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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 t

• panzer_wyrm 9y ago
  Cartels/vendor lock in
  • donquichotte 9y ago
    Indeed! Cartels charging outrageous prices like 0.5€/SMS (roaming) in 2017, that is more than 4000€ per megabyte. I have no idea how the telcos have been able to milk the public for that long. And for Switzerland, there is no end in sight.
• rsynnott 9y ago
  Some telecoms actually did reduce roaming prices long ago, but consumers aren't particularly willing to move between networks (still more difficult than it should be in most cases, and the telecoms like it that way; that's why they resisted software SIMs so vigorously), and plans are often complex and difficult to understand.
• gmac 9y ago
  Because it's a confusopoly[1] and roaming charges (like data overage charges) weren't part of the headline offer, which was generally UNLIMITED calls and texts and a FREE phone when you pay £X per month. Same as 'free' banking in the UK, which is in reality heavily cross-subsidised by the poorest customers paying overdraft penalties. [1] https://en.wikipedia.org/wiki/Confusopoly https://en.wikipedia.org/wiki/Confusopoly
  • stuaxo 9y ago
    What a great term. Mobile companies are the obvious ones to do this. Energy companies use this to great effect - there is never a like-for-like to compare.
  • deleted 9y ago
    [deleted]
  • walshemj 9y ago
    Should customers who don't go into the red subsides those that do then.
    • gmac 9y ago
      False dichotomy? Although if I had to choose (and speaking as someone who has never paid an overdraft fee), then yes, because it would be way less regressive than the current arrangement.
    • lmm 9y ago
      No, the point is the profit margin on all customers should be approximately the same; if any group is cross-subsidizing any other group then something's probably screwy.
      • walshemj 9y ago
        Lol the banks will find away to keep charging for overdrafts and screw both types of customer - just like they did over the reduction in merchant charges I lost £20 a month but the merchants just pocketed the reduced charges as a bonus and did not pass it on to customers.
  • simonh 9y ago
    Britain has some of the most forgiving overdraft penalties in Europe. My mother spends time in France and has a French bank account, going overdrawn over there is a seriously big deal even if you have an otherwise stellar record and the charges are punitive even if you have a facility.
    • ionised 9y ago
      Maybe, but being the best of a bad bunch doesn't make you good.
  • mamon 9y ago
    Roaming is relatively niche, but very expensive product, compared to other telecommunication services, so in my opinion it was fair to charge additional fee for that. 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.
    • seszett 9y ago
      The EU has also regulated down the price that mobile operators are allowed to charge each other for roaming though, during the last years. 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.
    • tim333 9y ago
      Sometimes fair. But there have been a lot of cases of people unknowingly using data abroad and getting a bill for like £500 for half a GB of data which would fairly cost maybe £5.
    • Thimothy 9y ago
      Why is expensive? I get that in the times of analog cable, connection centers between different countries networks were cumbersome, and a service that needed to be payed exclusively by those that used it, but these days of interconnected everything? 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.
      • will_hughes 9y ago
        Consider the case of a small national telco that happens to have a large number of incoming tourists. 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.
• matthewmacleod 9y ago
  Barriers to switching would be my guess. Three, in particular, has offered an amazing roaming package for years. But it's still fiddly and annoying to switch mobile providers due to long-term contracts, porting numbers and so on.
• axplusb 9y ago
  1. Oligoploly 2. Collusion It's also why phone services are so much more expensive in the US than say France.
• slindz 9y ago
  My estimate would be that the telco's rely on each others networks to 'roam', and absent of common rules, the behind the scenes peering agreements would leave someone's network with a bill to pay. Under these circumstances, mandated cooperation would make sense to me.
• pulse7 9y ago
  EU is a political effort to bring countries together and this is part of it - in this case, consumers will benefit. If not regulated, telcos would be capitalizing MUCH on open EU borders and (more or less) free travel within EU...
• dovdovdov 9y ago
  30 years ago we had carphones, later we only had cartels. ;)
• pietroalbini 9y ago
  Because all the major operators (at least in Italy) really like cartels: if an operator increases the price of something, you can expect all the other ones to do exactly the same within a few months. 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.
  • marvel_boy 9y ago
    Exactly the same in Spain.
• jlg23 9y ago
  There was no real competition because there was no real market. The high roaming fees were simply a trap for unsuspecting consumers who got a smartphone, went on holiday and only then learned about "roaming", "automatic updates" and their phones' "via wifi only"-settings; business users would just get a local SIM.
• quickben 9y ago
  Because it's an overused phrase that doesn't mean what most people think it means. "Free market" is heavily used as a propaganda. 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.
  • kybernetikos 9y ago
    > People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. - Adam Smith The wealth of nations
• DanBC 9y ago
  Bafflement pricing: Mobile phone plans can be monthly contracts or "pay as you go". They have pricing for texts, minutes, and data. They'll include some amount of free texting and free call minutes. Sometimes you'll get unlimited calls to people on the same carrier. 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.
  • InTempWeTrust 9y ago
    Bonus Points if you provide software that updates regularly and thus uses up bandwith. Thus Telcos have a interest in Security.
• andmarios 9y ago
  There is no free market. There can be only so many telcos in one country anyway, so instead of a race to the bottom, telcos of each country form cartels. 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.
  • mamon 9y ago
    In Poland it actually is a race to the bottom: there are 4 different mobile operators and every time one of them announce a new offer it usually is cheaper than anything already on the market. And within few weeks other 3 usually follow with similar price cuts. 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.
    • andmarios 9y ago
      You guys are lucky. I wish it was the same with the greek market. Though the cynic in me whispers that wait a few years and you'll experience the same behavior once the market is settled.
      • StavrosK 9y ago
        I don't know man, I have the Cosmote 65 and was paying 12 euros a month until recently (now I pay 20) for 1500 mins/SMS and 3 GB/mo. If you tell them you're switching away every time your contract lapses, they give you huge discounts.
• netcan 9y ago
  There are free markets and then there are free markets. 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.
  • icebraining 9y ago
    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.
  • kabbalf 9y ago
    It could be argued that these criteria lead to the opposite conclusion. 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_operators_of_Europe https://en.wikipedia.org/wiki/List_of_mobile_network_operato...
• belorn 9y ago
  free market forces is great when the is information symmetry between buyer and seller. In that world no person would ever be surprised when the phone bill is sent. 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.
  • mamon 9y ago
    There was another issue: most people don't travel very often, so roaming prices weren't even considered when signing contract with mobile operator. And when you do finally decide to go for that dreamed of vacation abroad you won't be switching your operator just for that purpose. So you just agreed to whatever roaming plan your current vendor had to offer. And then used your phone only for absolutely urgent things while abroad. Or bought a prepaid sim card from any of local vendors.
    • kabbalf 9y ago
      Put another way: most consumers don't care about roaming; if they did they would consider it when signing a contract. So why should the EU force roaming on everybody instead of letting operators offer products tailored to the individuals? 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.
• rplnt 9y ago
  It did in some cases - same operators across borders, or some neighboring country specials. But nothing global.
• dx034 9y ago
  Many commentators here say it's not a free market but I would disagree. It's just that very few people choose their plan based on roaming. There were cheap roaming plans for a while in most countries but many tend to choose a plan that fits best for the time they're at home, not for the few weeks a year they're abroad.
• watson 9y ago
  Look at the most free market of them all with the least regulation: United States. Here using a mobile phone is WAAAY more expensive than in Europe. My US friends always thinks I'm lying when I tell them how little we pay for data in EU.
  • dx034 9y ago
    The size of the country will play a big role. Many European states are densely populated. Germany, for example, has more than 80mln inhabitants while it is smaller than the state of Montana. 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.
    • zurn 9y ago
      The most sparsely populated EU countries (Sweden & Finland) have good coverage and low prices. And mostly domestic (not foreign-owned) operaotrs.
      • rhino369 9y ago
        You can't go by pure density. Imagine if you transported Mexico City into Antartica. It would be sparsely populated, but highly concentrated. Cellar coverage would be easy. 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.
        • ptaipale 9y ago
          Rural areas in Sweden and Finland are dominated by forests, swamps and lakes. You've got 3G or 4G practically everywhere.
          • yxhuvud 9y ago
• rahimnathwani 9y ago
  Do you consider the cost of an unauthorised overdraft when opening a bank account? Do you consider the late payment fee when taking out a loan? Do you consider the cost of foreign transactions when choosing a credit card? Do you consider the cost of ink cartridges when buying a printer? 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.
• revelation 9y ago
  Because telecom companies in different countries do not compete. So roaming charges are free money for all of them.
• zurn 9y ago
  People on average were willing to pay a lot for roaming, because it was charged from: - 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.
• rama_dan 9y ago
  It's because there are no free market forces affecting telecoms, because they're a state-maintained cartel. It's the same with ISPs and banks, etc.
• literallycancer 9y ago
  The available frequencies are limited, this means new companies can't enter the market.