The letter below was sent to the current (2010-2014) EU Comissioner of ICT, Neelie Kroes. Feel free to copy this letter and send to your political representative to add pressure for an open market.
Dear Mrs Neelie Kroes:
The EU has made progress bringing down costs of roaming by intruding caps and maximum prices, but I think that these initiatives does not attack the core problem: Carriers are locking down their clients.
Many, in particular in southern Europe where free (as in freedom) phones are relatively expensive compared to monthly income, people buy heavily subsidized phones only to become locked in by the carrier with a sim-locked phone and a two year contract, and then paying high tariffs for calling and messaging.
People are not aware of the actual cost, the TCO is not stated with the offer and conditions are hard to understand and compare. Further, due to the fast development of technology, once the two years are up, customers will want a new phone.
Add to this exclusive deals between manufacturers, retailers and carriers, means that some handsets are not available untied from the carrier.
In effect these business models stifles competition as customers are locked to a particular provider. There is no competition on tariffs and there is no competition on handset prices.
But on top of that, this hinders the free movement of Europeans: Once locked into a contract the carrier is not obliged to unlock the phone should a client move to a different country and there is no clear way out of a contract at a reasonable cost.
To ensure the mobility of the European workforce and reinstate competition, action must be taken:
- Manufacturers must offer a unlocked version of their product available for retail in all countries.
- Manufacturers must offer handsets at the same price to all retailers regardless of carrier-contract of the sold device, the handset must only be available at a discount to retailers according to volume.
- Manufacturers must offer warranty coverage for devices in all countries within the EU where the device is sold, regardless of where it was bought.
- Carriers must not bind clients for more than 6 months, or at least: Carriers must offer any subsidized device at a contract that does not bind the client for more than 6 months.
- Carriers must unlock phones at request if the client moves outside of carrier coverage, regardless if the client is still bound by the contract.
- Carriers must state the cost of cancelling a contract, at no point may the cost of cancelling a contract exceed the TCO of the device discounting the amount paid when the contract is cancelled.
- Retailers must publish total cost of ownership with any device that is subject to a contractual binding to a carrier, that is state the total price of the device + monthly fees till the binding expire.
So, what's the point of all this? Well, by example, take Apple in the current situation:
Apple has exclusive deals for the distribution of the company's iPhone with carriers in most European countries, and to avoid people shopping around in other countries, warranty is valid only in the country of purchase.
Because of the exclusive deals on the at the national level, there is no competition between retailers. Since customers are bound by a 2 year contract, at least in some countries, there is no option of moving to a competitor, hence there is no competition on tariffs.
When phones are sim-locked and customers contractually locked down by the carrier, they cannot move freely between countries, even if only for a short period, they cannot by a sim card from a local provider. Hence, there is no competition on roaming.
All this adds up to stifling competition and hindering the free movement of European citizens within Europe.
The objective of the above proposal is to break the intimate lock between manufacturers, retailers and carriers. I believe that this will force each part to compete on their market providing lower prices on handsets and lower tariffs on calls and messages and allow citizens to move freely.
I hope you will bring these ideas forward for the benefit of Europeans and Europe.