My newspaper this morning reported that Luxembourg is opposing a proposal from the European Commission regarding new regulation on the pricing of mobile phone calls.
For those not aware of what is at stake, here is a brief explanation. Currently, when roaming with your mobile phone all over Europe, you pay substantial roaming charges when abroad, even if you wish to make a local call. What the Commission says is that a local call is a local call, irrespective of what is your home network operator. If you are a customer of LuxGSM and happen to be in Paris, you should be able to call a number in Paris at the same price a customer of Orange or Bouygues would pay.
Looks fine. The trouble is that Luxembourg mobile operators (LuxGSM/P&T, Tango/Tele 2 and VoxMobile) consider that they would lose too much money and, as a consequence, would have to substantially raise the prices of local calls for everyone, including their own customers.
This demonstrates a real issue with competition in small markets like Luxembourg. What is costly to operators is the infrastructure. There are 2 GSM and 2 3G networks for 3 operators. Does it make sense for a country of 400 thousand people ?
The same applies to the Internet infrastructure. There are 2 competing DSL networks. 2 major operators have fiber networks throughout the country, with a third operator coming.
In such conditions, no operator can make any significant economies of scale, leading to high retail prices.
ISOC Luxembourg has been suggesting for a long time that all the infrastructure should be owned by a neutral not-for-profit operator, which would then resell capacity to telecom operators and ISPs. This would not only allow to rationalize the network infrastructure, it would also make billing the operators more transparent.
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