After many signs and statements from the European Commission that roaming charges have been a barrier for the consumers travelling within EU, after a sequence of price caps set over the last few years reducing the roaming tariffs for voice, text messages and data access, after implementation of bill shock prevention mechanisms after regulations to introduce new players for roaming (Alternative Roaming Providers) and local breakout for internet access in roaming (these last two planned to start at 1st July 2014), after all of this, the ultimate decision has been made: roaming charges will be abolished in all 28 countries of the EU by December 2015.
The move was announced by European Parliament on 3rd April 2014, following a resounding vote in favor of the reform; 534 to just 25 votes!
The move includes key changes to neutrality of internet which guarantees that all internet traffic is treated equally – essentially meaning operators cannot potentiate their services by blocking or forcing a different speed for providers working on top of their network. Examples of these services are Skype, Facebook and many others.
Being realistic, this measure is no longer a surprise. Recent actions and comments from EU lawmakers made it easy to predict and finally the proximity of the European elections worked as an accelerator for it. Operators for sure were already expecting it. In fact, we have already seen some operators with “roam like home” offers.
From the consumer point of view, this is clearly a welcome change! Users will surely feel more comfortable using their mobile phones while travelling in the EU, particularly when it comes to using data. Seeing this change together with the increasing mobility of people inside EU, and the exponential evolution of quality of service for data access with 3G and 4G networks, the industry is expecting a considerable increase in roaming traffic.
From the operators’ point of view, this means added pressure to already tight profit margins following the effects of the previous shake up of roaming regulation. During discussions with regulators, operators warned that abolishing roaming charges altogether could lead to increased global prices, decrease in the quality of service due to reduced investment and could ultimately work as a barrier to the evolution of the sector.
But, if we come back to consumer behavior, we realize that nowadays it is very common to see users blocking roaming data before traveling to another country, or buying a local SIM card as soon as they arrive in their destination, or even guaranteeing a local WIFI connection in order to avoid roaming charges. Together with the exponential increase of consumer demand for data access through smartphones and tablets, this has contributed to a considerable revenue loss for home operators. Interestingly, there seems to be a reluctance for some operators to face any of these problems head on.
At this level, consumer behavior will surely change as users will use their mobile devices in the same way as they use them in their home countries. This is an opportunity for roaming operators who will need to have a strong and innovative strategy to explore the new challenges and guarantee that this traffic remains in their networks. Operators will also need to monitor user behavior and quality of delivered service in order to proactively prevent churn; have strong mechanisms to prevent revenue leakage and roaming fraud that is still significant and with the increase of traffic will become even more significant; implement a combined strategy for wholesale, retail and interconnection to minimize costs and maximize revenues; have a strong focus on deals with roaming partners to potentiate roaming visitors in the home network and the best wholesale prices when visiting partners networks; and explore new services based on LTE networks.
There is also the “disseminate factor”… most of the changes to roaming regulations in the EU have been, little by little, adopted by operators further afield. Although a global regulation to remove roaming charges is unlikely, some of these measures may also be adopted through bilateral agreements with players outside of the EU. This factor may also become a strong marketing mechanism with benefits in terms of roaming results. At this level, group deals or alliances should be a key factor for success.
Although there are still some steps to confirm the proposed plans to eradicate roaming charges in the EU, and space for changes in the rules, a reform in European telecoms is upon us, and consumers are anxiously waiting for it! The challenge is now for operators to use it as an opportunity to reinvent the roaming business, and the first to act will surely have a considerable advantage to the competition.