Is the abolition of EU roaming charges an opportunity or threat for operators?
No one wants to return home from their holidays to a sky-high bill after using their mobile abroad. With international demand from consumers for roaming services continuing to grow at a rapid rate, serious investment is now required by operators to expand their offering while adopting a more sophisticated approach to customer service to ensure they’re able to remain competitive.
Following two years of protracted negotiations, the EU confirmed that roaming charges are set to be abolished in 2017, enabling businessmen and holidaymakers to call, SMS and surf the Internet at lower local prices. Consumers greeted the end of these charges, which were widely considered to be in conflict with many telecom operators’ ‘customer first’ ethos, says Mário Rosas, product architect for Roaming & Interconnect at WeDo Technologies.
Additionally, before we see the end of roaming charges in June 2017, there will be a price drop from May this year, where each voice call will have a maximum cost of €0.05 per minute per call, €0.02 per SMS, and €0.05 per megabyte of data; already offering consumers a more reasonable price compared to what was previously in practice.
Operators, however, have argued that by abolishing this revenue stream, governments are putting telcos under increased pressure at a time when profit margins are tight following the effects of the previous shake up of roaming regulation.
Several operators have even gone as far as to state that these measures act as a barrier to the progression and innovation of the telecoms sector. They argue that the abolition will limit MNO investment capacity, thus lowering the overall quality of the service and consequently increasing the total costs of service (both domestically and overseas).
In actual fact, these expensive roaming charges can in themselves contribute towards considerable revenue loss for the telecoms sector. As a result of the substantial roaming costs, many operators have failed to acknowledge that it is now common to see travellers to Europe turning off their mobile data (indeed, newer smartphones have the option to go into ‘travel mode’, which disables mobile data and cellular signal), buying local network SIM cards or simply limiting their use to OTT apps on local Wi-Fi connections.
Interestingly, these developments could also be viewed as a solution to the wider threat that these telecom companies face from the competition of OTT players. It is no secret that the rise of Skype, WhatsApp, and Viber, has curtailed the amount of data travelling through operators, with the telecommunications industry set to lose a combined $386 billion between 2012 and 2018.
Bill shock, the negative reaction a subscriber can experience if their phone bill has unexpected charges, has also always been seen as an obstacle in providing users with a ‘customer first’ approach; however telco operators can use the recent change in regulations as an opportunity to rebuild confidence with their users, without seeking alternatives based on WI-FI, to reduce or eliminate bill shock and follow the truly ‘customer first’ ethos that many of them espouse.
This is something we’ve with TELUS Canada, who, by giving their customers real-time visibility of roaming, were able to build trust and provide a better overall service to their subscribers.
To prevent customer churn, operators must now use this new legislation as an opportunity to reinvent their roaming business and guarantee that this traffic remains in their networks. To achieve this, they will need to:
- Explore new LTE based networks that provide better reliability and quality of service
- Implement strong revenue assurance processes to prevent revenue leakage and roaming fraud and thus provide more resources to improve services
- Focus on deals and bundles with roaming partners to entice roaming visitors in the home network and secure the best wholesale prices when visiting partner networks
- Apply a combined strategy for wholesale, retail and interconnection to minimise costs and maximise revenues
With so much to be gained from unlocking opportunities associated with roaming, 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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