As from June 15, European travellers won’t be overcharged for international calls, SMS and data usage within the EU. The new “Roam-like-at-home” contracts make sure the conditions associated to your home-country contract apply when you are (temporarily) abroad.

The new directive, adopted after a decade of negotiations with telcos, will for once make European citizens love European decision makers. But for how long?

2 to 5% revenue loss

It is no secret that telecom operators all over the world suffer from revenue erosion. Internet companies have been sucking voice revenues with over-the-top applications, and data monetization does not compensate the loss yet. At a time where telcos need to massively invest in their networks, it is subsequent – between 2 and 5% of their revenues, says ETNO (European Telecommunications Network Operators’ association).

“There has been a period during which roaming was indeed overpriced, admits Alessandro Gropelli, communication director at ETNO. But it doesn’t mean that roaming is free for telcos. Think of Proximus, for instance: their network is deployed in Belgium only. Everytime a Belgian subscriptor is abroad, you need first a technical arrangement to connect the phone to the hosting country’s network. Secondly, there is a bill emitted from the hosting operator to Proximus for using its network. Why? Because the maintenance and labour costs differ from one country to another, and the networks have to be sized according to the traffic. Belgium might not face a big challenge hosting lots of European travellers, but countries like France, Italy or Spain for example welcome millions of tourists a year.”

So, yes: roaming has a cost, even if no tangible value for customers. As from now, the roaming bill will stop at the wholesale level. Given the difficulties encountered by telcos, can we assume the loss will be passed on retail prices? “At this stage, it’s impossible to say, states Alessandro Gropelli. But telcos don’t want to scare their clients. Within ETNO, there is a consensus for absorbing the cost to the extent possible.” Clients being more price-sensitive than ever and fierce battle for market share are probably good reasons to trust him.

Are you part of the regulated club?

Although very sexy from the customer’s point of view, end of roaming reveals a major issue for the future of telcos: regulation. “Demand is of course the biggest driver for investment, explains Alessandro Gropelli. But clearly, investors and analysts base their appreciation on both demand and policy. Regulation can take away part of the demand profit when it is considered as a hurdle.”

A few months ago, analysts were quite confident in the fact that somehow relaxed European regulation would create a good climate for investment. “The new Electronic Communications Codeproposed in September 2016 had indeed the merit of shifting the regulator’s focus from price to investment, outlines Gropelli. Instead of pushing prices down, the EU wanted telcos to be rewarded for their investments.”

But the spirit of the Code seems a bit lost now, some national representatives within the EU Parliament and the EU Council being eager to push back. “Regarding fixed technologies, the legacy networks could benefit from relaxed regulation as far as there is no competition issue. Now the definition of competition is being adapted in a way that local governments will be able to regulate forever”, says Alessandro Gopelli. On the mobile side, spectrum harmonization is also at stake. “Spectrum (i.e. radio frequencies allocated to the mobile industry) is a big investment enabler in the mobile world. As spectrum is a scarce resource that belongs to the Member States, the only way for EU to regulate is to act on licences’ duration. The Electronic Communications Code suggested 25 years as a standard duration for spectrum licences. But again, national governments are pushing back, which means that investments in 5G are likely to be more timid.” Eventually, digital services keep being a highly sensitive topic. “The situation is quite simple: on one hand, you have the club of the unregulated, that is, the big US Internet companies ; and on the other hand, the club of the regulated EU telecom companies. This is nonsense.”


“There are two reasons for revenue erosion within the telco industry, concludes Alessandro Gropelli. Lack of innovation, which is telco’s responsibility, and regulatory burdens.” If Europe wants to reach the objective of building a Gigabit Society by 2025 (i.e. Internet speed of 1 Gigabit of data per second in schools, public transport and digitally intensive enterprises and uninterrupted 5G coverage in major cities and railways), things have to move fast. “The money will come because there is no other way, declares Alessandro Gropelli. The questions are: how fast and how much? We are kind of stuck. The US have adopted a very deregulated approach and Asia is investing massively in next generation networks. If we wait until 2028, we are dead.”