Is Europe’s abolition of roaming charges a threat or opportunity for operators?
After many signs and statements from the European Commission that roaming surcharges have been a barrier for the consumers travelling within EU, consumers were pleased to see the news this week that the European Parliament has finally agreed to abolish mobile roaming charges in all 28 EU countries from June 2017.
This will enable holidaymakers to call, text and surf the internet at local rates, says Mário Rosas of WeDo Technologies. Moreover, before this rule even comes into place, roaming tariffs will be reduced again; from May 1, 2016 each voice call will have a maximum cost of 0.05 Euro cents per minute, 0.02 cents per SMS and 0.05 cents per MB of data, already offering consumers a more reasonable price compared to what was previously in practice.
Roaming charges have historically hindered a customer first approach, so from the consumer point of view, this is clearly a welcome change. Yet from the operators’ perspective, this means added pressure to already tight profit margins following the effects of the previous shake-up of roaming regulation.
Several operators have already stated that these measures will potentially limit MNO investment capacity, consequently decrease quality of service, increase overall costs of the service (domestic and roaming) and ultimately work as a barrier to the evolution of the sector. By abolishing roaming charges, this could potentially lead operators to increase global prices, decrease the quality of service due to reduced investment and ultimately work as a barrier to the evolution of the sector.
However, expensive roaming charges can in themselves contribute towards considerable revenue loss for operators. As a result of the substantial roaming costs, it has become common to see users blocking roaming data before traveling to another country, buying a local SIM card as soon as they arrive in their destination, or even finding and securing a local WIFI connection. Interestingly, operators seem to be reluctant to face any of these problems head on.
Indirectly, these trends could also be viewed as a solution for a real threat on roaming – the competition of OTT solutions that offer Voice and SMS free of charge. With these roaming caps, users will little by little be able to recover the confidence of using the service without seeking alternatives based on WiFi, and bill shock risk will be considerably reduced or disappear. Reducing or eliminating bill shock cannot be underestimated as a means of improving the customer experience and bringing subsequent benefits to the operator. This is something we’ve seen with our own work with TELUS Canada, who by giving their customers real-time visibility of roaming, was able to enhance TELUS’ ‘customer first’ ethos and provide a better service for subscribers.
The challenge for operators now is in using the developments as an opportunity to reinvent their roaming business and guarantee that this traffic remains in their networks. To proactively prevent churn, operators will need to:
- Monitor user behaviour and quality of the service delivered
- Implement strong mechanisms to prevent revenue leakage and roaming fraud; something which is still significant, and with the increase of traffic will become even more so
- Implement a combined strategy for wholesale, retail and interconnection to minimise costs and maximise revenues
- Have a strong focus on deals with roaming partners to entice roaming visitors in the home network and secure and the best wholesale prices when visiting partners networks
- Explore new services based on LTE networks.
The first operator to act will surely have a considerable advantage to the competition.
The author of this blog is Mário Rosas, product architect for Roaming & Interconnect at WeDo Technologies.
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