A/NZ regulators likely to act on roaming

David Kennedy/Ovum
 

Ovum

In Ovum’s report The Regulatory Status of International Roaming we noted that excessive charging is the driver of intervention in global roaming markets.
 
Consumer roaming bills, especially associated with data use, have generated negative media coverage; in Australia the Telecommunications Industry Ombudsman’s office, which is responsible for the mediation of consumer disputes with operators, has reported that roaming complaints grew by 69% in 2011–12. While these complaints generated only 2.1% of claims, many of the disputes involved significant sums.
 
In August 2012 the governments of Australia and New Zealand jointly published a draft report on the roaming market between the two countries. The report found that prices were excessive, and canvassed options for intervention. It also concluded that regulatory scrutiny was the driver of recent data roaming rate cuts by some Australian and New Zealand operators.
 
In Australia the responsible minister has directed the regulator, the Australian Communications and Media Authority (ACMA), to prepare a mandatory standard to regulate Australian operators’ roaming practices (not including pricing). We expect the results of these policy initiatives to take effect in 2013.
 
Both bilateral and domestic measures are being considered
 
After an initial review in 2010, the Australia and New Zealand governments concluded that a full review of the competitiveness of the roaming market was required. The draft report of August 2012 found that profit as a percentage markup over cost in roaming markets was as high as 300% in 2011; this was actually down from 1000% in 2009.
 
However, the draft report found the timing of the margin decline correlated with the review itself, rather than any developments in the market. It argued that this, along with the high margins being generated in roaming services, provided sufficient justification for intervention. The draft report suggested a range of options for intervention, including new reporting obligations, the unbundling of international and domestic roaming, the introduction of price caps, and regulated wholesale pricing.
 
The responses from operators in both countries have been broadly similar. They have argued that the price trends were in the right direction, and that light regulation (if any) is the most appropriate course of action. They have also criticized the report’s approach to market definition, and the lack of a cost/benefit analysis of regulation.
 

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