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As EU mobile roaming charges end, industry frets over impact

As consumers celebrate the end of mobile roaming charges across the EU, the industry is facing up to the challenges of implementing the new rules

Travellers across the European Union (EU) can now move freely around all 28 member states without the worry of being charged excessive amounts for using their mobile devices on foreign networks, after the long-awaited abolition of mobile roaming charges finally happened on 15 June.

The ability to move across national borders without having to buy add-on roaming packages or stop using their devices altogether will come as a great relief to most users, from tourists heading off on holiday, to business travellers who move around Europe frequently.

But while the end of mobile roaming charges carries a significant personal benefit for the general public, mobile network operators (MNOs) and mobile virtual network operators (MVNOs) must face up to the loss of a significant revenue stream.

“The EU’s ruling to abolish roaming charges is set to impact operators’ revenue by hundreds of millions of pounds a year,” said Ian MacLean, CMO at network virtualisation solutions supplier 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.

Philip Mustain, chairman and CEO of Mobolize, which specialises in orchestrating mobile data, added: “As video continues to drive up data consumption by about 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.”

Mustain said many operators feared they could see their margins wiped out by wholesale data roaming charges that may significantly outstrip the cost of domestic data. He pointed to a recently released research note by Copenhagen-based telco consultancy firm Strand, which described the abolition of retail roaming charges as “a ticking bomb” under the industry, particularly for MVNOs, which it believes are least equipped to adapt to the new rules.

This view was backed up by MVNO trade body MVNO Europe, which is pressing Brussels to force a reduction in the wholesale roaming caps that MVNOs have to pay to their MNO partners, which it believes are still too high.

A short history of mobile roaming

  • Roaming costs have been an issue in the EU almost since the first 3G networks were launched 14 years ago. In 2004, Brussels launched an EU-wide investigation into mobile roaming charges.
  • By 2013, the rise of smartphones and 4G networking meant the issue was being taken even more seriously, and the EC’s Neelie Kroes pledged to introduce legislation to scrap roaming charges altogether.
  • That same year, the UK took its own unilateral steps towards scrapping roaming charges when DCMS signed an agreement with EE, O2, Three and Vodafone to end them by 2016. This never happened.
  • The abolition of roaming charges has been a long time coming, but the EU had already taken substantial steps to gradually bringing down the cost for consumers, as a July 2014 report revealed.
  • In October 2015, the European parliament pushed through legislation to end mobile roaming charges on 15 June 2017.
  • In February 2017, the final hurdle to the abolition of mobile roaming charges was overcome when the EU reached a final agreement on how to regulate wholesale charges.

“MVNOs are ready to punctually launch the ‘Roam-Like-At-Home’ regime,” said MVNO Europe vice-president Innocenzo Genna. “However, as we pointed out during the legislative process, the entire mechanism, in particular the wholesale caps, must be strongly revised to eliminate competitive unbalances that, at the end, would be detrimental for the consumer in terms of tariffs, variety of offers and innovation.”

Meanwhile, Adrian Baschnonga, global lead telecommunications analyst at EY, warned that the prospect of usage caps for travellers roaming on data plans that were unlimited in their home countries could be confusing, and he said operators must do more to communicate the changes clearly to help build trust in the new regime.

“Fair usage policies designed to prevent commercial or consumer abuse of the new rules are unavoidably complex,” he said. “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.”

New services

The alternative – or perhaps the companion – to raising prices for customers will almost certainly be the introduction of new consumer-facing services, which will help MNOs upsell higher-end contracts in the certain knowledge that users will be hungrier than ever for data.

Metaswitch’s MacLean said: “This is a good time to be looking at services like Voice over LTE (VoLTE), Video over LTE and Voice over Wi-Fi (VoWIFI), and open service creation platforms that encourage rapid innovation.

“Significant opportunities also exist to address currently underserved market segments with collaborative mobile unified communication offerings for prosumer, family and enterprise customers. If operators move to open, programmable, all-IP networks that are built on highly scalable and cost-effective virtual network functions, they can rapidly launch such services, increase market share and offset the loss of their roaming revenue.”

Mobolize’s Mustain said device-based data and video optimisation would be very important to help cut down on mobile data usage without capital expenditure. This, he suggested, would help MNOs minimise the impact and maximise the opportunity from the roaming regulations.

Digital exclusion

But it is not only the operators who may encounter problems arising from the end of roaming, but users too. In the previously-mentioned research note, Strand CEO John Strand slammed the end of roaming charges as a “media stunt” designed to make the EU look better in the eyes of the European public, and put forward the idea that it may increase digital exclusion in the EU.

Strand predicted that operators would soon start to offer customers two types of price plan – one with regulated EU roaming and a domestic-only plan, which would naturally be cheaper. Ultimately, this means users will be forced to make a choice at the point of purchase, and those on lower incomes, who may only travel outside their home country once a year, will get no benefit.

Strand said there was no doubt many Europeans would be better off, but they would mostly be well-to-do professionals.

“Mobile operators do not discriminate their customers based on gender, age, job and income, but the new regulation creates a de facto form of discrimination that inevitably hits people who don’t travel much, typically the single mother with three children,” he wrote.

Long-term gains

But Joe Marsella, EMEA CTO at Ciena, takes a more positive approach over the medium to long term, and said he believed there would be an upside for industry.

Marsella said a unified telecoms market with a single pricing approach and similar cost base would be better placed to encourage people to use their services more often.

Although he conceded that MNOs would have to invest in more cost-effective infrastructure to support the increased loads they would see on their networks, free-flowing use across the region would ultimately replace the lost roaming revenues.

“Data from Juniper Research supports this, indicating that mobile phone operator revenues from mobile data roaming will hit $42bn by 2018, or 47% of global mobile roaming revenues,” said Marsella. “This compares to 36% in 2013. It shows that ending punitive charges will encourage roaming, and will more than replace any lost revenue.”

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