[bOR_]

She's great (or at least the dutch think she is), and did a good job as well when she was commissioner on competition, handing out some big fines to business cartels. see

http://www.ft.com/cms/s/0/a854010e-dd84-11db-8d42-000b5df106...

I think we first were a bit disappointed that she was no longer keeping businesses on the straight and narrow, when she moved from competition to the digital agenda: it seemed like she was rearranged to a position where she would be less dangerous. In retrospect, that impression might have been wrong, and she might have just decided that keeping the digital world from being corrupted (by roaming fees, broadband prices, copyright agreements) was a more important thing to go after now than business cartels :-).

[fauigerzigerk]

I wasn't so happy about her work as competition commissioner. They went very far in the direction of price fixing. For instance, the EC tells telcos what to charge for roaming even though no one can claim that the telecom sector isn't very competitive. It's cut throat actually.

[bOR_]

I understand the the telco's are very competitive, but for some reason, free market competition appeared to fail to have an effect on prices like texting or data roaming. Oddly enough, you roam through various network using the internet, and there free market seems to have worked between fiber providers into keeping the prices low and efficiency high.

It seems that Kroes only launched the inquiry into telco's as part of her commision on competition. The price regulations came after her time there (see http://en.wikipedia.org/wiki/European_Commission_roaming_reg...)

[fauigerzigerk]

The price of something being "high" doesn't mean there is a market failure. It may just be an expression of customer preferences. If high roaming fees are used to subsidise cheap local calls and data plans, that may be a problem for EU officials who travel a lot, but it may be exactly what regular folks want.

The job of the competition commission is to make sure there is real competition, but what they have done is plain old price fixing. In this case, their actions make low income people subsidise the mobile life-style of high income people.

[bOR_]

Isn't it actually the reverse?: don't the EU actions actually stop the previous practice of Telco's to subsidize the calling behavior of the majority by adding additional fees to a smaller group that heavily uses roaming?

I'm not sure what the free-market theory on that is (it is an interesting topic though) - making a smaller group of customers pay (and have limited alternatives but to pay) to be more competitive in other parts of your market.

[fauigerzigerk]

Yes, I think that's exactly what happened before the prices were fixed and it's a completely normal facet of markets. You could make a case that governments should protect minorities. But I see a couple of issues in this case:

The competition commission doesn't have a legal mandate to give preferencial treatment to minorities. They have a very clear mandate and they should stick to it in the interest of seperation of concerns.

The particular minority concerned in this case is a rather wealthy one that benefits from free markets in other respects more than the average person. They don't need extra help from governments.

Helping minorities by fixing individual prices tends to be inflexible because any change in the underlying economics or social culture has to be to be compensated with new regulation which often doesn't happen in a timely fashion.

Preferencial treatment for minorities should, in my view, focus on life and death issues, freedom of expression, legal matters, etc.

[CaptainZapp]

A bit of revisionist history here?

The prices charged for roaming where insanely and artificially high.

The EU commission provided multiple opportunities for the telcos to get their act together, which they didn't. Enforcing fair prices within the common market is exactly one of the missions of the EU commissioner in charge.

No wonder that the telcos hate it, but in this regard there was no competition. They all gouged their customers mercilessly until the EU put a stop on this.

[EDIT: clarification]

[fauigerzigerk]

I'm not a telco, nor do I work for one. I'm a consumer, so the reason why I hate this is not the same reason why the telcos hate it. Their interest is to make money. My interest as an EU citizen is good governance. Countries where arbitrary prices are fixed for populist reasons tend to be poor.

The competition commission should make sure that the markets aren't rigged and leave it to the market to determine the right price. I'm not saying markets always work well, but the telecoms market does.

[CaptainZapp]

  market to determine the right price. I'm not saying markets always work well, but the telecoms market does.

While I agree that this may be true on a national level I disagree that this applies when it comes to roaming.

Example? I'm charged 4 Euros (5$ +) for 1MB of data. Overseas I may be charged as much as 17EUR for a MB.

This is not a reasonable price determined by a free market, but price gouging and I can't switch to an alternative service provider.

At least - thanks to the wide availabilty of WiFi - I do have an alternative to such obscene prices.

For voice calls this is not the case. So I for one salute the EU's efforts to curb an out of control market.

Your mileage may vary, of course.

[fauigerzigerk]

I think our dispute comes down to a single question: Are high prices alone proof enough of a dysfunctional market? You seem to say that by definition excessive prices are a market failure that has to be fixed by the government. I disagree. I think the standard of proof has to be higher than that.

If governments effectively start to target profit margins for particular services it will result in massive misallocation of capital. The prices of basic services will go up and innovation will suffer, because one reason for innovating is to earn very high margins for a while until cheaper alternatives become available.