Brexit matters

[reddragon]

I think you're somewhat missing the point.

One of the main aims of Brexit was to free the UK of the requirement to adhere to EU rules. There was little point in leaving if pettifogging regulations like outlawing roaming charges would be carried over after we left. There is nothing to prevent mobile companies maintaining free roaming if they wish and nothing to prevent the UK government from outlawing the charges if they see fit. But I see no reason why government should interfere in the pricing structures of commercial companies where adequate competition exists.

EU Rules, a substantial number created in the UK are about protecting consumers. The reason our Government want rid of them as it costs their businesses money!

 

[Yew]

Probably many remainers would have been happy with it, but I doubt many people who voted Brexit would've been. As I recall, the issue of Freedom of Movement was widely cited as one of the big drivers behind the Brexit vote in the referendum. Any Brexit that preserved freedom of movement would very likely have caused large numbers of (maybe even, most) people who voted Brexit to feel utterly betrayed, and that their vote had been ignored.

There was no mention of the customs union on the ballot paper - it specifically referred to the European Union and nothing else. If anyone feels mislead for doing exactly what was voted for, they should direct their ire at the odious toff masquerading as a working man, Nigel Farrage.

 

[reddragon]

There was no mention of the customs union on the ballot paper - it specifically referred to the European Union and nothing else. If anyone feels mislead for doing exactly what was voted for, they should direct their ire at the odious toff masquerading as a working man, Nigel Farrage.

I'm not sure anyone got the Brexit that they thought they voted for!

 

[Yew]

But I see no reason why government should interfere in the pricing structures of commercial companies where adequate competition exists.

Aha, would you like rip off prices from the company with a red logo, or rip off prices from company with a blue logo? You can't complain because it's "free market competition".


Quite simply I find these free market types utterly perplexing, with national laws and boundaries, the market is simply not free - yet they persist in pretending that it is.


We've seen time and time again that large corporations do not act in the interest of the public, Standard Oils segmented marketing and IBM's early practices being great examples. The internal politics of these organisations almost always results in a thirst for maximum profit (and thus shareholder dividends) with complete disregard for everything else.

I'm not sure anyone got the Brexit that they thought they voted for!

That's the thing, it doesn't matter what people thought they voted for, it matters what was written on the ballot paper. Without a further ballot to leave the EEA, it was undemocratic - plain and simple.

 

[jon0844]

I think you're somewhat missing the point.

One of the main aims of Brexit was to free the UK of the requirement to adhere to EU rules. There was little point in leaving if pettifogging regulations like outlawing roaming charges would be carried over after we left. There is nothing to prevent mobile companies maintaining free roaming if they wish and nothing to prevent the UK government from outlawing the charges if they see fit. But I see no reason why government should interfere in the pricing structures of commercial companies where adequate competition exists.

The UK networks can't afford free roaming as they now have to pay the wholesale charges that don't apply to EU members (and was recently extended 10 years - which means even in the EU, in theory, they could reintroduce charges one day because it has an expiry).

UK networks chose to bear the cost for as long as they could, but without increasing rental to cover the charges of some users (many/most won't roam, and if they do only for one or two weeks a year). We already saw a reduction of the amount of data you could use before the charges came back, so they'd already been trying to reduce their liability.

I am sure the UK Government could have negotiated with the EU on this, but they clearly chose not to. Just as it seems UK disabled badge users may lose the benefit when in some EU member states.

Not to worry though; despite many years of people moaning about high phone bills when on holiday, now they say 'You're on holiday - leave your phone at home!' and I've seen people arguing that disabled motorists shouldn't be driving abroad anyway, or should pay like everyone else (because they're alright Jack, as well as forgetting blue badge owners can often park in places that others can't, even if willing to pay).

Brexit negatives are often looked at as no big deal, but I remember how happy people were when we got free EU roaming.

 

[DynamicSpirit]

EU Rules, a substantial number created in the UK are about protecting consumers. The reason our Government want rid of them as it costs their businesses money!

Which in turn means it costs you, the consumer, money. If there is reasonably free competition, it becomes all but impossible for businesses to make excessive profit because if they do, someone else will come in and undercut them. If it's an industry where for some reason a free market doesn't exist or is impossible (natural monopoly, barriers of entry are too high, etc.) then it's a different situation and more regulation may be appropriate.

Aha, would you like rip off prices from the company with a red logo, or rip off prices from company with a blue logo? You can't complain because it's "free market competition".

If it is genuinely free market competition then the prices will not be rip-off prices. They might not be the prices you want to pay, but they will be the prices that broadly reflect the cost of providing that good/service to you. (Or if they are rip-off prices, you're likely to see that company rapidly go out of business as it loses all its market share to the competition).

Quite simply I find these free market types utterly perplexing, with national laws and boundaries, the market is simply not free - yet they persist in pretending that it is.

Well if you find it perplexing, you could try reading a decent economics book to explain it

Of course no market is perfectly free. There are always some things that get in the way to some extent. But lots of parts of the economy are so close to being free markets that for all practical purposes, the economics etc. work out as if they are.

 

[RT4038]

Aha, would you like rip off prices from the company with a red logo, or rip off prices from company with a blue logo? You can't complain because it's "free market competition".


Quite simply I find these free market types utterly perplexing, with national laws and boundaries, the market is simply not free - yet they persist in pretending that it is.

And who decides what is a rip off and what is not? I think all prices (except the price of (my) labour of course), are a rip off and should be reduced by at least 50%, so I can have a much higher standard of living. Should the Government, or the EU, be determining the price of everything to prevent rip-offs? How is that going to end?

 

[Yew]

If it is genuinely free market competition then the prices will not be rip-off prices. They might not be the prices you want to pay, but they will be the prices that broadly reflect the cost of providing that good/service to you. (Or if they are rip-off prices, you're likely to see that company rapidly go out of business as it loses all its market share to the competition).

Specifically, mutual agreements between companies (or even divisions of the same company) are often almost cost neutral - yet extortionate fees are paid for them because the companies can charge. Why drop a cash cow, if you don't have to?

Well if you find it perplexing, you could try reading a decent economics book to explain it

I would recommend "The general theory of employment, interest and money" by John Maynard Keynes.

Of course no market is perfectly free. There are always some things that get in the way to some extent. But lots of parts of the economy are so close to being free markets that for all practical purposes, the economics etc. work out as if they are.

I think the issue is that we often face a closed shop, the level of upfront investment to get started in many industries limits the ability for new organisations to come in and disrupt things. Instead in many industries we are faced with an oligopoly of the same old names.

 

[alex397]

I thought pretty much everyone was in favour of regulation of roaming charges, apart from big businesses who want as much profit as they can get. You learn something new everyday!

 

[ainsworth74]

I thought pretty much everyone was in favour of regulation of roaming charges, apart from big businesses who want as much profit as they can get.

We have always been in favour of roaming charges! Just like we've always been at war with Eastasia!

 

[JamesT]

The UK networks can't afford free roaming as they now have to pay the wholesale charges that don't apply to EU members (and was recently extended 10 years - which means even in the EU, in theory, they could reintroduce charges one day because it has an expiry).

UK networks chose to bear the cost for as long as they could, but without increasing rental to cover the charges of some users (many/most won't roam, and if they do only for one or two weeks a year). We already saw a reduction of the amount of data you could use before the charges came back, so they'd already been trying to reduce their liability.

I am sure the UK Government could have negotiated with the EU on this, but they clearly chose not to. Just as it seems UK disabled badge users may lose the benefit when in some EU member states.

Not to worry though; despite many years of people moaning about high phone bills when on holiday, now they say 'You're on holiday - leave your phone at home!' and I've seen people arguing that disabled motorists shouldn't be driving abroad anyway, or should pay like everyone else (because they're alright Jack, as well as forgetting blue badge owners can often park in places that others can't, even if willing to pay).

Brexit negatives are often looked at as no big deal, but I remember how happy people were when we got free EU roaming.

There are still wholesale charges in the EU. The EU legislation just means the operators aren't allowed to pass them on to individual consumers.
That our operators have mostly reintroduced charges tends to imply more UK mobile users go abroad than non-UK come here, so it's costing them overall.

 

[najaB]

If there is reasonably free competition, it becomes all but impossible for businesses to make excessive profit because if they do, someone else will come in and undercut them.

Where there is an effective regulator to prevent anti-competitive practice, perhaps. But even then...

That our operators have mostly reintroduced charges tends to imply more UK mobile users go abroad than non-UK come here, so it's costing them overall

Or that they saw a way to increase their profits, and somehow people would blame the EU to boot.

 

[WelshBluebird]

This thread is a goldmine for "interesting" views.
We have gone from suggesting that EU citizens who didn't get UK citizenship (because beforehand there was literally no need to) only have themselves to blame for now having to deal with the post Brexit faff because apparently not applying for citizenship shows they don't care about the UK, to suggesting that banning roaming charges was actually bad for consumers and reintroducing them after Brexit is good (despite all the networks claiming they weren't going to a few years ago!).

Which in turn means it costs you, the consumer, money. If there is reasonably free competition, it becomes all but impossible for businesses to make excessive profit because if they do, someone else will come in and undercut them.

I didn't realise this was a comedy thread!!
IIRC we didn't see any network do that before roaming chargers were banned, so why would they do that now?

Of course what we are actually seeing in the real world is all of the operators reintroduce roaming charges one at a time.
O2 are currently the last one standing, but some of the MVNO's who use their network have already reintroduced roaming charges leaving it likely that within the next year or two O2 will aswell.
If all of the networks have roaming charges, what incentive is there for one network to drop them again and then lose money?

 

[reddragon]

Free market? What crap!

The reality is the spin some businesses use now get around any concept of "fair competition"

A typical business today sets up it's HQ in a business friendly low tax economy in the EU such as Luxembourg, puts it's money in an off shore island say the Cayman Ilse, then racks up debt so that the business makes a paper loss thus avoiding taxes.

There are multi-billion pound businesses here is the UK that make a "loss", their HQ is sited to avoid tax and have been bought on debt. Previously the company paid £1 billion per year in tax, now they get tax relief & justify their hiked prices. That money is off shored, funding private jets, mansions, super yachts etc not fair competition, simply tax avoidance.

The reason these rich / business people funded & pushed Brexit so hard was because new EU laws now prohibit this model, off shore tax havens are banned, tax avoidance schemes are being closed down.

Meanwhile is the UK free of EU rules for our benefit, businesses are ramping up roaming charges, bank charges, living costs etc. Mobile phone companies are international not British, they don't pay 'roaming' charges, we do. Come on get real, Brexit was a big lie that 50.5% of those who voted fell for. Oligarchs simply took out injunctions to ban the reporting off this, that is why you don't know, simple as that.

 

[DynamicSpirit]

I didn't realise this was a comedy thread!!

Wow! Has economic illiteracy really reached such a level that making a fairly uncontroversial and widely accepted (amongst economists) point about how markets operate can get your post labelled as 'comedy'?

 

[WelshBluebird]

Wow! Has economic illiteracy really reached such a level that making a fairly uncontroversial and widely accepted (amongst economists) point about how markets operate can get your post labelled as 'comedy'?

They may operate like that in theory but not in practice. You just have to look at the bloody market to see that.
The comedy part was the assumption we live in an ideal free market society when actually we live in a rotten version where the fat cats have got even more greedy.

Lets take your idealistic world and play through a scenario shall we?
One network decides to drop roaming fees (no idea why they would, but lets assume they do).
That means for all customers who use roaming they they will have a loss of revenue (because it is something they could have charged for).
If loads of customers who want free roaming join this network, then that is even more revenue lost (because it is even more people they could have charged to use roaming).
So what will they do? Raise their prices or introduce roaming charges again. In the hope that they can increase them just enough to make more money but not to push too many customers away.
That is how the mobile network market has worked for years. For proof, substitute free roaming with unlimited data. Three did actually try doing what you have suggested when it comes to trying to win customers by unlimited data and allowing unlimited tethering when most networks either didn't offer unlimited data at all, or if they did wouldn't let you tether with it. Except they very quickly realised they could charge money for that tethering - and so they did. And they liked doing that so much they actively kicked people off old tariffs so they had to pay extra.
Basically companies can't help but be greedy.
Also worth adding the the guy in charge of Vodafone has recently said the UK network is ripe for consolidation and wants less networks. You know what that means? Even less competition which means even higher prices and more charges for things that may currently be free. If the people in charge of the networks want that then that says it all really.

 

[najaB]

Wow! Has economic illiteracy really reached such a level that making a fairly uncontroversial and widely accepted (amongst economists) point about how markets operate can get your post labelled as 'comedy'?

I think the "comedy" is that people believe that economic theory trumps basic greed.

 

[edwin_m]

Wow! Has economic illiteracy really reached such a level that making a fairly uncontroversial and widely accepted (amongst economists) point about how markets operate can get your post labelled as 'comedy'?

The barriers to entry in the mobile market are high. A new competitor would either have to set up an entirely new network, or buy services from one of a limited number of existing ones who are hardly likely to offer rates that allow someone to undercut them. In such a situation the market isn't perfect and some regulation is needed, which keeps a level playing field between companies but just puts it in a different place. It might be different if we allowed operators free access to the radio spectrum and unlimited powers to build base stations, but there are all sorts of reasons why neither is sensible.

Many reputable companies say they welcome an appropriate level of regulation, to prevent less responsible competitors undercutting them by offering lower standards. There may be a place for that in some markets but certainly not all.

 

[najaB]

It might be different if we allowed operators free access to the radio spectrum and unlimited powers to build base stations, but there are all sorts of reasons why neither is sensible

Even then, the barrier is still very high. Nobody (or almost nobody) is going to want to have a mobile phone that only works in a limited geographic area, nor one that isn't interoperable with the other networks.

So the capital expense of setting up a new national network means that the UK is effectively closed to new entrants, even if they could get spectrum allocated.

 

[DynamicSpirit]

The barriers to entry in the mobile market are high. A new competitor would either have to set up an entirely new network, or buy services from one of a limited number of existing ones who are hardly likely to offer rates that allow someone to undercut them. In such a situation the market isn't perfect and some regulation is needed, which keeps a level playing field between companies but just puts it in a different place. It might be different if we allowed operators free access to the radio spectrum and unlimited powers to build base stations, but there are all sorts of reasons why neither is sensible.

A few years back there was quite a market for companies that sold foreign call cards allowing you to make cheap international mobile calls. They generally worked by having you dial a UK number, which would then forward the call to your ultimate destination (I'm guessing that worked by using the Internet rather than the mobile network to get the call into your intended country, and then swapping back to that country's own phone network). I'm not entirely sure to what extent they are still going. It wasn't nearly as convenient as just dialling directly, but does show what can happen when you allow the market to run.

Having said that, I think you are correct that barriers to entry are high in the mobile phone market. If I was seeking to regulate in order to make sure people got good deals on mobile phones, that's probably where I'd want to focus the regulation: See if there's any way to make it easier for new competition to get in. I'd also be looking at preventing the long multi-year contracts that some providers seem to try to get people to sign up to, as that's arguably very anti-competitive: It becomes a lot harder for any company to charge an excessive price if the consumer can easily swap to a competitor. Just about the last thing I'd look at is trying to directly regulate the prices they are allowed to charge. That's usually a terrible way to regulate, and only really appropriate if there's no other option and no realistic possibility of a genuinely competitive market. (Look for example at how well-meaning regulators thought they could price-regulate what we pay for electricity and gas: The main thing the price cap achieved was to make lots of the smaller suppliers go bankrupt, which means now we have less competition and less innovation, which ironically - in the long term - is likely to lead to higher prices!)

 

[reddragon]

A few years back there was quite a market for companies that sold foreign call cards allowing you to make cheap international mobile calls. They generally worked by having you dial a UK number, which would then forward the call to your ultimate destination (I'm guessing that worked by using the Internet rather than the mobile network to get the call into your intended country, and then swapping back to that country's own phone network). I'm not entirely sure to what extent they are still going. It wasn't nearly as convenient as just dialling directly, but does show what can happen when you allow the market to run.

The phone companies shut that down by imposing high call charges per call & per minute on those operators. Competition, no thanks!

WhatsApp etc gets around the issue for mobiles.

 

[najaB]

I'd also be looking at preventing the long multi-year contracts that some providers seem to try to get people to sign up to, as that's arguably very anti-competitive

I'm starting to think that your definition of "anti-competitive" is different from mine. Being able to offer discounted rates in return for a commitment period is a pretty basic fundamental of competition!

Interestingly, it was the hated EU that insisted that mobile companies had to continue to offer monthly contracts, and ruled out auto-renewing contracts.

The phone companies shut that down by imposing high call charges per call & per minute on those operators.

Actually, not so much. The phone companies were quite happy to let them operate since they used non-geographic access numbers that weren't included in call plans. So they got paid either way. As you said, it was Skype and WhatsApp that killed their business model.

 

[reddragon]

Interestingly, it was the hated EU that insisted that mobile companies had to continue to offer monthly contracts, and ruled out auto-renewing contracts.
Actually, not so much. The phone companies were quite happy to let them operate since they used non-geographic access numbers that weren't included in call plans. So they got paid either way. As you said, it was Skype and WhatsApp that killed their business model.

EU call diallers were about 5p per minute. Then phone companies added 20p set up chargers and 15p per minute on top of that and suddenly calling plans via your phone provider became cheaper. Funny that! Skype / WhatsApp were a bit later

 

[najaB]

[

EU call diallers were about 5p per minute. Then phone companies added 20p set up chargers and 15p per minute on top of that and suddenly calling plans via your phone provider became cheaper.

I don't know what period you're referring to, but I used an indirect access operator* as late as 2012/13 that was cheaper than calling directly from my landline.

No setup charges, just a per-minute rate that started charging the moment you dialled, while you dialled the foreign number and it rang - which made a wrong number/no answer very expensive.

*Both a true "dial a short code" IDA as well as a non-geographic shared revenue numbers.

 

[Enthusiast]

EU Rules, a substantial number created in the UK are about protecting consumers. The reason our Government want rid of them as it costs their businesses money!

Then it's a question of who do you want to take these decisions? An elected UK government over which the electorate has a modicum of control, or a panel of unelected bureaucrats over whom the electorate has no control whatsoever?

The problem is that, as an EU member, a country cannot pick and choose which policies it will control and which it will contract out to others. If the EU decides it is a matter in which they want to become involved, all national control is lost. An example of a policy which has no particular concern for the interests of consumers is the control of the price of oranges. The EU controls the import price of oranges as well as the quotas that it allows to be imported from various non-EU countries. The result of this is that oranges sold in the EU are considerably more expensive than those bought in most places outside the EU. The reason for this? Quite simple: the orange producing industry in the EU produces about 0.25% of the bloc's orange consumption. But in order to protect the relatively small industry, which is obviously confined to a few southern EU nations, a complex system of quotas and tariffs is devised (so complex that the tariff and quotas vary across the year - the tariff is higher and the quota lower during the EU orange harvesting season). The result is dearer oranges for all. This included the UK when we were members (and probably about 20 other EU nations) whose consumers who have no material interest in the tiny EU orange industry .

This is a very minor and fairly insignificant intervention (unless you eat a lot of oranges or run a business which processes them). But it is indicative of the protectionist nature of the EU. Of course if you'd rather EU bureaucrats determine the price of your oranges - or your mobile phone charges - then EU membership is for you.

Before you ask - no, I haven't noticed a decrease in the price of oranges here. But I rarely buy any and in any case any price changes would be lost in the general noise of high inflation currently being experienced.

 

[reddragon]

Then it's a question of who do you want to take these decisions? An elected UK government over which the electorate has a modicum of control, or a panel of unelected bureaucrats over whom the electorate has no control whatsoever?

The problem is that, as an EU member, a country cannot pick and choose which policies it will control and which it will contract out to others. If the EU decides it is a matter in which they want to become involved, all national control is lost. An example of a policy which has no particular concern for the interests of consumers is the control of the price of oranges. The EU controls the import price of oranges as well as the quotas that it allows to be imported from various non-EU countries. The result of this is that oranges sold in the EU are considerably more expensive than those bought in most places outside the EU. The reason for this? Quite simple: the orange producing industry in the EU produces about 0.25% of the bloc's orange consumption. But in order to protect the relatively small industry, which is obviously confined to a few southern EU nations, a complex system of quotas and tariffs is devised (so complex that the tariff and quotas vary across the year - the tariff is higher and the quota lower during the EU orange harvesting season). The result is dearer oranges for all. This included the UK when we were members (and probably about 20 other EU nations) whose consumers who have no material interest in the tiny EU orange industry .

This is a very minor and fairly insignificant intervention (unless you eat a lot of oranges or run a business which processes them). But it is indicative of the protectionist nature of the EU. Of course if you'd rather EU bureaucrats determine the price of your oranges - or your mobile phone charges - then EU membership is for you.

Before you ask - no, I haven't noticed a decrease in the price of oranges here. But I rarely buy any and in any case any price changes would be lost in the general noise of high inflation currently being experienced.

I'd be interested to know what awful EU law you feel threatened by or greatly disadvantages you that Brexit will remove?

 

[najaB]

or a panel of unelected bureaucrats over whom the electorate has no control whatsoever?

That phrase quite aptly describes Ofcom, but doesn't describe the EU parliament.

 

[simonw]

A few years back there was quite a market for companies that sold foreign call cards allowing you to make cheap international mobile calls. They generally worked by having you dial a UK number, which would then forward the call to your ultimate destination (I'm guessing that worked by using the Internet rather than the mobile network to get the call into your intended country, and then swapping back to that country's own phone network). I'm not entirely sure to what extent they are still going. It wasn't nearly as convenient as just dialling directly, but does show what can happen when you allow the market to run.

Having said that, I think you are correct that barriers to entry are high in the mobile phone market. If I was seeking to regulate in order to make sure people got good deals on mobile phones, that's probably where I'd want to focus the regulation: See if there's any way to make it easier for new competition to get in. I'd also be looking at preventing the long multi-year contracts that some providers seem to try to get people to sign up to, as that's arguably very anti-competitive: It becomes a lot harder for any company to charge an excessive price if the consumer can easily swap to a competitor. Just about the last thing I'd look at is trying to directly regulate the prices they are allowed to charge. That's usually a terrible way to regulate, and only really appropriate if there's no other option and no realistic possibility of a genuinely competitive market. (Look for example at how well-meaning regulators thought they could price-regulate what we pay for electricity and gas: The main thing the price cap achieved was to make lots of the smaller suppliers go bankrupt, which means now we have less competition and less innovation, which ironically - in the long term - is likely to lead to higher prices!)

Cheap international calls through dialers or calling cards came about through government action via oftel as was. International calls had at the time gross margins often in excess of 75% because there was a virtual monopoly.

The telcos were forced to open the market up to resellers who could still make money at prices a fraction of BTs tariff.




Free markets rarely work without regulation and with it, they are hardly free.

 

[Doppelganger]

The problem is that, as an EU member, a country cannot pick and choose which policies it will control and which it will contract out to others. If the EU decides it is a matter in which they want to become involved, all national control is lost.

Only that isn't how it works. All EU member states influence the decision. If the UK public thought something was due, then they should have asked the UK government as they would have agreed to it.

Remember a few years back a trade deal with Canada was blocked by Belgium's Wallonia region? It only was passed after more back and forth and and forcing through concessions. Doesn't sound like not being able to pick and choose does it?

It's scary how little people know about how the EU operates even now. On balance the UK are best of out, shame that both the British public and the UK government both chose to be so wilfully ignorant.

 

[Cdd89]

They may operate like that in theory but not in practice. You just have to look at the bloody market to see that.

While I can see the irritation with EU roaming fees, exc-EU fees (such as the USA) have competed downwards dramatically over the last ~10 years (from £7.50/MB to £5/day, or thereabouts) and are a clear example of the market working. In fact, roaming fees alone have been the driver behind my last three network changes, since there’s barely any difference between their domestic products and prices.

I know it sucks to pay roaming fees when they used to be free, but comparing the current charges against the £0 they were forced to charge (and which may have distorted domestic prices) is not a fair test of the market. The current charges seem in line with (or below) the best available fees for worldwide (exc-EU) roaming, especially since some carriers such as EE offer premium plans that continue to eliminate them entirely. Presumably rational consumers agree that they get equal or better value from their current provider notwithstanding EU roaming charges, otherwise they’d be with O2.