With operators making solid progress to improve roaming services in the MENA region, the GSMA warns regulators against taking a similar approach to Europe and imposing a one-size-fits-all set of regulations on operators.
Peter Lyons, director of spectrum policy, Africa & Middle East at the GSM Association, gave a keynote speech at last month’s Roaming MENA conference in Dubai. He offered a persuasive argument for regulators to avoid attempting to apply European style regulation to the Arab world and indicated that market forces may prove to be the best driver of fairer roaming tariffs in the region.
Outlining the general global trend of roaming regulation, Lyons says that regulatory activity is growing, with policy makers and regulators from around the world trying to address the problem of “high charges and bill shock” that many mobile subscribers experience when they travel abroad.
“We are seeing various levels of regulation, from bilateral between countries, regional and global,” Lyons says. “Our position is that one side does not fit all, and especially global measures do not work because you are really dealing with companies at different stages of development, very different stages of mobile market maturit. Our analysis is going to highlight even in Europe that there are vast differences between member countries of the EU and especially in the Middle East region.”
For example, he adds that there are few similarities between two countries such as Yemen and the UAE which are at vastly different stages of development.
According to Lyons, parts of the European regulatory approach, which included wholesale and consumer price caps on roaming charges, would be difficult to apply to the Arab world and could prove to be counter-productive.
“Parts of this regulation presents a risk to consumers and the industry through unintended consequences,” he says. “We are talking about regional regulation and a uniform price cap regulation does not consider economic or market differences that could cause market distortions over time and impact the industry’s ability for fair mark-ups.”
Indeed, Lyons points to significant differences between countries in the region, including inflation rates, GDP and the proportion of the local population that travel abroad. To illustrate his point, Lyons points out that Yemen experienced inflation of more than 11% annually while the UAE has an annual inflation rate of about 1%. “To impose a price cap between those two markets would completely distort the operating costs of the operators. Operators in countries with high inflation will be disproportionately affected as their costs rise faster,” he says.
Another potential problem with price caps is that they can hinder operators from making a fair return on investment, and given that many operators in the region still generate a significant proportion of their revenue from roaming, this could become a serious problem.
Furthermore, countries with higher levels of tourism depend more on roaming traffic, and countries including Morocco, Egypt and Jordan depend more on tourism than countries in the GCC.
“We want to maintain a level of investment in networks where putting price caps on roaming could deter investment, particularly in the roaming services,” Lyons says. “And there is the waterbed effect. If you push prices down in one place they could ultimately rise in another.”
The GSMA also believes that competition and innovation in roaming tariffs are likely to suffer as a result of regional regulation. Imposing regional regulation across the Arab world’s diverse markets could serve to create some “commercial restrictions” that could deter transparency, Lyons says.
Furthermore, there are numerous steps that regulators and operators can take to improve roaming without the need to implement restrictive pan-regional regulation.
As Lyons says, the telecoms market in many countries in the MENA region still faces structural challenges, including a monopoly on international gateways and a lack of routes for pre-paid roaming within the region. In some countries, fraud also remains an issue.
