Advice to European Parliament on international roaming prices

The EU is concerned about high costs for consumers using their mobile phones in other countries, called international roaming. The European Commission has made a proposal on how to regulate international roaming. The European Parliament’s Committee on Internal Market and Consumer Protection has issued an opinion on the European Commission’s proposal. The Committee draws on a report from Copenhagen Economics, in which we have reviewed the Commission’s proposal. We suggest several changes to the Commission’s proposal. For instance, the European Commission has proposed two retail price caps when making a call: one for calling home or a third country (45 eurocents), another for calling locally in the visited country (30 eurocents). In our review of the Commission proposal, we do not find justification for two price caps, and we propose a single price cap (39 eurocents). For details of other suggested changes, the report can be downloaded here Further information Christian Jervelund or Henrik Ballebye Olesen.

Still untapped potential in opening up network industries
Copenhagen Economics has shown, in a new study for the UK Department of Trade and Industry (DTI), that the current lack of market opening in network industries is costly. By fully opening up network industries to competition, jobs and income in the EU can be expected to grow by between 50% and 90% of what we experienced as a result of the market opening frenzy in the 1990s. "Most EU Member States have done a good job so far of opening up their network industries to competition. But crucial industries are lagging behind in many countries; postal industries for one. The last effort towards full market opening in network industries will bring along new services and decrease prices for the benefit of EU consumers", says senior economist in Copenhagen Economics Christian Jervelund. Read the report here Further information Christian Jervelund
New method to calculate over-recovery on the cost of raw copper

In 2003, the Danish National IT and Telecom Agency changed the method for calculating the price of access to the raw copper. I.e. the part of the telecommunications’ network which connects the end user to the local switch. On behalf of the Agency, Copenhagen Economics has developed a method to calculate whether the change gives TDC - who owns the raw copper in Denmark - an over-recovery for the costs of the raw copper. The method is described in the report "Over-recovery for the costs of raw copper" KPMG has used the method and real data to calculate the actual size of the over-recovery. Based on these calculations, the Agency concludes that TDC is likely to gain an over-recovery, but that it has not been realised yet. By the end of 2030, TDC is likely to have gained an over-recovery of about 200 million DKK from selling access to the raw copper. The actual size of the over-recovery will, however, depend on the market developments until 2030. The Agency's conclusions can be seen here Further information please contact Partner Martin Hvidt Thelle

Outward direct investment: beneficial or detrimental?

In today’s globalised corporate world, typically not much time is needed to convince firms about the benefits of investing abroad. The stream of arguments about better access to overseas client markets; knowledge and advanced technologies; or less expensive qualified employees is music to the ears of CEOs. But will headquarter profits increase alongside increased production, or will lower employment make domestic productivity look more favourable? And what happens to domestic suppliers, distributors, employees, or tax collectors? Copenhagen Economics has identified and measured specific effects of outward investment accruing to one of Europe’s most dynamic economies. In this project, we have supplemented our trademark quantitative approach with in-depth interviews with top corporate CEOs. Communicated in an accessible language, our study will once again facilitate informed decisions. For further information, please contact Partner Martin Hvidt Thelle 

Advice to European Parliament on international roaming prices
Everyone who has used their mobile phone while travelling abroad knows how expensive it is. As costs do not seem to warrant such exorbitant prices when roaming, the European Commission has proposed to regulate them. However, regulation is a delicate matter, and certain aspects of the Commission proposal can be questioned. For example what is the reason for choosing mobile termination rates (MTRs) as a benchmark for regulation at the wholesale level – and is peak or average MTR the better choice? Furthermore, why is a 30% mark-up on wholesale costs the proper size for regulating retail prices – should it be larger or smaller? The European Parliament led by the Committee on the Internal Market and Consumer Protection (IMCO) feels that these and other similar questions have not been properly answered so far. Therefore, it has asked Copenhagen Economics to answer these questions such that its position on the Commission proposal may be an informed one. For further information, please contact senior economist Christian Jervelund