Europe Votes to Cap Roaming Rates

As predicted, the Eurocrats have voted to cap mobile roaming charges. And as expected, most of the press have focused on how popular this will be with customers. For good examples, take a look at the story televised on BBC News and as written in the Financial Times. Note how the BBC video shows that customers assume roaming charges are excessive (I doubt any of the people interviewed actually know what the actual costs to telcos are…)

One consideration missed by the Euroclowns is that limiting cross-border revenues should encourage cross-border consolidation. Rather than giving away a large chunk of revenues to another, possibly rival, service provider, the long-term goal will be to avoid roaming by always keeping customers on your own network, wherever they are. So expect the speed of mergers and acquisitions to increase. That may not be so popular in some countries with operators that are the targets for takeover (like Italy). It will also lead to some tension in countries like France, which are fine with investing overseas but do not like foreigners buying up their companies. In the meantime, the industry must hope that the decrease in prices sees an increase in traffic, which may mean plenty of headaches for those businesses already struggling to manage dataflows and settlement with roaming partners. Expect revenue assurance to be better focused on roaming as a result. Gone are the days when you should be happy to wait a long time for a customer’s calls to be provided on TAP files – there will be more pressure to rapidly convert calls into cash. On a network infrastructure level, the smart operators will realise they need to keep working on having the strongest radio signals where people enter the country. If you can get phones to roam on your network when a person crosses the border, there is a much better chance that subsequent calls will be made on your network. So more focus should be placed on building at key points like airports and border crossings for roads and trains. And finally, the Euroclods have tried to do customers a favour by ensuring they get a text explaining the roaming charges when they enter a new country. That is smart business anyway, as many customers are too scared to make calls, so hardly needs to be enforced by government. It seems 80% of roaming calls are made by business users – meaning people who do not care what the bill is. Changing the behaviour of tourists may lead to higher revenues in the long run though it will damage revenues from corporate customers first. So the mobile industry had better do a quick u-turn and start promoting low tariffs instead of fighting them. If it can persuade young holidaymakers to take their phones to the beaches and use them as a way to keep in touch with each other, or to use the phone to get updates on travel news and local information in their native language, the mobile industry will get more than extra revenues. It will be more popular with its customers. And if the mobile service providers were more popular with customers, it would be harder for the Euroclueless to interfere in their business….

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.