International mobile roaming

A presentation by Ewan Sutherland to the ITU Workshop on 3G Licensing.

Mr Secretary-General, Ladies and Gentlemen.

Thank you for the invitation to speak today. The development of markets for mobile telecommunications has been a matter of great interest and some concern for INTUG.

I have to apologise for missing the first day. However, I was attending meetings of INTUG and EVUA in Vienna. The last words before I left were from the telecoms manager of one of Europe's largest users of mobile telephony, it was to ensure that I told you in no uncertain and even blunt terms that users were very unhappy at being ripped off. He wanted to know when something would be done about outrageous international roaming charges. Not if, but when.

INTUG has set out its position on Global Roaming. The requirements are not technically difficult. We want to be able to buy mobile telephony and data services on a global or a continental basis, rather than country by country. Admittedly, this requires some integration of activities by the operators. They must also listen to users, i.e. their own customers.

On a purely technical level GSM international roaming works very well for voice telephony. There are now a significant number of tri-band phones allowing roaming over an enormous part of the world. Coverage is constantly expanding and improving.

By contrast, the position with data is deeply disturbing. The operators seem to have little, if any, idea how they want to sell High Speed Circuit Switched Data (HSCSD) and General Radio Packet Service (GRPS). Even within one company, different approaches can be taken in different markets. The operators do not know whether they are offering a data service, a value added service or a combination of the two.

Technically, a number of operators can now offer some sort of national service for GPRS. However, they are unable to offer international GPRS roaming. Yet without international roaming GPRS is of very little use to a business. Today, roaming is taken for granted. To explain that data services are available only in the home country would be seen as some sort of joke. A purely national GPRS services is suitable only for a very small group of users. It is one step up from TETRA. Perhaps the operators see the market as primarily residential or individual users for the downloading of MP3 files. However, I doubt there is much money in that.

We are not expecting to see operational service for international GPRS roaming until the second or third quarter of 2002. Even then we wonder whether we will have any choice of operator.

Of course, a lot could happen between now and then. Not the least is the upsurge in use of IEEE 802.11b (Wi-Fi) for Wireless Local Area Networks in hotels, airports, conference centres, universities, offices and coffee shops.

All of this should make as very sceptical of forecasts for the launch of 3G services. These will have to allow for the demand for international roaming from day one. At least in most countries. There will be exceptions, where international roaming has not been present or in very large countries where foreign travel is less common. It will also be necessary to have national and international roaming from 3G devices onto 2G and 2.5G networks.

International 3G roaming could be a very long way off.

Operators can seem remarkably insistent in their own interests. We have had to fight battles with operators all around the world as they resist Mobile Number Portability (MNP). They use the typical 3D tactics of Deny, Delay and Degrade. They suggest that users should instead use Universal Personal Telephony (UPT). (I have yet to meet anyone with UPT number.)

Even today Deutsche Telekom and Vodafone struggle in Germany to persuade the RegTP to give them another ten months within which customers will remain locked to their services and unable to select the operator of their choice. So much for a competitive market. Yet MNP has been up and running in Hong Kong SAR for half a decade.

This is typical of how the operators listen to their customers.

The operators prefer to find ways to raise the prices. This is shown in their attitude of tapping the demand for SMS. Especially SMS when roaming.

Operators also like to claim to "own" the customers. A strange, even bizarre, claim given that most customers they have acquired in the last few years are pre-paid and that they do not even know their names and addresses. Amongst the subscription customers the churn rates are high, with yet more waiting to leave once they can get MNP.

The GSM Association has already referred to the "unparalleled cooperation" amongst the operators used to achieve international mobile roaming. To others than can be seen as collusion, "joint dominance" or even a cartel. It depends on how you look at it. Certainly, if you are paying the bills, then it looks very, very bad and more than a little suspicious. It looks unlike most forms of telecommunications where the prices go down quite steeply, rather than going up.

INTUG became concerned about the high level of roaming prices in the late 1990s. Not only in Europe but around the world. Many of the prices in Asia Pacific are every bit as bad as in Europe. However, with the European Union and European Economic Area we had a supra-national authority with the powers to investigate the problem.

We undertook surveys in 1999 and 2000 on roaming charges and hope to complete a further survey this year. We compare four prices for each pair of countries. From country A to country B for a domestic subscriber and for a roaming foreigner. Then we reverse the direction. The variations in the prices are enormous and inexplicable. Put simply, the deal seems to be that a GSM operator rips off the visitors. It is content to take, typically, 25% on top of the foreign charges. It makes it hard to complain, since it will always seem to be a problem with the foreign administration or regulator should address. (See our survey.)

We presented some initial findings to a conference in early 1999. The European Commission's Competition Directorate-General took an interest. At the end of July 1999 a formal investigation was launched into the telecommunications sector by the European Commission. The work on international mobile roaming charges began in January 2000 and resulted in a Working Document published in December 2000. In July 2001, the European Commission, together with national competition authorities, launched "dawn raids" on all the licensed operators in Germany and the United Kingdom, includes BT Cellnet (now mm02), Deutsche Telecom, Orange (France Telecom Group) and Vodafone. However, the results of the raids will take until the second half of 2002 to be published. Should the findings be taken to appeal it could last a further four years.

In a speech earlier this month Mario Monti, the European Commissioner responsible for Competition indicated that if competition law was insufficient to ensure cost orientation of international roaming charges, then he will look at regulatory means.

By a strange coincidences, the European Commission published its interim report at a time when the mobile operators were lobbying the European Parliament. Lobbying very hard. The operators were seeking to evade and avoid as much regulation as possible in the new telecommunications legislative package. In order to do so they asserted that mobile telephony was vigorously competitive and did not need any regulation.

However, some Members of the European Parliament found the DG Competition Working Document. Three months after the publication of Working Document, the GSM operators had still not admitted to its existence. So that it was something of a surprise when one member of the Parliament, Wim van Velzen, referring to the Working Document, called the operators a cartel. It is a charge to which the operators have still not responded.

The European Parliament amended the draft legislation to require cost-orientation on roaming prices and to oblige operators to inform customers in real time of the prices of roaming calls.

In addition the European Commission has to make decisions about the legality or otherwise, under the competition articles of the Treaty of Rome, of the STIRA, Inter-Operator Tariff (IOT), Vodafone Eurocall and DTAG Worldclass schemes.

The GSM Association has referred to their Code of Conduct. It should be emphasised that this is a code for the provision of information. It says nothing about the prices being reasonable, being cost-oriented or even being justifiable. The prices must only be available. The Code and indeed the GSMA have no powers over the operators should they fail to conform.

On a personal note, I was going to the USA in August. So I called by own operator and asked for the prices for roaming in California and Colorado. I was told the price for forwarding calls to me, about USD 1.40 per minute. This seems remarkably high, bringing back memories of prices from the 1980s. Initially, I was told to ask in the USA for the cost of calls back to Europe and to other destinations. I complained that this was impossible, since the US operators did not know the retails tariffs my operator (to whom I was speaking) would charge and also that was in breach of Article 11 (1) of the Revised Voice Telephony Directive. The Directive requires the publication of tariffs for users.

I was called back in a few minutes with the price of calls back to Belgium. Apparently, the prices are not given to the helpdesk because they are complicated. Only in the face of a very serious request was the information provided. I later received an electronic mail message from the international roaming manager.

Roaming charges are and remain very, very obscure for most users. While they are so hard to find and understand you will not see rationale behaviour by consumers. This allows the operators to maintain high prices.

As the GSM Association has indicated, the provision of services over international data roaming raises complex questions. The data protection authorities have only just begun to address them and it could take some considerable time to get satisfactory answers.

INTUG continues to bang the drum of unacceptable international roaming prices. Indeed international mobile roaming charges remain a subject of considerable unhappiness amongst corporations in Africa, Asia and Europe. The pressure remains considerable for action to reduce prices. The aim is not just to save money, it is also to expand use and to allow more innovative uses. Until the prices fall and roaming charges are eliminated in Asian and European markets, businesses will not be able to exploit 2G or 3G technologies.

Users will continue to look for alternatives to grossly inflated GSM international roaming charges. These may use arbitrage, by-pass or other technologies. We may just tell people to use calling cards from a payphone! The potential saving to individual businesses amount to many millions of dollars per year.

We will also support continued action by national regulators, national competition authorities and by the ITU to address this problem.

Thank for your attention.