Working Paper: CEPR ID: DP16554
Authors: Giulia Canzian; Gianluca Mazzarella; Louis Ranchail; Frank Verboven; Stefano Verzillo
Abstract: The roam-like-at-home regulation (RLAH) eliminated all mobile roaming surcharges to European consumers travelling within the European Economic Area (EEA). We measure the causal impact of the regulation on EEA roaming traffic, using the Rest of the World as a control group. We find large and heterogeneous effects on retail and wholesale traffic volumes and revenues. To evaluate the welfare effects of the regulation, we develop a framework that includes consumer surplus, retail and wholesale profits. The gains in consumer surplus are large, and mainly stem from data services. The consumer gains are proportionately larger in small, open economies and in countries with previously high roaming prices. Finally, total welfare increases considerably, because the consumer surplus gains far outweigh profit losses. As such, the removal of market power more than compensates for a distortion from a possible overconsumption at zero surcharges.
Keywords: Price Caps; International Roaming; Mobile Telecom; Market Integration
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| RLAH regulation (K20) | international roaming volumes within the EEA (L96) |
| RLAH regulation (K20) | outbound retail volumes (L81) |
| RLAH regulation (K20) | inbound wholesale volumes (L81) |
| RLAH regulation (K20) | wholesale revenues (L81) |
| RLAH regulation (K20) | consumer surplus in the EEA (D11) |
| RLAH regulation (K20) | total welfare increase (D69) |
| RLAH regulation (K20) | heterogeneity in traffic increases (L91) |
| RLAH regulation (K20) | higher traffic increases for MVNOs than MNOs (L96) |