Tim W has a go at mobile roaming charges. He links to this, which suggests:
But there’s something else a bit murky here. The European Commission is focusing soley on the roaming charges. Just because the companies might be making large profits on that narrowly defined section of their business doesn’t mean they’re pocketing it and walking off. All those free handsets, call minutes and texts that the big telecoms companies offer (but not, alas, Jersey Telecoms) have to be paid for somehow.
Could it be that these roaming charges (paid by those well-off enough to travel) are subsidising communication for everyone, benefiting, in particular, the less well off?
Maybe. Maybe not. The problem is similar to the one the CC investigated a few years back in relation to the UK market. Then, it was found the mobile phone firms charged very high termination fees (the fee the mobile company of the calling party charges to the connected party). These higher fees, essentially charged at the wholesale level, are not affected by competitive pressures at the retail level. That is, there is little incentive to prevent termination fees spiralling ever higher. This isn’t a problem for mobile firms as the analysis show that what they pay out in termination fees they pretty much get back. But the fixed line operators suffer. The excess returns from termination fees thus subsidise cheap handsets and free minutes.
A good thing? It depends. The subsidy appeared to drive people from using a low cost technology (Fixed line) to a high cost (mobile). Equally, fixed to mobile callers subsidise mobile users, also causing a distortion.
My guess is that the issue is similar across the EU. In any case, it isn’t as simple as looking at the availability of cheap handsets.
