EU mandates a separate market for roaming contracts - great news for us all in 2014 but until then watch out!
"Ladies and gentlemen, a mobile should be mobile."
Never truer words spoken by Neelie Kroes in her Wednesday announcement about the shake-up of EU roaming rules. Why should it be that we all switch our mobiles off or use them much, much less when we go abroad?
They still work. It doesn't usually cost the operators much more to supply the service than at home. The whole situation is, as Kroes suggests a "raw deal" for customers and one where "operators enjoy outrageous margins, particularly on data downloads".
Why has this "outrageous" situation persisted so long?
The best reason I've seen far this so far was given by Paul Lambert, Senior Analyst at Informa Telecoms & Media:
"European operators have been reluctant to stimulate the market for consumer roaming in the EU largely to protect the rates they charge their corporate customers, which, unlike the consumer, are much less price sensitive as they have a much greater need to stay connected when they travel abroad."
It certainly makes sense - but I think there are other factors at play.
After all, we know 39% of UK subscribers use their phones for roaming at some point or another during the year and they can't all be business customers. Why are they not choosing alternatives that are available? VoIP services like Skype, Jajah or Rebtel, local SIMs, Global SIMs, calling cards, apps that reduce your data usage - there are many possible ways to cut costs today, why are they not being used.
One reason: convenience. Or more precisely: Inconvenience.
They require the customer to have identified the problem, researched alternatives, chosen something, set it up and then actually used it. Their use is often conditional or circumscribed in ways that are frankly a hassle to most people (eg. got to use Wifi, can't keep your phone number or contacts, must unlock your phone, separate billing etc.). So they're not used as often as they could be - even though they'd save a lot of people a lot of money.
So what's the solution? Two contracts: one for home, one for abroad
This is why the idea of an independent roaming contract market where the problem is assumed as a given and the customer is almost forced to choose for their own good is such a game-changer. As laid out by the EU proposals, by 2014, all customers will have to be offered alternative roaming solutions from other providers at the point at which they purchase their new "local" tariff and mobile contract - the default will still be their local network operator (who is unfortunately likely to persist in charging the maximum possible, which, by 2014, will still be considerably less than today) but it gives room for a whole host of other players to enter the roaming market as MVNOs (mobile virtual network operators).
You will basically have two mobile contracts from 2014; one for home and one for abroad. You'll automatically switch from one to the other when travelling and you won't need to switch SIMs, mobile numbers or handsets.
billmonitor will help you to choose the right roaming contract as soon as the freedom exists - we're already the only site giving roaming bundle recommendations
Of course, at billmonitor, we're already gearing up for what this means in terms of not only providing you the right local contract but also the right roaming contract. It's also worth bearing in mind that billmonitor is currently the ONLY mobile price comparison site that a) analyses your roaming & international calls and b) actually provides you with the relevant details of the network bundle you'd need to buy to match your needs. No-one else is providing you details on these bundles when recommending new contracts.
In fact, it's a measure of how difficult this process is that this is based on our own manual research right now and you can't often buy these bundles without calling your network. Even ones you get for free often have to be activated by customers rather than being switched on by default.
Given all this, we're incredibly excited by the implications of this change and you can be sure that as soon as these market structures develop, we'll be the first to offer you the best service for your situation.
But it's not here yet - so watch out!
None of this should encourage immediate celebration. The full impact of this legislation won't be carried through until 2014 - unless the networks decide to speed it up further. Until then, the usual roaming rules apply:
- Switch off data roaming unless absolutely necessary
- Use your phone as little as possible abroad
- Text don't call where possible - texts are free to receive (and it's free for others to text you too) and cost less to send than a call
- If you really need a mobile more regularly, investigate the alternatives (mentioned above - look out for future blog posts too)
- Make sure you have all the righ roaming bundles, bolt-ons or add-ons available from your network. They're not always helpful but they could be just the right thing. Call your network to ask for options.
Seen the right way, this is a huge opportunity for the first network to make the changes
From our perspective, we'd like to see the networks really rise to the occasion and introduce these changes as fast as possible. The market for roaming is potentially much bigger than it is today and high prices have curtailed the number of people using the services and the amount they use them.
It stands to reason there's a lot of money to be made by being first with lower prices and encouraging people to opt for your roaming rates not a competitor's (ie. basically steal customers for the holiday season - as well as regular roamers). Frankly, all the networks will have to cut their prices anyway, so why not look to grow the market aggressively in response?
The problem is of course that everyone will want to take other networks' customers but no-one will want to open their own customer base to being snatched. I'd still like to think that some innovative, aggressive, below-price-cap price cuts to roaming rates combined with opening up to roaming competitors and a well-publicised awareness campaign that names and shames other networks who aren't quite so forthcoming, would ultimately work in favour of whoever tries it first. We can but dream...
And what will be the knock-on effect? Will we see higher tariffs, out-of-allowance costs, or international calling costs?
With the networks likely to lose a previously guaranteed revenue stream (unless they innovate aggressively and proactively as suggested above), what will be the likely knock-on effects for UK mobile phone users? Well - no network will raise prices before they have to and in fact they don't like raising them anyway (higher prices mean fewer customers).
However, even if they choose the aggressive market growth route (which we recommend), they will likely need to combine this with a more defensive price raising strategy. They have a number of options:
1. Raise prices for customers who exceed their allowance on local calls, texts or data - this is traditionally the obvious outlet as it can be billed as the "customer's fault" and the numbers who exceed their tariff are reasonably predictable
2. Raise tariff prices - networks avoid this like the plague unless they see significant movement from other competitors. I would expect this to be a move of last resort.
3. Raise prices for international calls - this seems the most likely outlet. After the last roaming price caps, international call charges from mobiles increased - to the extent that it's now less than half the cost to call a Spanish or French number from Spain or France than it is to do so from the UK! There is a strong correlation with people who use international services and roaming services, so they'd be passing the costs on to the same section of the population.
In my view, this would be a mistake though - international calls have so many alternatives and the prices are already so high, that a further substantial price increase might mean customers NEVER again use their mobiles to call abroad.
4. Raise prices for roaming outside EU - the EU can only legislate within its member states. This means that operators are free to increase roaming charges elsewhere like the US or Asia. Ideally, the roaming operator/contract you choose should cover ANY trip abroad but it's as yet unclear if networks will allow this or not. Unfortunately, this is very likely to happen as an immediate consequence and for those who travel further afield than Europe this could be the worst direct impact of the EU's legislation.
On balance, the worst case scenario might be a combination of all four approaches. Expect the market to look very different by next summer! And by 2014 it will be unrecognisable.
What are your thoughts on the EU roaming rules? Will it work out well for customer or not? Are these measures long overdue or are they too disruptive? I want to know your thoughts - please share your comments below.
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