November 30, 2016
As has been well documented by the European press, next June 15th retail price caps for Roaming will cease and the abolition of Roaming will begin. Simply put, while MNOs have a cap on what they can charge each other at wholesale level, there should be no additional costs for subscribers using Roaming services in the EU member states.
While this brings opportunities for increased productivity for Europeans, one might assume that with lower pricing, the data usage might increase. In reality however, while data usage continues to climb - over GSM and Wi-Fi of course - there is also the challenge of silent roaming. Roaming bill shock has for many years deterred roamers from switching on data roaming and in the last 10 years of smartphones the ability to connect to free Wi-Fi continues to appeal, making the GSM roamer more silent. As we saw from the recent UROS inspired ROCCO Roaming Bill Shock Strategy Report 2016, one of the biggest challenges for subscribers is trusting that once they open Roaming there are not going to be surprises.
Looking from the perspective of the wholesale provision, Roaming as a service is also costly for MNOs to deliver. While there’s the effort of establishing the partnership between one MNO and another for all the latest Roaming services - we roam with 4G today but 5G is only a few years away - there is also the maintenance. The MNO is after all facilitating its customer on another network, one that it does not own or manage. This requires a long list of typically outsourced services to facilitate, including: International signalling, Billing and settlement clearing, steering of Roaming, fraud prevention processes etc.
Additional factors which are also widely concerning MNOs are around the differences in the business models of the EU states. While an MNO in one state of the EU may charge a minimal monthly domestic fee of 25€, in another they may only charge 3€ due to the specifics of the market competition. There is also the question of whether as an MNO you are a EU country that in general receives more visitors than you send. Countries in the south will take greater loses in Inbound Roaming revenues then those in the north. These differentials when added to the unique tax challenges of each state make for an interesting challenge for the European commissions single market approach.
One might ask why MNOs can’t save costs for example in build or acquisition that might help them to recover costs coming from the regulation. In the EU mergers and acquisitions of competitors in some markets has been widely challenged by the EU owing to competition concerns, e.g. the O2 (UK) merger with 3 earlier this year. To be clear, the regulators want the networks to offer the best service, with full coverage and at reduced rates. How much simpler would it be for MNOs in the EU states, if like the MNOs in the US states they could build on economies of scale? Judging from recent news regarding 5G, it looks as if few EU MNOs have the appetite to roll out next generation services in the current climate, meaning that we are likely to find vast differences in quality in the EU as we cross borders.
On balance, considering the effort that International Roaming over GSM takes to deliver it’s not surprising that in recent months some MNOs and MVNOs have asked the question whether they need to provide Roaming as a service at all?
When we consider International Roaming as a line of business that does not make the profits it used to, that has lost its appeal with typically over half its regular customers due to trust concerns, where transparency for billing may be problematic and have a negative effect on brand perception, one might ask if its easier for MNOs to just offer a domestic package.
According to the EU Roaming Regulation and to the European legislation, there is nothing that obliges neither MNOs nor MVNOs to offer the international roaming service at retail level. The only obstacle could be national legislation issued by the National Regulation Authorities. Where because of competition reasons, the MNOs may be obliged to offer it.
Surprisingly, not all regulators require it, maybe because it was always deemed to be something that all MNOs would want to offer. The scenarios for a MNO or a MVNO not to offer roaming can be the following, distinguishing between existing offers and new offers:
With all these factors in mind, the next six months will be interesting as we see the roaming offerings come to the market from EU MNOs. As with the implementation of regulation for the last few years, there will be a push from regulators to adhere to the policies, but there may also be a push from MNOs to find alternative solutions.
For this and other strategic matters regarding Roaming retail offers for people or machines, consider chatting with UROS. As we bring our Roaming App, new devices and IoT platform to the market we are always interested in hearing your views on the future of Roaming.