Maybe EU roaming price caps are doing their bit after all: 60% roaming data price cuts by 2012.
Wow - what a surprise!
We had previously heard Neelie Kroes admit her frustration that competition in the mobile roaming market had not led to the satisfactory outcomes in terms of lower consumer prices but last week's announced wholesale price caps were hardly going to make a difference. So these changes are a very welcome step. The only shame is that customers wont' enjoy these changes until next year (unlike the roaming call charge price cuts which were effective last week).
In fact, I'd literally call this a game changer.
Instead of either slightly tweaking their roaming strategies or raising local tariffs or per minute prices for customers to make up the shortfall (roaming data is currently responsbile for around £443 million in annual revenue for the networks), networks should be looking to massively expand their market penetration amongst customers using mobile data abroad.
As prices reach roughly £6 per hour of normal (non-streaming) mobile internet usage, smartphones will become viable and much more convenient alternatives to using internet cafés or free Wifi areas (the current best alternatives). I would expect that, with a price drop of this magnitude, customers will believe the cost to be worth acceptable and networks should see both the number and the amount of data usage go up exponentially. Even though their ARPU is limited to £45 per month, I'd wager that very few are hitting that cap today and even if usage increases would likely be far from reaching it.
The real benefit for networks would be that customers who'd never considered smartphone data use abroad begin doing so, leading to incrementail revenue they may otherwise not have had. In addition, by 2014, when smartphone penetration will be much further along, there will also be many more potential customers able to avail themselves of the service. I would expect the current 24% of susbcribers using roaming data to be much closer to the 39% who already use their phone for roaming calls.
Finally, Kroes directly indicated that there would be further shake-ups to the roaming market - possibly introducing more viable competitiveness into a market where customers are currently too locked in. We eagerly await the full announcement due this Wednesday.
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