Questions & Answers

From 1 July European Union (EU) mobile operators have been required to lower retail prices for roaming calls, in line with EU rules first introduced in 2007. Consumers opting for the EU regulated ‘Eurotariff’ will pay no more than 35 cents (32p) per minute for calls made, and 11 cents (10p) per minute for calls received while abroad in the EU. From 1 July 2011 the cap for data roaming wholesale prices (the price which operators charge each other) fell to 50 cents (45p) per megabyte (down from 80 cents – 71p – per MB). The current Regulation does not establish a retail price cap for data services. How do you feel about this final EU price cut? What does it mean for consumers and is it enough to encourage them to use their mobiles for calls and data while roaming, and for mobile operators, what does it mean for their business’s sustainability and future in general?

Richard Turner, Brightstar Europe managing director: It was always obvious what would happen here, operators would simply put their prices up for pay as you go services to compensate and that’s exactly what’s happened, so to some degree the ruling is pointless, as it simply means that the burden of operating and funding those international roaming agreements is being shared out amongst all users.

Overall, it’s not that helpful because the majority of users don’t travel that much; those who do, mostly business users, are happy to pay the additional charges as long as they are not entirely disproportionate. In the end, the EC directive could have a negative impact; consumers who do not travel won’t be happy about having to pay more to supplement those who want to make calls from abroad.

Ultimately, that could even lead to some operators walking away from roaming agreements in areas where there are marginal benefits, which would limit the scope and flexibility of services. That would be a move in the wrong direction. The tariffs did need to come down a bit, but we think the EU may have gone too far.

This ruling prevents operators funding the cost of roaming agreements by charging the people who use those services; instead, everyone is going to make a contribution, whether they use roaming or not. In that sense, it’s not entirely fair.

Richard Turner, Brightstar Europe managing director

Lokdeep Singh, Mach vice president of technology and innovation: Consumers will undoubtedly benefit from the new regulation, given that it will result in lower costs when using their mobile device outside of their home zone.

However, the latest legislation may also provide the optimum opportunity for the operator community to review their approach to their roaming business. Recent research from YouGov and Mach found that more than one third (38%) of consumers do not use their mobile device at all while abroad, with 54% of these identifying the cost of usage as the reason why. Furthermore, operators’ own statistics indicate that more than 40% of travellers switch off their data connection when abroad to avoid bill shock.

Clearly, consumers are significantly underutilising their mobile device when outside of their home zone. While for mobile operators faced with declining ARPU, stimulating mobile data roaming on both their own networks, as well as those of their partners, actually presents them with the opportunity to capitalise on a still largely untapped revenue stream.

Fundamental to operators generating revenue from roaming is gaining a more intimate understanding of customer behaviour and in turn, developing bespoke roaming tariffs which are tailored to complement individual subscribers’ needs and usage patterns. Operators also need to provide greater transparency around the roaming costs themselves.

Lokdeep Singh, Mach vice president of technology and innovation

Instead of just lowering the price, they must ensure that there is a greater level of predictability, simplicity and consistency in their pricing structure, which in turn will help to foster a better understanding and awareness among consumers of the actual cost of the services they are accessing. This is particularly important in markets entering the mobile data boom; existing roaming tariffs were originally designed for basic feature phone users, not for the data-hungry smartphone subscribers increasingly proliferating.

Users want more reasonable and simpler data roaming rates and greater visibility and control over their roaming package. Furthermore, the growing prominence of mobile as a platform for an increasing number of everyday tasks reinforces the importance of developing tariffs which will allow subscribers to replicate their regular usage habits while outside of their home zone, without the fear of bill shock.

In an industry which is being infiltrated by an ever-growing number of diverse players, the movement towards more flexible business roaming models, coupled with regulatory change, could provide operators with the strong revenue stream required to maintain competitive advantage in the years to come.

Rick Centeno, Nokia Siemens Networks head of Charging, Billing and Care: The EU legislation on retail prices for roaming follows a long tradition of regulation in the telecommunications industry. These rules aim to balance the sustainability of the mobile service provider business with expectations of consumers to enjoy competitively priced quality communications services.

For subscribers, the ability to check current usage levels and costs in real time or to define cost thresholds contributes to a superior user experience. This applies to domestic as well as international communications services.

For communication service providers (CSPs), this new competitive situation will present obvious threats to current revenue streams but also opportunities to grow new business opportunities by actively stimulating international data usage with a focus on continuously improving customer experience. CSPs can innovate how they package roaming services on voice, SMS and data services to retain their customers and stand out from the competition.

Although the caps on roaming fees might at first sight seem to limit CSPs’ revenue generation, they may actually stimulate data usage as subscribers won’t have to worry about receiving a large bill after a holiday abroad. Bill shock prevention combined with an integrated view of network and business policy control, customer experience management, and convergent charging capabilities supporting flexible payments, whether prepaid, postpaid or hybrid, provide key enablers for CSPs to turn the new regulations into a business opportunity.

Rick Centeno, Nokia Siemens Networks head of charging, billing and care

Jonathan Pearson, Acision proposition manager for real time charging:With lower roaming rates promised, the latest EU legislation will obviously be beneficial from the point of view of the consumer. In particular, with the rise of smartphones and tablets and the accompanying increase in mobile data consumption, subscribers should be satisfied with the fact that they will now be protected from bill shock charges exceeding €50.

From the perspective of the operator, the updated legislation presents them with an opportunity to build more confidence in their brands by providing consumers with greater pricing transparency and control through the provision of spend limits and real-time notifications. Going one step further, it could even be a revenue opportunity; Acision’s research revealed that 42% of consumers believe that having spend limits would encourage them to make greater use of mobile services while roaming, while 41% would be happy to pay for real time notifications.

Operators need to do more to encourage mobile use whilst roaming. For example they could further improve pricing transparency by offering bundles for a specific type of service, such as email and Facebook, web browsing or video downloading. A hybrid postpaid and prepaid service is ideal for this scenario, as it allows users to budget. It can include real-time notifications about how much they are spending, when they are nearing their spend limit, as well as offering the opportunity for the user to top up their bundle.

Jonathan Pearson, Acision proposition manager for real time charging

We’re experiencing a shift in the communications paradigm, the catalyst of which is the move to an IP-based communications services environment. To sustain their business operators need to optimise and monetise their networks assets, by combining real-time charging, policy management, and intelligent optimisation.

With the likelihood of further deregulation to create greater competition, it will be imperative for operators to deliver the differentiated and hybrid services and personal quality of experience that consumers want. It is the delivery of such services which will enable operators to maintain a sustainable roaming revenue stream in the long term.

Jonathan Pearson, Acision proposition manager for real time charging:As a consumer, any price cut is welcomed, especially when the difference in pricing is so varied and so high. Surely it’s a simple volume and value equation in that if operators lower call charges, people will use their mobiles abroad more and so drive more revenue? Whereas at present most people keep international calling to a minimum.

How can international calling SIMs work off the back of a domestic network, make a profit for the MVNO and still deliver cheaper prices either when abroad or calling abroad? The international MVNO market is created as a result of network pricing, which on one hand is happy for the ‘educated minority’ to use a cheap SIM for international calling, while the ‘uneducated majority’ get charged excessively. I suggest that while the revenue of the masses outweighs the revenue of the few, the networks have no real incentive to reduce pricing further.

I for one recommend joining the ‘educated minority’ with a Lebara and Truphone SIM!

Jason Kemp, Data Select director of marketing