Mobile roaming is a matter of fact all over the world, but many customers are denied the opportunity to roam networks within their home countries. The reason is straightforward. By denying roaming between national networks, there is added incentive, and profits, from rolling out new network capacity. The operators compete on coverage and customers win in the long run as a result of increased overall coverage, though they may suffer in the short run as they find their network has coverage gaps and they cannot simply flip over to another network when that happens.
In the UK, one legislator has tabled a proposal to permit in-country roaming. Greg Clark, Member of Parliament, has introduced a bill to encourage, though not mandate, in-country roaming. It is unlikely to be enacted in law, but it is an interesting case of an legislator trying to help telecoms customers without trying to grab headlines by bashing telcos. To read an overview of Greg Clark’s arguments, take a look at his entry on the well-regarded ConservativeHome blog. To read Greg Clark’s speech to the House of Commons take a look at the user-friendly entry at TheyWorkForYou or look through the record of business in Hansard, the official minutes of the UK Parliament. You can also see the video of his Commons speech here.
I can sympathize with Greg Clark’s reasoning, and could go further. Greg Clark’s arguments are simple in order to garner sympathy for an argument that has marginal interest to most. Customers in rural areas would greatly benefit from the freedom to roam on any network that provides them coverage where they are. It also seems strange that emergency services are acquiring foreign SIMs in order to work-around the risk that loss of one network will disable their communications. Given the burdens often imposed on telcos by UK law, especially with respect to responding to emergencies and managing disasters, I would have thought that mobile operators can do more to facilitate multi-network access to special users. In-country roaming also has parallels with other aspects of telecoms liberalization. From the perspective of economics, regulation and consumer choice, I see many parallels between in-country roaming and Wholesale Line Rental (WLR). Domestic landline customers have the right to pick from multiple providers that will sell them use of the exact same copper wire to their home. That copper wire is offered at a fair wholesale rate to the retail provider. Restricting network use to the operator’s own customers gives them an effective monopoly right over the network assets. This may not always be a bad thing, but then again, opening up access to the asset need not penalize the owner either. What matters most is whether the wholesale rates charged give the wholesale provider a good enough return whilst being reasonable enough for service providers to be willing to pay them. Roaming is no different to WLR in this regard, except that consumer choice is less of an issue when there are multiple networks serving the same geographical area. The point here is that multiple networks may be the norm in towns and cities, but not necessarily in the countryside. The use of the Radio Access Network can be sold at a profitable and fair wholesale rate to the customer’s service provider. They in turn pass that cost plus a margin to the customer in exchange for the right to roam on another network. So long as the customer knows that they are roaming, and knows the price they are expected to pay, I consider it to be in the consumer’s interest to have the choice.
There are counter-arguments to all of the above, not least that allowing roaming may discourage new build or that 3G network sharing is already delivering a similar result to in-country roaming. For an overview of counter-arguments, take a look at The Register’s pretty negative response to Greg Clark’s proposed legislation, and also read through some of the reader comments. However, it was interesting to note that there were well-informed comments on both sides of the debate.
As stated, Greg Clark’s bill is unlikely to become law, but If you can track its progress through Parliament here. However, I think most of the arguments for and against are now irrelevant. The problem is that it would be very difficult to provide national operators with a decent enough return to encourage them to open up their networks to all rivals. The reason is the European regulation imposing retail price controls on roaming within Europe. The aim of this was to lower retail costs for European travelers, but the legislation specifically states that it also applies to retail prices for in-country roaming as well. If retail prices are low, then wholesale prices would have to be lower still, and if those are too low, then network providers have minimal reason to sell spare capacity to competitor networks. The competitors would benefit too much from having their outages and coverage gaps addressed at a low price. In reality, the network operator will opt to compete on network quality rather than gain a small income whilst eliminating a key differentiator with rivals. Even if Greg Clark’s exhortation to permit more in-country roaming does become law, the network operators will most likely ignore it. However, the comparison with the EU’s attitude to retail price regulation makes for a nice contrast. Instead of controlling the telcos, it is nice to see a legislator trying to help customers with a bit of creative thinking and by suggesting a potential win-win with telcos, even if telcos are unlikely to take it up. I think we would all like to see more of that.