating little evidence of competition. Analyses of the wholesale markets by national regulators revealed little. The approach was abandoned in favour of European Union legislation setting price caps, supported by price transparency measures. Impact assessments had to be based on incomplete models and may have overestimated price elasticity. The reduction of prices within Europe led operators to raise prices for non-European operators and for their own retail customers going beyond Europe. Some customers prefer to switch SIM cards, buying service from the foreign operator. In the absence of a massive data collection exercise and the creation of a dynamic model of the roaming markets, interventions continue to be doomed to imprecision and unpredictable side-effects.

Keywords: Wireless, Mobile, Roaming, Telecommunications, Europe, Competition

JEL Classification: L96, K21, L40, L51, K23, L13

Suggested Citation

Sutherland, Ewan, International Mobile Roaming: Competition, Economics and Regulation (May 31, 2010). Available at SSRN: https://ssrn.com/abstract=1622759 or http://dx.doi.org/10.2139/ssrn.1622759

Ewan Sutherland (Contact Author)

University of the Witwatersrand, LINK Centre ( email )

1 Jan Smuts Avenue
Wits
Johannesburg, Gauteng 2000
South Africa

HOME PAGE: http://link.wits.ac.za/

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