Back in June, we read reports that VP of the European Commission Neelie Kroes was definitely going to all but abolish roaming charges from next July. For a while, blogs and publications lit up with opinions about whether we had reached a data roaming usage ‘tipping point.’ Our own opinion was that we had reached the moment when the number of people who would keep their data switched on when they travelled (over half switch it off, according to some, more like 75 percent according to others) would provide more revenue than if roaming charges were kept in place.
The financial world grumped and pointed to the risk of short term arbitrage opportunities for wholesalers – they would know about those – and said that it would hurt investment. Some even said that we were lagging behind the US because of the hurtful regulations.
Then in July the top executives from the top telcos in the territory paid Ms Kroes a visit..
Then in late August, Reuters reported that the wholesale roaming rates would not be reduced as dramatically as recently reported. Indeed, there seemed to be some doubt as to whether the topic would even appear in the much anticipated presentation on the reality of a single market, scheduled for early September.
Finding people to comment on the subject was spookily hard. The only noises to be heard were mumblings from Kroes’ office that seemed to suggest that abolishing roaming charges was still absolutely what they were going to do at some point and no, we can’t give you any more information, please see our web site for more confusion.
If the hard men and women of the telco world in Europe had applied pressure and managed to get her to back off, it would be bad news for two reasons.
The first is that we are talking, essentially, about telcos subsidizing themselves at the expense of their customers (see: Customer Experience – our absolute priority, by Any CEO of Any European Telco Any Time in the Last Year). And subsidies should be completely in the hands of Government. That big business can manipulate things that easily says huge amounts about the power of politicians in relation to the power of Big Business.
Reflect also, that 20 years ago New Zealand’s farming industry had their substantial subsidies slashed overnight. Did they give up? Did they go and sit in the corner of their sheep sheds and sniffle? No, they sat, they thought, they diversified, they innovated and now have one of the most robust farming sectors in the world. When you eat new season lamb, or venison, it comes from New Zealand. When you sigh after the first sip of a crisp white, it is likely to be New Zealand as well.
The second is that there are two teenagers who helped BillingViews conclude that almost all teenagers would be allowed to keep their data on if roaming charges were abolished. They will be deeply disappointed.
And, like any forward thinking folk, quite cross.
The problem is centered on the proven-ineffective role of government in commercial decision making. While I chiefly agree with the premise of this blog that more net shareholder return is the likely outcome of the removal of roaming surcharges on mobile data usage, the idea that a VP of the European Commission has any constructive contribution to the thinking is questionable. The problem is only compounded by the over-regulated business environment that implicitly hobbles free market competition, the proven-effective approach, and which artificially shelters incumbents from those competitive pressures.