By Guy Reiffer, VP for marketing & partnerships at MACH.
The recent EU regulation on roaming charges came into force earlier this month.
This further reduces the wholesale price capping of charges between European operators, with savings then passed on to consumers through a new, capped retail price.
For the first time, retail data prices are being regulated and “bill shock” alerts will need to be implemented for EU citizens who travel outside the EU.
MVNOs must be given fair access to regulated roaming prices by MNOs and, if requested, MVNOs must be provided with roaming agreements with any EU MNO.
In July 2014, there will be a more radical change, whereby subscribers can purchase their roaming service from a different provider to their domestic service.
The industry is still in the process of determining how to achieve this requirement.
One of the options that is being defined is the use of “local break out”, where a subscriber can buy their roaming from the visited network.
The regulator states that these structural measures are being introduced to stimulate new entrants and competition in the market, so that eventually regulation can be removed as the market starts to function as a truly competitive entity.
However, regional regulation often results in increased prices intra-region as operators look to recoup their losses.
Positive price elasticity as a result of regulation (where increased volume can offset or even create a positive effect vs. price decline) has not happened for voice or SMS.
However, there is a suspicion that with mobile data, a point does exist where users will ‘roam like home’, leading into positive price elasticity.
Although there has been an undeniable trend towards increased consumption of roaming data following various stages of intervention, the usage levels remain low with the average user using 300 times less data when they roam, most users turning off the connection all together.
It is a fact therefore, that the vast proportion of the data roaming market remains untapped due to consumer fear of bill shock.
MACH’s own research with YouGov showed that 58 per cent of smartphone/tablet roamers do not use 3G at all when abroad and that an additional €740 million global market could be opened up in mobile data roaming simply by removing the fear of bill shock.
Roaming is an important part of an operator’s total revenue and will remain a profitable part of their overall business.
The prospects for the mobile roaming market over the next few years look positive.
Increasing personal mobility among consumers, and constant demand from enterprises, combined with the growth in data usage overall, is likely to contribute towards not just stability, but also growth across all regions.
For operators, anything that can help reinforce customer relationships and reduce churn is desirable.
If operators can balance profit against a pricing strategy that removes fear of bill shock from the user, then both parties can benefit.
Already operators are starting to launch pan- European daily packages with corresponding deals agreed with their partners at the wholesale level.
This is in effect changing the pricing unit in the EU from per MB to more integrated packages.
Operators are also starting to bundle roaming into domestic offers and also packaging roaming across voice, SMS and data.
All of these initiatives should start to build trust and consequently usage in the market.
An operator that can offer extensive outbound roaming coverage with commercially attractive roaming agreements is likely to have an advantage as these trends take hold in the EU market.
For operators, the requirement by the EU to connect MVNOs and alternative roaming providers within a four month time period will also change the approach they take to roaming processes.
It is likely that hub solutions like Link2One will be the only way that they can comfortably meet the connection timeframes.
It is also likely that roaming implementation will be outsourced to remove the liability from the operator.