by Carlo Longino

EU's Approach To Telecom Regulation: Balloon Squeezing

EU telecom regulators have been on the warpath lately against high roaming charges, and plan to force operators to lower rates, despite plans by many operators to cut the rates on their own. The biggest risks of such heavy-handed regulation are the unintended consequences they often create. The regulators should be well aware of this, since it was the conditions they attached to Vodafone's buyout of German operator Mannesmann in 2000 that helped bring about the high roaming rates they now see as a problem. With that in mind, it's hardly surprising to see one carrier prepare for the coming forced rate cuts by raising its roaming charges in most of the rest of the world. So Orange's EU customers will pay lower rates while they're within the EU, sure -- then get reamed when they go outside it. Somehow, it would be surprising if the net effect hit the carrier's bottom line. This sort of regulation is just like squeezing a balloon -- pushing things down in one area just makes them go up in another.

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