I'm wondering why the regulation was necessary and why the free market forces didn't bring the prices or roaming down?
What are the forces in telecom industry that kept the prices so high (assuming that the prices were higher then necessary)?
Same as 'free' banking in the UK, which is in reality heavily cross-subsidised by the poorest customers paying overdraft penalties.
Now that EU regulation is in place mobile operators are no longer allowed to charge the additional cost to people actually using roaming, they have to spread it across all their customers. So, net effect will be: poor people who do not use roaming (e.g. because they cannot afford vacations abroad) will pay for the convenience of middle and higher class people who travel a lot.
So roaming is actually not expensive anymore for them, and this latest regulation is the logical outcome, forcing the operators to pass their savings on to their customers.
I have still to see a reason in this thread that justifies the higher prices. If connections between different companies in a country work without significant cost, why is different between (european) countries? Damn, most of the time are the same company! It's price gouging and a racket.
There's an additional burden on their network, and they should be able to recoup some of that cost.
But almost every carrier I've seen would charge extortionate rates - hundreds or thousands of times the price they would charge their local customers for.
If they have no way to recoup the additional cost of all the incoming visitors, then they can't invest in expanding infrastructure.
It's probably a pretty limited scenario though.
Yesterday, that traffic typically was priced at euros per _mega_byte, starting at the first bit transferred; starting today that's at most €7.70 + VAT per _giga_byte, starting after you have used your (fairly generous) fair use allotment, going down to €2,50 per gigabyte in the coming years.
Naturally, countries who see many tourists heavily opposed this change and lobbied to keep the maximum price that the EU now has set high.
You'd have to be fairly destitute to not be able to afford to travel within Europe[1]. For example, even people on social welfare in the UK and Ireland can afford cheap sun holidays to Spain or wherever.
Not to mention Latvia or Bulgaria.
From the EU's perspective that was a problem, limiting 2 of 4 aspects in the single market's stated goal of free movement of goods, services, people and capital, namely services and people.
Services are still somewhat limited (you can't just buy the Latvian 15€/month service as a German in Germany, telcos made sure of that), but given the reliance of contemporary folks on connectivity, it helps somewhat on the "free movement of people" bit.
> net effect will be: poor people who do not use roaming (e.g. because they cannot afford vacations abroad)
There's a contingent in European's poor (from Eastern Europe) that works abroad (Western Europe) and benefits from not having to deal with roaming anymore.
(also, from my experience from when I was poor[0], it can be ridiculously cheap to have a few days of international vacation within the EU)
[0] poor being relative, but I think most official metrics would have covered me.
Highly questionable. Concern for the poor that only appears in the context of government regulation often seems to be motivated more by dislike of regulation than worry about the lot of the poor.
Surely you have considered that one of the reasons poor people don't travel more is the predictable large roaming bill they may face upon their return. Once people are used to being in regular contact via cellphone, they don't wish to give that up for travel. Further, suggesting that vacations are the only reason people travel seems disingenuous. People are often motivated to travel in search of work, or to attend funerals, or other in- or semi-voluntary reasons besides leisure.
In Greece for example, we have 3 mobile operators and they announce exactly the same changes to their plans within a couple weeks difference. Things like “we increase our basic plan by 5 euros” or “you have to top up your prepaid phone at least once every 3 months instead of 12”. This way, there is no point at switching.
Especially roaming was a golden goose until few years ago, because each telco charged termination fees for roaming subscribers. So your telco was like “I can't do much, I have to pay the foreign telco”. What happened in EU, is that by law these termination fees started getting smaller until today where they become zero.
EU's roaming regulation is the latest example: 3 operators announced tariffs that pretended to make roaming free, but have multiple strings attached. But the fourth one, Orange, announced offer without any fine print, just equating roaming prices with domestic ones, thus forcing other three to do the same.
If I recall correctly there wasn't a single price raise in Poland in the last 15 years.
There are commodity markets with many producers, many consumers and product uniformity. These can be modeled very effectively using economic theories. Barley, pork bellies, silver.
There are more “normal” markets with many (or at least enough) producers & consumers and nonuniform products with sufficient substitution options. Supermarkets, building supplies, spoons, shoes… These tend to be efficient and broadly explainable via economic theories.
Some markets are highly regulated. Some markets are oligopolistic or have an monopolistic component in the “value chain” (e.g. last mile infrastructure). Some are highly financialized (e.g. health insurance markets) or have weird standardisation/compatibility issues. Some have high fixed/marginal cost structures. Lock-in, licensing issues, externalities, inflexible supply side (e.g. housing), property rights aggregation issues (e.g. regional US radio bands), bundling…
The ability of a market to be dynamic, efficient, innovative and all the other emergent properties of a free market is limited by all these things.
Telcom markets have a lot of these issues. That’s why highly interventionist policies have performed well relative to more “free” market setups.
Which telcom markets are you thinking about? The ones I'm familiar with are all fairly interventionist.
Many producers: maybe not, but most countries have at least 3 [1]. Not worse than e.g. major grocery store chains or gas stations. Many consumers: definitely Product uniformity: significant--I don't care how my 1 mb of data or 1 min of talk is routed
The key anti-free market characteristic is arguably the limited amount of frequency spectrum, which is allocated via centralized auctions. Yet I don't recall hearing similar complaints about the radio or TV industries in Europe.
A lot of the arguments in this thread are that the market is inefficient and therefore must be regulated, but is this the right path if the inefficiencies are due to regulation in the first place?
[1]: https://en.wikipedia.org/wiki/List_of_mobile_network_operato...
Back when I took few economy courses, we went over numerous real world examples on how big companies price fix. Sometimes you can have eight players and they'll still agree to fix prices.
This wasn't dry theory, this was golf meeting to raise prices by 50% , fishing trips where pieces of papers were exchanged and nobody fished etc.
From this, if the government is non corrupt, it's far better for the people that government step in and regulate than leave it to the market with a handful of players.
An example of this is when all the operators changed the billing cycle from one month to 28 days, adding another monthly fee in practice: even if only one operator started doing that (with outrage from the customers), now everyone does that, with the except of landlines where the regulator stepped in.
You won't have reception everywhere in Montana but just covering major highways and the interstate system in the US adds a lot of network costs. The barriers to enter are huge whereas you can easily provide coverage for a large part of the population in some EU countries.
Are rural areas in Sweden dominated by small, fairly dense towns? In America, even small cities are sprawling because of cars. People will live 10 miles outside of a small town of 3000 people.
As other have pointed out the population density works against us a little too. Having service when I visit remote places is worth a lot too.
2. Collusion
It's also why phone services are so much more expensive in the US than say France.
Maybe you do, but most people don't. People aren't price sensitive to every element equally. I recall the first time I used roaming. I was in Heidelberg, Germany, using a UK-issued SIM. The cost per minute for me to make a call to a local number was over 1 USD per minute, billed in minute increments (i.e. a 10 second call would be billed as a minute).
If I had known that before I left, would that have been enough for me to research other carriers' roaming costs and switch? Probably not.
Mobile roaming is for most[1] people a rare event.
The average user has little idea about how much data they're actually using.
These combine to make it impossible for the average user to buy the best plan for them.
[1] Some people live near borders, and those people got hammered by mobile roaming charges because their phones connected to towers across the border. So they got charged for roaming even when they weren't.
- business travelers (someone else's money)
- high income people (will still roaming even if it's expensive)
And it had a loophole for frugal people (prepaid local SIM) so they could still tolerate the situation.
Finally, operators didn't decide the roaming costs for their customers - they could only decide what they will charge the other country's operator. So there was no direct way to lower their own roaming costs short of formin a "reverse cartel" of lowering prices.
Under these circumstances, mandated cooperation would make sense to me.
Now the question is, how many consumers knew roaming prices (for places which they would travel to) when they had the opportunity to compare companies and made the decision to enter into contract with a phone company. If the answer is almost everyone then regulation is completely unnecessary. If the answer is almost no one then competition is basically impossible and the consumer just have to hope that the contract they signed several years ago was a good one and not a exploitive one. Regulations in that case reduces risk to the consumer.
Whether the market is currently competitive or not, this move will result in less competition as there is more price fixing and less room for operators to differentiate their offerings.
It's the same with ISPs and banks, etc.