Mobile operators have generated substantial revenues for many years from imposing charges as users roam between nations in the European Union, writes George Malim as the abolition of roaming charges comes into effect on 15 June 2017.
However, roaming charges irritated and, when poorly explained, alienated customers. While the end of roaming for EU customers eliminates roaming charges, the switch to using customers’ in-country data allowances while they roam still has the potential to cause confusion.
Adrian Baschnonga, the Global Lead Telecommunications analyst at EY, warns the new approach to roaming could still have an impact on customers. “As the final step in a decade long process, the abolition of roaming surcharges is great news for consumers. The era of bill shock for phone users travelling in the EU is drawing to a close,” he says. “However, the prospect of usage caps on unlimited data plans could create some measure of confusion for users. As a result, operators must ensure they communicate clearly with their customers to help build trust in the new system.”
The Eurotariff, which is now in force, is the result of the European Commission’s demand that European Union mobile providers offer mobile roaming across Europe without any premium. The regulation ensures European consumers can “roam like at home” with no extra cost. However, this means lower revenues for many operators who still face significant roaming fees, particularly with the increase in video use. The impact of this – if not proactively managed – could reduce competition and increase monthly tariffs, companies in the mobile virtual network operator (MVNO) market have warned.
A recent report from Strand Consult has warned that the abolition of retail roaming charges is, “a ticking bomb under the MVNO industry. While the roaming policy will be hard for the entire industry which has suffered declining average revenue per user (ARPU) for more than a decade, MNVOs are least equipped to adapt to the Commission’s heavy-handed rules on roaming.”
Some operators fear that they could see their margins wiped out by wholesale data roaming charges which significantly outstrip the cost of domestic data.
“While travellers across Europe embrace free roaming today, MVNOs and small operators will be only too aware that an end to retail roaming charges does not mean an end to wholesale roaming costs,” says Philip Mustain, chairman and CEO of Mobolize, a mobile data orchestration company. “As video continues to drive data consumption up by around 60% annually, many operators face a stark choice when their customers roam: absorbing the additional cost, losing their price advantage, or crudely throttling data at the cost of customer experience.”
“European consumers are best served when there is healthy competition from challenger MNOs and MVNOs,” adds Mustain. “Technologies like device-based optimisation can help those operators adapt and thrive in the new regulatory environment.”
Baschnonga also sees an impact on operators. “Fair usage policies designed to prevent commercial or consumer abuse of the new rules are unavoidably complex,” he says. “Although they offer operators some flexibility, monitoring travellers and their phone usage will no doubt be burdensome for operators. The fact that mobile prices, service usage and travel patterns vary significantly across European countries means that the impact on operators will also vary. Smaller mobile providers, or those hosting a large number of travellers, may face a greater challenge than their competitors.”
The vendor community also sees negative impacts on operator revenues. “The EU’s ruling to abolish roaming charges today is set to impact operators’ revenue by hundreds of millions of pounds a year,” says Ian MacLean, the chief marketing officer of Metaswitch. “This regulation is being introduced at a time when competitive market conditions are negatively impacting the levels of customer growth seen by major operators, such as O2 and BT [in the UK]. They must therefore respond swiftly by developing new revenue-generating services. This is a good time to be looking at services like Voice over LTE, Video over LTE and Voice over Wi-Fi, and open service creation platforms that encourage rapid innovation.”
