DTI consultation on the proposal for a Regulation of the European Parliament and of the Council on roaming on public mobile networks within the Community CBI Response Introduction The CBI welcomes the opportunity to respond to the DTI’s consultation on the proposal for a Regulation on roaming on public mobile networks. As the UK’s leading business organisation, we represent thousands of businesses that benefit from the array of services available via wireless providers in the EU. These businesses need a strong and globally competitive mobile communications industry, offering them services that help increase staff productivity, improve efficiency and add-value to business processes. The recent CBI/Google survey1 of UK businesses’ internet use showed that 54% of companies provide their employees with internet-enabled mobile devices for working on the move. Within that, 84% found improved internal communications and 75% improved staff productivity, demonstrating the clear benefits these technologies provide to businesses in their everyday operations. In any market, the CBI believes strong competition is a major benefit for the consumer (including the business consumer) and that regulation is necessary where bottlenecks can be clearly shown to be preventing effective competition. The market for international roaming charges is relatively unique in the context of EU telecoms in that it operates at a supranational level, giving it a relatively opaque level of operational transparency and being to a large extent outside the regulatory remit of national authorities. While this situation may require regulatory scrutiny and possible intervention, the CBI also believes that it is vital that any intervention is balanced, appropriate and proportionate – in other words, in line with better regulation principles. The international competitiveness and investment capabilities of players within what is a large and complicated market should not be fundamentally stunted by a rigid and inflexible centralised solution. This issue of the appropriate regulatory framework for EU market conditions is an issue raised by the Commission’s current consultation on the review of the Framework Directives, and will take some time to be finalised. For the present, however, we believe that the approach taken by the European Regulators Group (ERG) to the issue of international roaming has brought to bear the most suitable analysis of the issues involved with international roaming. Over the coming months, the Regulation proposed by the European Commission needs to be developed so that it can truly benefit mobile users over the long-term without distorting the business operations of the complex set of companies providing these services through simplistic, unclear or unduly burdensome actions. We believe that the compromise position proposed by the UK and France within the Council in December 2006 offers a useful though not complete basis for achieving this objective.
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CBI/Google survey of internet trends for business and consumers (2006)
The CBI recognises there is some divergence of views within our membership over specific points of the Commission and Council proposal. We believe that some of the more technical discussions are best left to those with extensive technical and operational experience of the issues involved and that it would be inappropriate for us to comment on areas such as the exact levels of retail and wholesale caps. As such, we will confine our comments to the overall value of the proposal for UK business as a whole, particularly in regard to the consultative process through which the Regulation was put together and the level of operational detail at which the Regulation aims to legislate. Better Regulation: consultation periods The CBI, together with its sister federations within UNICE, has consistently pushed for better regulation to be higher up the agenda within the EU. We were encouraged by the Commission’s commitment to comprehensive consultation in their Communication on Consultations2 but have been disappointed by the lack of adequate consultation in the case of the proposal on international roaming. The latest figures from Eurostat show that there were over 368m mobile subscribers in the EU in 20033. Legislation having such an impact on this market would have clearly benefited from extensive consultation with relevant parties prior to publication. We believe that the level of consultation with affected parties during the drafting of the proposal was inadequate. The first public consultation on the Regulation ran for a period of four weeks and asked only three very general questions, giving little or no indication as to the content of the actual proposal. This was followed up with a six-week consultation outlining the objectives and scope of the regulation, as well as the general ideas underlying the proposal. The CBI believes strongly that this minimal level of consultation needs to be rectified by the Commission, MEPs and the European Council – the Commission’s own guidelines emphasise that, inter alia, there should be clear indication as to the content of the consultation process and the Commission should strive to allow at least eight weeks for consultation. Given the highly detailed and extensive nature of the regulations proposed, and their potentially profound but differing impact on wholesales network operators, retail providers and virtual providers, large and small business as well as individual consumers, even these periods of consultation would seem too short. The timeframe for the Regulation should not have been driven by an understandable but simplistic political desire to get something in place as quickly as possible, given the complex regulatory issues raised by international roaming and the concurrent discussions over the EU’s Telecoms Framework review. But if the Commission wants its promises on better regulation taken seriously by the business community, it needs to fulfil the obligations it has laid out for itself. As the Communication on Consultations states: “it goes without saying that, when the Commission decides to apply principles and guidelines, its departments have to act accordingly.”4 Better regulation: level of detail The CBI has strong reservations over the Commission’s proposal to place a harmonised maximum price cap on the retail charges operators can levy. It is vital that operators are able to continue to tender bespoke packages for large corporate contracts and to develop more tailored individual bundles for SMEs and consumers through a framework that allows the freedom to set general retail pricing levels - letting market forces reward operators who provide the most competitive and compelling packages. In line with principles of better
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11 December 2002, COM(2002)704 http://tinyurl.com/y95veo 4 11 December 2002, COM(2002)704, pg. 10
regulation, regulatory solutions should be targeted at economic bottlenecks rather than attempting to control minutiae at an increased level of operational complexity. Under Stephen Carter’s leadership in the UK, Ofcom succeeded in achieving an outcome in its Strategic Review of Telecommunications by targeting economic bottlenecks at the wholesale access level that has been generally well regarded by a wide range of consumer, industry and business stakeholders. The CBI would like to have seen similar methodical, practical and thorough thinking applied in the case of international mobile roaming. This is now impossible due to the Commission’s choice of using legislation outside the EU Telecoms Framework and the Regulation entering the Parliamentary process in Brussels. As such, the CBI would support using this procedural opportunity to focus the Regulation solely on wholesale charges rather than implementing a catch-all schema that drastically alters current market conditions by regulating wholesale and retail charges. This is not to say that exceptional forms of retail regulation should not be considered where precise bottlenecks can be shown to prevent effective competition. A system for achieving greater transparency in the relation between wholesale and retail pricing that is trusted by all parties needs to be developed at an EU level in the medium term. However, the European Regulators Group have publicly stated that the retail regulation proposal as put forward in the Commission’s proposal is impractical and that cost-savings could be passed on to the user through wholesale price regulation. In the short term, a sunrise clause could be used in support of wholesale regulation to ensure pricing structures are brought down to pre-defined levels, with retail regulation kicking-in if certain pricing targets are not met by operators within a pre-set timescale. If operators do lose the flexibility for creating a range of pricing structures, there could be a possible knock-on effect for users of mobiles who do not roam, as costs are recouped from other business operations in order to support levels of investment necessary for providing European businesses with leading edge services. It is it likely to be in the SME sector where the greatest proportion of business is done locally, and relatively little requirement for extensive international business travel. Users in this sector often rely on mobile phones for their communications requirements - particularly micro-businesses with few permanent premises. For many of these businesses, struggling to stay solvent in an increasingly competitive marketplace, additional costs at their bottom line would be another burden to bear. For the sake of clarity and simplicity for those parties targeted by the Regulation, the CBI would like to see a final proposal based on actual monetary figures rather than formulas for working out cap limits. This would give mobile service providers a clearer view of what the final proposal will actually mean for their business operations and help the actual implementation of the Regulation into these operations. It would also create a more precise legislative text, in line with the principles of better regulation. The CBI is concerned by Article 7 of the Commission’s proposal to create detailed transparency obligations for providers of mobile services. Mandating a set of specific customer service obligations is an inflexible approach to such a fast-moving marketplace. Users of these services would benefit more from a principles-based format that is adaptable to change rather than centrally-determined requirements that may swiftly become outdated and even a barrier to providers’ ability to make innovative improvements. In more saturated mobile markets, customer service levels become a key competitive differentiator in service provision. Operators should be free to create tailored customer service plans for different pricing packages based around general principles of good practice rather than being mandated to comply with a rigid set of centrally-determined rules.
Implementation While the draft Regulation foresees a six-month delay before retail regulation would apply, this should not be shortened due to political pressure to get an agreement in time for summer 2007. A shorter period of implementation ignores the practicalities of implementing new price structures, especially at retail level, and what this requires logistically for, and in negotiations between, wholesale operators and virtual providers. Companies plan out new price packages well in advance, with long-term planning for publicity, systems adaptation and staff training. Any hasty price cap could lead to pricing opacity and customer confusion if operators are forced to rush to meet shortened deadlines. The political imperatives driving this proposal should not be allowed to take precedence over the principles of better regulation and adequate due process.