Non-European mobile firms face roaming price hike

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Non-European mobile firms face roaming price hike

European operators compensate for recent cap.

European mobile operators are gearing up to "substantially" increase the wholesale prices that they charge non-European operators whose customers roam onto their networks.

Analyst firm Informa Telecoms & Media said that the move is an attempt to compensate for the loss of revenue resulting from the new European price caps on mobile roaming.

On average, retail prices are set 20 percent above the wholesale rate, Informa predicts in its Global Mobile Roaming: Business Models and Forecasts in the Evolving Environment report.

Until now, operators have been free to set their own wholesale prices for roaming services, but some operators set much higher wholesale price levels than others.

It is quite normal for two operators on a single route, for example between Germany and India, to charge each other different prices for calls made by their customers on each others' networks.

"Some of the highest wholesale prices are levied by operators in developing markets for which inbound roaming is a key source of income," said Mark Newman, co-author of the report.

"In India, for example, wholesale roaming prices are up to 30 times more expensive than the retail price that Indian operators charge their own customers for making the same call."

Newman added that, faced with lower revenues from their European roaming business, operators in Europe will now start to seek reciprocity in wholesale price arrangements.

And if operators outside Europe refuse to reduce their wholesale roaming charges, the European operators will increase their own wholesale charges. These higher charges will be passed on to non-European customers.

"What we are beginning to see is the emergence of a two-tier market for roaming services," explained Newman.

"With the new price caps and the emergence of pan-European groups such as Vodafone, Telefonica/O2 and Orange, Europe is going to start resembling a single market in terms of retail prices.

"Countries such as the US and India already have national roaming markets where people can make calls on other operators' networks without incurring higher charges.

"The same is also beginning to happen in Greater China. However, when people want to use their phones outside their countries or regional groupings they will pay a substantial premium."
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