One reason Western European mobile service provider revenue is dropping is that new mandatory price cuts have been adopted, reducing maximum prices for some products, such as mobile data, by up to 70 percent.
On July 1, 2014, the European Union will institute the third of three wholesale price cuts for wholesale mobile communications, cutting price caps for mobile data usage by more than half, from 45 cents per megabyte to 20 cents per megabyte. Rates could have dropped by 70 percent to 90 percent if a 2013 proposal had been adopted. Maximum wholesale rates for outbound mobile voice calls will drop from 24 cents a minute to 19 cents a minute.
In July 2012, the EU wholesale rate data usage rate was set at 70 cents a megabyte, while the rate for outbound calls was set at 29 cents. On the other hand, action by EC regulators could help mobile service providers later, if proposals to create a single EC telecom market can overcome national regulator opposition by perhaps 2015.
Digital agenda commissioner Neelie Kroes has promised to roll out a single telecom market throughout the EU before she leaves office in 2015. That would help the leading service providers by allowing them to increase geographic scale and gain operating efficiencies. On the other hand, a single market might also end all roaming charges.
But there are obstacles. Some believe such a single market would require a single EC regulator, in place of 27 national bodies. Predictably, that idea has met with resistance from national regulators. Service providers support the move to unify European markets.
The European Telecommunications Network Operators’ Association (ETNO), representing 37 companies, says the fragmentation of the European market makes revenue generation and creation of new services more difficult.
Europe has 1,200 fixed operators and over a hundred mobile operators, compared to the United States with six mobile operators and China with three mobile service providers, ETNO says, illustrating the scale problem.
In the near term, revenue problems are going to get worse for European mobile service providers, because of the roaming rate cuts.