By Wawa Nkosi
The introduction of the Wireless Open Access Network (WOAN) has been the headlining component of the recently released EC Amendment Bill, but another element that shouldn’t be overlooked is that of the proposed International Roaming Regulations in the SADC region. This regulatory proposition is underpinned by the high costs associated with roaming within the region. The Bill aims to “provide for the regulation of international roaming including SADC roaming to ensure regulated roaming costs, quality of service and transparency.”
The idea of introducing international roaming regulations is not novel – there is international precedent that supports this policy. The European Union (EU) and the Trans-Tasman roaming region (New Zealand and Australia) have both introduced international roaming regulations. The EU’s pursuit of establishing a Digital Single Market Strategy entails achieving a single market for mobile communication services such that there is no differentiation between national and roaming rates when roaming in the EU. Therefore, introducing International Roaming Regulations was the natural progression and in June of 2017, surcharges were abolished through a regulation that is known as ‘roam-like-at-home’ (RLAH). The New Zealand and Australian governments decided to regulate the Trans-Tasman mobile roaming rates in February of 2013 due to the high cost of roaming for travellers between the countries. The objective was to encourage competition in this market for the long-term benefit of consumers in New Zealand and Australia.
Similar issues arise when looking at the SADC region: roaming rates are high and there is a lack of competition between operators for the provision of roaming services. A study conducted by Analysys Mason in 2010, concluded that: “In many cases, prices for SADC-wide roaming at the wholesale level appear to be above the costs of providing the service. Retail margins vary significantly between operators and also appear to be above cost. These problems are compounded by a lack of transparency and consumer awareness of prices at the retail level which affected consumer choice and competition”. There is evidently a market failure at play in the SADC region as competition has failed to exert downward pressure on prices.
The introduction of International Roaming Regulations would be favourable for SADC in many ways: there would be lower tariffs for mobile subscribers travelling within the region, and the reduction of transaction costs would contribute to the ease of doing business. This will have further benefits as it will allow companies to channel resources into other areas of business. The regulations could encourage better regional integration and potentially encourage more competition from international networks. To achieve these benefits, it is however important that the roaming regulations are implemented in the correct manner. The Bill proposes that “the regulations may include rate regulation for the provision of roaming services, including without limitation price controls on the wholesale and retail rates as determined by the authorities.” Regulating at the wholesale level, as opposed to the retail level is regarded as more effective. The rationale is that intervention at the wholesale level introduces competition that can trickle down along the value chain, thereby delivering the best outcome for consumers at the retail level.
The proposed International Roaming Regulations have the potential to positively transform competition in the market for international roaming services in the region and allow consumers to enjoy better roaming rates.
Author/s: Wawa Nkosi
Nothing in this publication should be construed as advice from any employee of Econex and should be seen as general summaries of developments or principles of interest that may not apply to specific circumstances.