Europaudvalget 2015-16
EUU Alm.del Bilag 362
Offentligt
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Danish Non-Paper on the review of national wholesale
roaming markets, fair use policy and the sustainability
mechanism referred to in the Roaming Regulation
531/2012 as amended by Regulation 2015/2120
Significantly reducing roaming wholesale price caps in the EU is a necessary and logical step on
the way to ending roaming retail surcharges on a sustainable basis in the EU.
The Danish Government welcomes the opportunity to comment on the Commission’s public consultation
on the review of national wholesale roaming markets, fair use policy and the sustainability mechanism
referred to in the Roaming Regulation 531/2012 as amended by Regulation 2015/2120.
Being able to use electronic communication services, including while travelling, is becoming ever more
important. The abolition of roaming surcharges is, thus, essential for consumers and businesses in today’s
European digital economy and society. It is also an important step towards completing a European single
market for electronic communications.
Retail price levels, price structures for mobile services and consumption patterns of mobile services vary
significantly between Member States. Danish consumers are among those who use the most mobile data in
Europe.
Furthermore, there are different travelling patterns of consumers across Europe. There is a general trend of
greater travel from Northern Member States to Southern Member States than vice versa, which has
typically resulted in operators in the Northern Member States being net buyers of roaming and operators in
Southern Member States being net sellers.
Thus, the coming implementation measures to determine a wholesale price cap and fair use limit for the
full implementation of the Regulation (EU) 2015/2120 will have a major impact on European operators’
roaming businesses and European consumers.
Overall, there is a critical balance between the level of the wholesale price cap and fair use limit. The higher
wholesale price cap and fair use limit, the greater the negative effect on the Danish operators’ retail
businesses will be. This can have an effect on the domestic retail prices and the access to roaming services
since Denmark has some of lowest retail prices within the EU. Therefore, the aim must be to find a balance
that ensures that consumers have a real opportunity to use mobile services across the EU and at the same
time does not unduly entail that the overall profitability of operators is adversely affected.
Application of the fair use limit has to be comprehensible and easily explained in practice.
Wholesale roaming prices
All previous reductions of retail prices have been accompanied by a reduction of wholesale prices. The
Danish Government considers this approach to be the most balanced.
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 EUU, Alm.del - 2015-16 - Bilag 362: Notat vedr. dansk positionspapir om regulering af international roaming i EU
A sustainable end to roaming surcharges requires a significant reduction of not only the retail prices that
consumers pay but also the wholesale prices that operators pay each other. This was clearly spelled out in
recital 40 of the roaming regulation (EU) No 531/2012: “action to reduce the level of retail prices without
addressing the level of the wholesale costs associated with the provision of these services could risk
disrupting the orderly functioning of the internal market for roaming services and would not allow a higher
degree of competition.”
Data traffic increasingly drives network costs according to BEREC and data volumes are increasing rapidly.
Thus, a substantial reduction of the wholesale price cap for data services is the most important step in
abolishing roaming surcharges in a sustainable way.
Domestic retail prices in most Member States are lower than the regulated wholesale price caps. According
to data collected by BEREC not only regulated wholesale price caps but also the average wholesale prices
that operators actually pay remain higher than domestic retail prices in many markets. Thus, operators are
not able to provide roaming at domestic prices (Roam Like At Home) without losing money since they pay a
higher wholesale price than they charge consumers at the retail level.
If operators lose money on selling roaming services at domestic prices they will either raise domestic prices
(waterbed effect) to compensate for this loss or stop offering roaming services altogether. This effect is of
greater magnitude for smaller operators that are not able to negotiate discounts on the wholesale caps, for
operators in countries where many customers are frequent travelers and operators with low domestic
prices.
The Danish Government finds it important that the wholesale price cap is determined at cost level, so the
retail operator does not run an inappropriate risk of not being able to recover its costs when customers
have access to RLAH.
At the same time the Danish Government finds it necessary to use a common, objective methodic approach
to determine the cost of roaming. The most appropriate approach would be to use a single cost model for
the EU based on an efficient operator as it also described in the questionnaire (question 27, answer 1):
“…by reference to the costs of providing wholesale roaming services across the EU by a hypothetical
efficient operator (i.e. an operator using the most efficient technologies and optimal operations
commercially available)”.
Furthermore, it is the Danish Government’s assessment that – from a transparency view – it would be most
appropriate if there is to be determined a wholesale price cap that applies to the entire EU.
It is possible to lower wholesale caps without requiring operators to sell roaming wholesale services at a
loss. This is especially true with regards to data services. According to BEREC the current wholesale caps for
data are higher than costs. The regulated data cap is 5c€ per MB or more than 50 € per GB. Current
domestic retail data offers are a lot cheaper than this in EU Member States.
Wholesale data caps in the Roaming III-regulation were based on the maximum cost in 5 countries, with an
additional mark-up (BEREC). Data costs per unit have fallen substantially since the caps were adopted in
2012. The Danish Business Authority (Erhvervsstyrelsen) has developed a cost model that estimates the
cost of providing mobile services in Denmark. According to this model the price of providing 1 MB of data
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 EUU, Alm.del - 2015-16 - Bilag 362: Notat vedr. dansk positionspapir om regulering af international roaming i EU
was less than 0.3 eurocent in 2014. If data volumes double (not an unreasonable expectation) the price per
MB falls to 0.2 eurocent.
The current wholesale price caps are 5 eurocent per minute, 2 eurocents per SMS and 5 eurocents per MB.
The average wholesale prices that operators actually pay were 4 eurocent per minute, 1.3 eurocent per
SMS and 1.9 eurocent per MB in the first quarter of 2015 (BEREC benchmark report). So actual wholesale
prices (especially for data services) are significantly lower than the regulated price caps which further
underlines that the current price caps are set considerably above actual cost.
Fair use policy
On the one hand, consumption patterns across the EU vary significantly. The rules should be able to
accommodate consumers with high consumption patterns to ensure that consumers have a real
opportunity to use mobile services across the EU to the benefit of European businesses. For this to happen,
it is important that the fair use policy is not too restrictive.
On the other hand, a fair use limit should be determined to avoid arbitrage in the form of “permanent
roaming” and to ensure that the concrete fair use limit does not unduly entail that the operators overall
profitability is adversely affected which could affect the low-priced subscriptions on the market that are
typically used by non-travelling consumers. In case of a high fair use limit flat rate subscriptions with
unlimited voice minutes or national voice and/or data packages included will generate a loss on all roaming
traffic that is within the fair use limit. It is therefore important that the fair use limit is not set higher than
what can be considered reasonable for “periodic travel”.
Overall, the Danish Government recommends setting a fair use limit that strikes a balance between the
above mentioned objectives and ensures that consumers have a real opportunity to use mobile services
across the EU and at the same time does not unduly entail that the overall profitability of operators is
adversely affected.
In addition, the fair use limit must be understandable for consumers and must be to be handled technically.
In other words, a fair use limit per single subscription with a larger number of parameters would be
inappropriate.
Sustainability clause
According to regulation (EU) 2015/2120 a roaming provider should, in specific and exceptional
circumstances where a roaming provider is not able to recover its overall actual and projected costs of
providing regulated retail roaming services from its overall actual and projected revenues from the
provision of such services, be able to apply for authorisation to apply a surcharge with a view to ensuring
the sustainability of its domestic charging model.
The imposition of a sustainability charge is specifically intended to compensate operators with low mobile
rates typically in the form of packages and a negative balance of roaming traffic among other reasons
because the national retail price level of mobile traffic is very low compared to the rest of the EU. It is
largely a problem in the exchange of traffic with countries with a high number of foreign tourists.
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 EUU, Alm.del - 2015-16 - Bilag 362: Notat vedr. dansk positionspapir om regulering af international roaming i EU
The sustainability clause should therefore ensure that no operator risks having to provide roaming services
without being able to recover its cost. A situation where cost recovery is made impossible or
administratively difficult would deter the operators from providing roaming services in the first place,
especially in their cheapest offerings.
The Danish Government finds it important to involve the operators in the process of developing the
mechanism for assessment of the sustainability since the operators have concrete and simple demands to
the calculation of costs.
The mechanism for calculating sustainability and the conditions for applying the sustainability clause should
be simple and predictable for operators and regulatory authorities alike.
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