Light Reading

EU Telecom Market, Sans Roaming Charges

Ravi Kumar Palepu
7/11/2014
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Under the new European telecom regulations, roaming charges for voice calls, texts and Internet access will be completely scrapped. In 2015, consumers from European Union member states will be able to use their mobile services at the same price as their native mobile services while roaming. (See Eurobites: Red-Letter Day for Roaming Charges and Continental Shift.)

This new regulation will not only have a positive impact on consumer and traveler costs, but will also drive operators to develop new revenue streams in the emerging telecom trends and services.

Roaming charges for voice calls and mobile data services have been a major hindrance to travellers, as they tend to avoid mobility services due to high roaming costs while abroad. Even for a proactive mobile user, service providers charge a considerable amount to receive a call or to pick up a voicemail message, resulting in an inflated bill at the end of the month. A recent survey by the European Commission of 28,000 EU citizens (conducted on the EU's behalf) illustrates that people drastically curb mobile usage while traveling abroad.

The survey found that:

  • 47% would never use mobile internet in another EU country
  • While traveling, only one out of 10 subscribers use emails in the same way as they would use in their native network
  • More than a quarter of them simply switch off their mobiles when they travel across the EU
  • Most of them divert to SMS, rather than pay for calls.

The new regulation is expected to depress the mobile operators' revenues by 2%; however, the new regulation will also have an upside for other telecom trends, including the Internet of Things (IoT), smart meters, mobile payments, BYOD, mobile apps, and OTT applications, where connectivity is essential.

Short term pain versus long term gain
In the short term, operators might experience some pressure on their margins, but in the long term the increased usage of mobile phones while traveling abroad will benefit the ecosystem as a whole.

The 47% of people who have never used mobile data services while traveling abroad represent an untapped market; this will help to subdue the revenue impact on the operators from the lost roaming charges. Secondly, the market would see additional revenue opportunities and substantial growth in value-added services, such as voicemail, text, OTT, and location-based services.

In addition, operators would be able to charge consumers on delivering content native to their home country -- for example, delivering a UK TV channel to a customer roaming in Italy -- and likewise providing location-based services, such as travel guides, maps, and language translation applications, at a premium cost.

This apart, operators can also look at new revenue streams in the enterprise (B2B) space by offering personalized services to enterprise customers through providing better value propositions on BYOD, unified communications, and M2M services. Across Europe, the EU study suggested that 94% of mobile phone users avoided using Facebook and Twitter while traveling to an EU country other than their own, and 70% of people who call other EU countries limit their call duration. The market will see an upward surge in mobile usage, as customers start to use their mobiles to access the Internet, use mobile apps, and make voice calls while traveling abroad.

Established telecom operators with significant presence in Europe can save on operating costs by opting for cheaper call center locations to service customers. The new regulations will have provisions to simplify the mode of operations across the EU by synchronizing airwaves sales. Small and medium enterprises, and especially mobile virtual network operators (MVNOs) that cater to the European market, will experience a decline in their revenues due to lower margins and an increase in customer churn rate. Subscribers using alternative methods, such as buying cheap SIM cards while traveling, would rely more on their current operator to provide better voice and data services, which will lead to improved average revenue per user (ARPU).

It's even possible that the European Commission will push its telecom reforms to foster a single market, an idea that has received some support in recent days. (See Italtel CEO calls for creation of borderless Europe with single digital market.)

Leading European operators might see an increase in customer acquisition and retention as consumers would be more persuaded by the quality of services, connectivity, and speed, rather than merely the cost. In addition, operators would gain better insights into customer usage and buying patterns, giving them the chance to drastically improve the customer experience.

— Ravi Kumar Palepu, Head of Telco Solutions, Virtusa Corp.

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vijay.srirambhatla
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vijay.srirambhatla,
User Rank: Light Beer
7/17/2014 | 9:08:03 AM
Thanks for the interesting articile-
Ravi,

Thanks for the interesting article, well explained and insights on Operator & Consumer essentials with respect to Short term pain versus long term gain.

Many thanks,


Vijay S
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