‘Roam like at home’ – the misnamed EU rules preventing mobile phone companies passing on to consumer’s charges for roaming in other countries – could cost the industry a telephone number-sized sum.
A July report from Juniper Research, The Rise & Fall of the Roaming Empire 2017, suggests mobile network operators (MNOs) will lose 11% of revenues in 2017 as a result.
They’re already being squeezed by the rising tide of mobile virtual network operators (MVNOs), which already have 18.1% of mobile subscribers in the Netherlands, 13.9% in France and 10.6% in the UK.
Juniper says MNOs’ revenue per user will fall to less than 77% of its 2015 value. Overall operator service revenue had already fallen to 88% of the industry’s 2012 peak as users switched to cheaper packages and communicate through social media rather than SMS and calls.
By the EU’s own figures, charges for roaming calls have been cut by more than 90% since 2007 and charges for roaming data services have been slashed by 96% since 2012.
Recoup losses from consumers
There is talk of MNOs and MVNOs changing their contracts to recoup money from customers in different ways or to restrict how much roaming is deemed reasonable use, but the European Commission (EC) is adamant that isn’t going to happen.
Ominously, a spokesperson said: “We will be watching carefully to make sure that our rules are applied by operators and enforced by national regulators. Citizens can count on the European Commission to make sure the promise of this legislation is fulfilled.”
There are some pretty strong rumblings from the EC about consumer protections. The end of roaming charges cannot be used as an excuse for price increases, the EC suggests. It insists there is no reason for operators anywhere in Europe to raise their domestic prices because of roaming reform.
Opportunity, not threat
As Juniper flags in its report, mobile customers using roaming while abroad opens up possibilities to make more money. Juniper says that despite the significant income generated by charging foreign firms for roaming “this pricing structure is costing the telecoms industry billions in lost revenue, with large volumes of consumers limiting or discontinuing mobile usage whilst away from home”. Juniper refers to these inactive mobile consumers as ‘silent roamers’ and considers them a potential lost revenue.
“With roaming revenues slowing down in markets such as Europe, industry stakeholders are looking at other opportunities to add innovative services to generate incremental revenue,” Juniper says. That echoes the EC’s stated vision. Juniper provides some stats that lead it to predict there will be two billion overseas travellers worldwide by 2022.
While the focus until now has been on commercial travellers, firms have been forming alliances that give free roaming to multinational companies so they can profit from add-on services. Some alliances have been targeting the ‘silent roamers’ with special offers.
Within the EU silent roamers using their inclusive data present huge growth potential. The EC says that between 2008 and 2015, the volume of the data roaming market has multiplied by more than 100.
There will be some short-term pain, however. Juniper forecasts that annual revenues, estimated at $54bn in 2016, will fall to $48bn for 2017 as revenues generated from increased usage in many markets fail to offset those lost by lower roaming charges in the EU.
Juniper says: “This decline in global revenues is due to a 33% fall in European roaming revenues, following the EU regulation to end roaming surcharges.” Despite roaming tariffs outside Europe remaining unregulated and, as a result, higher, Juniper suggests: “Operator focus will need to shift to innovative bundles and tailored pricing to preserve or grow revenues from travellers and immigrant workers.”
Service revenues will begin to recover in 2018, Juniper predicts, “following a significant increase in active roamers and data usage”.
Customer satisfaction and new services
The EC is adamant that operators had two years to adapt to the end of roaming charges and should have been ready to seize the opportunities introduced by the new rules. At the simplest level the EU sees improved customer satisfaction as a boost.
In an unattributable briefing, the EC made clear it believed people were switching off their roaming en masse for fear of roaming costs that had no economic justification. It believes the roaming policy was to fix a clear market failure that was a cost to society and to overall economic welfare.
After a pretty damning attack, it says the new rules will bolster the use of services for the benefit of both consumers and operators.
Some MVNOs, however, have taken punitive action to charge customers visiting areas not included within the EU regulations. At least one started charging customers travelling to the Channel Islands, the Isle of Man, Switzerland and Monaco ‘rest of world’ roaming zone rates. Those territories had previously been included in the same pricing tier as the European Economic Area.
Some mobile providers are likely to benefit from the new rules. Firms in southern Europe that have more incoming tourists than travelling customers will still charge the roaming prices on the increasing number of tourists who, before the price cap, might have been silent roamers. They will pay those charges for far fewer of their own customers.
Transnational firms may offset the charges by having business operating across Europe.
But the key to future profitability will be selling – bundling – services to customers who will use them because they can get a decent data service everywhere they go, at no extra cost.
Why roam like at home?
And that brings us back to why ‘roam like at home’ is a misnomer. At home, you can’t roam. Customers on one network are often without a signal even where a different network does have coverage.
As the EU spokesperson says: "Changing providers in your home country does not fall under the scope of the EU Roaming Regulation. A ‘roam like at home’ call is one made outside your home country, and not a call within your home country, for which you might rely on so called national roaming."
This may also be about to be fixed. The Commission's proposal for the European Electronic Communications Code, which comes under Article 59.3, gives national regulators the power to impose exceptional measures on network/spectrum sharing and national roaming to cover poor connectivity spots. The proposal is currently under discussion between the Council and Parliament.
Mobile phone consumers might soon be able to roam at home, not just when they’re away. Industry had better prepare for that.
EU roaming FAQs
Fair Use explained
Press release: http://europa.eu/rapid/press-release_MEMO-17-885_en.htm
European Electronic Communications Code
Juniper: The Rise & Fall of the Roaming Empire