Europe’s 2017 Roam-Like-at-Home Regulation

In June 2017, the EU enacted the so-called Roam-Like-At-Home (RLAH) regulation. Essentially, network operators were required to end surcharges to consumers travelling within the European Economic Area (EEA). 

Before the regulation, travelers were subjected to high roaming charges and, as such, refrained from using their phone as much as they would like. For example, in a 2014 Eurobarometer survey, 52% of respondents who traveled to other countries in the European Union (EU) said that they never used the Internet on their phone when travelling.

Using individual-level consumption data, a recent paper evaluates the effects of RLAH on consumption patterns as well as on operator profits. From a methodological point of view, the authors follow a difference-in-difference approach. The key identification strategy is that RLAH applies to some countries but not to other countries. One can therefore evaluate the post-RLAH variation in consumption in countries affected by RLAH using the other countries as a control group.

The figure below summarizes the results from this approach. The horizontal axis measures time, whereas the vertical axis measures the difference in roaming consumption between EEA countries (where RLAH applies) and non-EEA countries (where RLAH does not apply). The vertical dashed line marks the introduction of the RLAH regulation.

As can be seen, before RLAH, the difference between EEA and non-EEA countries is not statistically different from zero, whereas after RLAH roaming activity in EEA countries is considerably higher. There is some variation across countries and consumers; the shaded area in the figure above corresponds to a 95% confidence interval.

The figure above shows clearly that RLAH had an effect on stimulating roaming within EEA. In order to put a euro number on this effect, the authors estimate a demand model and compute the increase in consumer surplus stemming from RLAH (which effectively corresponds to a drop in price). They find that the average consumer surplus gain per user and travel day is about €2.44, with a confidence interval [2.31, 2.55]. Moreover, they decompose this number into two effects: 60% corresponds to buying the same roaming at a lower price, whereas 40% corresponds to new consumption. 

The authors also analyze the effect on RLAH on network operators. They estimate that the daily marginal revenue loss due to RLAH amounted to €.32 per outgoing roamer and €1.17 per incoming roamer.

All in all, the results suggest a positive and significant effect of RLAH on total welfare.

Martin Quinn, Miguel Godinho de Matos, Christian Peukert

The Welfare Effects of Mobile Internet Access: Evidence from Roam-Like-at-Home

The Economic Journal 134 (659), April 2024, pp. 1228–1246.