Telecom regulator's representative: "Most Ukrainians benefit from using Ukrainian SIM cards in roaming"
Liliya Malion speaks on how Ukraine joins the EU roaming space
The EU Council has recently approved Ukraine's joining the EU's Roam Like At Home (RLAH). This was announced by Mykhailo Fedorov, Ukraine's Minister of Digital Transformation and Vice Prime Minister for Innovation, Education, Science and Technology. What should the EU Council and Ukraine do next? When are Ukrainians going to start enjoying RLAH benefits and what do these entail? Will the rates be significantly different from the current service packages launched by Ukrainian operators after the signing of the Joint Agreement on affordable roaming for Ukrainians in the EU? Liliya Malion, member of the NCEC, spoke about this and many other issues in an earlier conversation with Mind.
As a reminder, at first, European and Ukrainian operators have signed a new Joint Statement on affordable roaming for Ukrainians in the EU. This was recently announced by the telecom regulator, the National Commission for the State Regulation of Electronic Communications, Radio Frequency Spectrum and Postal Services (NCEC).
– The agreement was extended in the end. How did you manage to persuade European operators?
– The first Joint Statement on affordable roaming for Ukrainians in the EU was signed on April 8, 2022. It was a step of solidarity for European operators. They made it on their own goodwill, and we are grateful for that. At the time, it was difficult to predict the duration of the hostilities, so the statement was agreed for three months. Frankly speaking, at that time it was hard to realise that the war could last so long – for three more months...
Afterwards, we, the NCEC, had to make efforts to keep the agreement in force. Political support for this process from both the Ukrainian and European sides was also essential. It was extended for the first time in July and again in October. In late 2022, we realised that the statement should be extended further. But there is a need to update it. This was also clear from the monitoring data that we conduct both independently and jointly with the Body of European Regulators of Electronic Communications (BEREC). We saw that there is a clear trend of increasing consumption of services by Ukrainians who are forced to keep staying in the EU. Roaming was beginning to become a basic service for people, and consumer behaviour was changing significantly.
So we initiated another round of negotiations. As a result, the new Joint Statement came into force on January 9, 2023 (although we were able to officially talk about it only recently, after the statement by the President of the European Commission Ursula von der Leyen).
The document's main novelty is that it has expanded the list of call types to which inter-operator discounts apply. Accordingly, the list of operators that have joined the Joint Statement has expanded. From now on, our roamers can also call fixed-line numbers at reasonable rates (in some cases, free of charge). The previous parties to the agreement from the Ukrainian side (Kyivstar, Vodafone Ukraine, lifecell) have been joined by Ukrtelecom, Datagroup, Vega and TriMob. This means that the largest segment of the domestic market is now covered.
From the European side, 24 operators joined the agreement in April 2022, and in November there were already 45 of them. Now it is difficult to name the exact number: 20 European operators/groups of companies have signed the new Joint Statement. For example, Vodafone is a large group of operators. But we count it as one party to the agreement.
The statement is open to all operators to join at any time. And it works very well. The domino effect is at work: at the start, one group signs the document, and the others see how it all works and organically join in. For example, operators from Malta have recently joined. Before that, this country was not covered by preferential roaming. We expect that the number of signatories from the European side will continue to grow. However, we already have the main cohort of operators covering the EU market.
We have now signed a Joint Statement for six months, which is also a novelty. If the war does not end, the document will hopefully be extended again. The difficulty of the process lies in coordinating the synchronisation of actions between the operators and, in fact, their involvement. That is why the process is largely coordinated by the European Commission and the NCEC. Of course, the operators work at their level all the time, but to ensure that everything is synchronised, we facilitate the process, including the negotiations.
– However, this is probably not a very profitable story for European operators?
– On the one hand, yes. On the other hand, business is business. If the business was clearly unprofitable, no one would have played this game for long. If the deal was so unprofitable for European operators, I don't think it would have been possible to continue it. Of course, without the agreement, the players would have potentially had higher revenues.
However, European operators are benefiting: our citizens use both Ukrainian and local SIM cards. In other words, the European market, in addition to roamers, has gained a customer base that pays a subscription fee.
Competition in the market mostly boils down to one thing: the number of subscribers. And European operators have acquired a large subscriber base without making any effort. Of course, they have made super concessions. This should not be underestimated. But they have also benefited from this.
– How many Ukrainians use this preferential roaming? What is the dynamics since the beginning of the full-scale invasion and what does it indicate?
– We constantly monitor the number of active Ukrainian sim cards. The dynamics is actually very interesting. It demonstrates several things: the number of our citizens in the EU, the number of subscribers who keep Ukrainian SIM cards, and the extent to which the measures taken by operators under the Joint Statement and beyond are relevant and affordable.
So, in January 2022 – and this is partly the tourist season – we had 2 million roamers. In the low season, for example, in March or October, this figure could be around 1.4–1.6 million. The number of users, of course, increased rapidly after the full-scale invasion. In February, there were already 2.4 million, and in March – 5 million. Then the "picture" gradually stabilised. From July to December, the number of roamers fluctuated between 3.9 and 4.4 million.
Why does it fluctuate? Many citizens return to Ukraine for half a month or a month or go to other countries and then back to the EU. However, the statistics do not mean that 500,000 Ukrainians have completely switched to local SIM cards, abandoning Ukrainian ones. Yes, some subscribers have chosen local operators, but it is not a large percentage.
There are also interesting dynamics in consumer behaviour. In January 2022, one subscriber used an average of 3 minutes of roaming calls, in March – 17, and in December – 52. Traffic consumption is also telling: in March, the average traffic consumption per subscriber was 0.5 GB, while in December it was 3.6 GB.
So, to summarise: the figures show that most Ukrainians find it profitable to use Ukrainian SIM cards. Roaming tariffs of domestic operators are much lower than European ones.
– How much lower?
– The subscription fee of European operators starts at about 5 euros, and the average value is 10-15 euros. "The price depends on the country, the local player, and the service package itself. For example, in Romania, the call charge rate can be as low as 2 euros and as high as 15 euros per month if it is a business package. In Poland, it can be up to about 10 euros. In Liechtenstein, Switzerland, and Belgium, the monthly fee can reach 30 euros.
– So Ukrainian operators can relax for now?
– I don't think they plan to relax (laughs). We are preparing to join the EU roaming space – Roam Like At Home (RLAH). By the way, cooperation with European operators within the framework of the application has become a great tool for synchronising the two markets. This is a unique bridge and test drive that allows us to establish technical processes and prepare well for joining the EU roaming space.
– Ukraine has been trying to join the EU roaming space for many years. When can this finally happen and under what conditions?
– I have been engaged in this area since 2016. The war changed everything: priorities, processes, and accelerated the dynamics. On the eve of the EU-Ukraine Summit, the President of Ukraine announced an updated plan of priority measures to strengthen the implementation of the Deep and Comprehensive Free Trade Area between Ukraine and the European Union and further integration of Ukraine's economic sectors and the EU market for the next two years. Among the priorities is joining the EU roaming space.
– So, Roam Like At Home is expected in early 2025?
– They hope it will happen sooner. However, this is a very hard process. First, the EU countries have been building their RLAH policy for 15 years. They did it gradually and constantly modified the regulation. Second, according to the EU principle, internal rules do not apply to any third country that is not an EU member. And now we are actually setting a precedent: Ukraine will join the internal roaming market on the same principles and conditions, even though it is not an EU country.
This implies a complex legal process and the mechanism of accession itself. So for the last five months we have been working on this together with our partners from the European Commission. We have recently defined the legal mechanism and launched the first stage. It will be multi-folded.
In the near future, Ukraine is going to start developing and amending Ukrainian legislation (i.e., we shall implement the rules and principles of roaming regulation enshrined in the EU). As soon as we do this, the EU will start evaluating our work. After that, the EU and Ukraine will decide on the date of accession and the actual launch of RLAH.
All the preparatory work has already been done, and as soon as we complete the legislative process, the ball will be in the EU's court. I hope they will quickly make an assessment and decide on membership.
– What will change for Ukrainian subscribers?
– Currently, under the Joint Statement, affordable roaming services are provided permanently. And Roam Like At Home is designed for short-term roaming – tourism – so it has clear restrictions on the time of use (3-4 months). However, if the war does not end before the launch of RLAH, our people who are forcibly staying abroad should continue to receive permanent services. So now we are looking for such a solution. Although we hope that it will not be needed.
For the consumer, everything will be simple: when you cross the border with the EU, you get Roam Like At Home. No, it will not be free roaming, as is sometimes claimed. There are no free services. When something is offered for free, it is either dumping or misleading the consumer. RLAH means that when a subscriber is roaming, he or she receives his or her home package with a certain subscription fee, which includes roaming services.
– Earlier, you said that you were working with the State Service for Special Communications to get funds from the International Telecommunication Union (ITU) to repair Ukraine's infrastructure. Have you succeeded yet?
– So far, we have adopted a resolution on restoring the infrastructure and assessed the damage to the telecommunications infrastructure and losses incurred as of early September. The ITU has set up a fund to which member states can transfer funds.
However, legal procedures still need to be completed before the fund can be fully launched. Along with them, we are initiating a fresh assessment of the damage. The work is ongoing, but let's not forget that the ITU is a UN agency with 193 member states, so some processes are quite slow. Therefore, I cannot say whether the fund is already receiving money.
– Is there already a mechanism for distributing funds among operators?
– The ITU is not a financial organisation, it cannot issue ready cash and grant it to private companies. The assistance will be provided only at the country level and will include two areas: financing infrastructure projects and supplying equipment needed to restore damaged networks or deploy new ones if they cannot be restored.
– What projects will be funded?
– The list has not yet been compiled. For now, I can hypothetically assume that the priority should be to restore mobile and fixed-line networks in the liberated territories. The main thing now is that these funds are "born" and a decision on their distribution is made in principle.
– Perhaps it would be easier for ITU members to provide money if they could see exactly what it is being invested in?
– Yes, of course. Ukraine will provide all the necessary information. But we have to understand that our desire is one thing, and the ITU bureaucratic procedures are another. By the way, many ITU member countries are already transferring funds to Ukraine directly. When the money comes into the fund, a more complicated mechanism is activated.
– The ITU includes telecom equipment vendors. Ericsson and Nokia have announced their withdrawal from the russian market. The positions of Huawei and ZTE are somewhat "vague." Can the ITU influence compliance with sanctions by all vendors?
– This is a complicated question. In theory, we can only demand this from residents of countries that have imposed sanctions. In practice, I'm not sure that the ITU has any reason to put pressure on Chinese Huawei and ZTE.
– Let's get back to the Ukrainian market. Do operators provide the regulator with data on the amount of damage caused by the destruction of infrastructure, theft of equipment by the occupiers, a drop in revenue due to a decrease in the number of subscribers, etc.?
– Operators do not have to provide us with such statistics. However, it is important. That is why the regulator has independently developed an approach to calculating the losses incurred. In the first months of the war, collecting and calculating any information was a super-costly affair for operators, they simply did not have the resources to do so.
So we developed a formula and calculated the estimated losses: $600 million – direct losses from damage to mobile and fixed networks as of June. This data was later used by the World Bank and the Kyiv School of Economics in their own loss estimates and reports. Of course, this amount is now "slightly" higher.
– Is it possible to get compensation from the aggressor country? I don't remember any such cases since 2014.
– Frankly speaking, I don't remember any such appeals or cases from operators. This is probably a marginalised story.
– How can the regulator help now?
– The government oversees this issue. There is a draft Recovery Plan for Ukraine. The document was developed by the National Council for the Restoration of Ukraine from the Consequences of the War. We were also involved in the work of the relevant thematic group. So the restoration of destroyed electronic communications networks is included in the overall plan.
– So, the operators have to summarise the losses and provide them to the government after the victory?
– Yes. It is important that the electronic communications sector is already among the areas included in the recovery plan, which have at least rough figures for the losses incurred. This data is included in Ukraine's overall recovery needs. The regulator and the Ministry of Digital Transformation have made efforts to ensure that telecom is not forgotten.
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