Marketing Weblog: Being protected from the European Union - Instituto de Empresa Business School

Imagine you are doing fine with your Business. You have invested heavily in infrastructure, worked hard to make things happen, obtain reasonable profits, and have a balanced portfolio with cash cows, star products. dogs and question marks. And all the sudden, based on political reasons, an authority called European Union, requests you to cut down prices in one of your cash cows or star products by 60%. How would you feel? What could you do about this situation?

Well, this is the situation that the Telecom Industry is suffering. Leaded by the Commissioner Viviane Reding and pushed by Germany, the European Union is to rule a price decrease in Roaming (international calls you make when you are in a foreign country) of 60% within the European Union.

Reasons for this? The main explanation given is that roaming prices within the EU are too high and should therefore be reduced dramatically. Real economic reasons? Not clear to me. Sure that end users will be very happy, but if you want to reduce prices, the best thing is to foster competition. Be sure that it will bring prices down.

To male matters worse, we are speaking about perceptions. Take for instance Spain. We have been accused of having very high prices in the mobile industry due to a lack of competition. And I can assure you that competition is fierce and that roaming prices have been cut down by approx. 40% in one year.

Add to the latter potential negative effects, such as an overcharge in services given to national users to compensate the drop in roaming, and you will agree with me that this measure is not as good as it seems.

I could keep on writing a book defending why I consider this unacceptable, but this would not be practical. The main thing is to learn from it and analyze what you can do to get protected from these abuses. The response is clear to me: Join a Lobby. It is going to be your only chance of being defended.

Lobbies have a terrible reputation, but in my opinion are absolutely necessary. They are created to protect the interests of the companies it is representing and can be very powerful. Lobbies can actually take many forms and scopes. The main ones would be the national and international ones. The national ones are country based and will represent those national countries that formed it. The international ones will obviously have a bigger scope.

The difference between them many not be so subtle, and my recommendation is that you join both. In the case of the Telecom Industry, your interests may differ from a national and international point of view. Spain is for instance one the big losers of the price cut analysed as it receives 60 million tourists every year, while Germany is one of the clear winners. Thus, in this case, national companies should be also represented by a powerful european telecom lobby that might defend the global interests of the coporation as a global one.

So please join a Lobby. You need protection from regulations that will affect your potential market and income. Meeting needs profitalby could be really tough if you are not!

Comments? Other opinions? Experiences from other sectors are very welcome.
Ignacio Gafo

PS: All the opinions given are personal. I am not representing here the opinion of any company. This blog is written to express a personal opinion and promote a debate.

Comments

"Sure that end users will be very happy, but if you want to reduce prices, the best thing is to foster competition. Be sure that it will bring prices down."

No estoy muy segura de esto, en España la reciente paso a la tarificación por segundos ha ocasionado una subida al unísono del coste de establecimiento de llamada por parte de las tres mayores compañías de telefonía móvil.

Lo de que exista un cierto número de operadores nacionales de telefonía no exime de la existencia de acuerdos entre ellas (contrarios a las prácticas en un libre mercado) para no perjudicarse en exceso y sacar el mayor partido de todas aquéllas regulaciones en favor del consumidor. A esto sumémosle la extrema dificultad que tiene un usuario de una compañía de telecomunicaciones de darse de baja y de irse a dónde está más barato, y ya tenemos el fenómeno del cliente cautivo.

Al final, en el mejor de los casos, el consumidor ha pasado a estar en las mismas condiciones económicas que antes de la regulación por segundos.

Si es cierto lo que señalas sobre el acuerdo entre operadores, estaríamos en un caso de colusión y estoy de acuerdo contigo. Porque entre otras cosas lo que digo es que se incremente la competencia, que es contraria a los acuerdos entre operadores.
Sobre lo que dices de la tarificacion al segundo es tambien cierto (las tarifas no han bajado en general). Pero tambien lo es que el espiritu de la ley no era que se bajasen precios, sino que tarficara a cada uno lo que consumía sin redondeos. El subir los costes de establecimiento es algo lógico para cambiar el sistema de tarificación.
Por último, déjame discrepar sobre lo que dices del cliente cautivo: Puede que sea difícil darse de bajam pero España es uno de los países europeos y del mundo con mayor tasa de portabilidad.
Saludos.

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