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New Roads Lead to Roam

Robert Clark
News Analysis
Robert Clark
8/31/2015

Finally, mobile operators are chipping away at roaming fees -- the last high-margin, low-volume telecom service left.

They are cutting prices to boost mobile data usage to entice the "silent roamers" to turn their phones on when they travel abroad.

Norway's Telenor Group (Nasdaq: TELN) is one of the most active. The company says some 25% of customers switch off their phones when traveling and 90% curtail their use of apps such as email. It is promising lower-priced roaming services to its European and Asian customers over the next two years, with the aim of weaning users away from WiFi and lifting the number of active roamers in the EU to 80%.

So far only its Swedish subsidiary has launched packages at new prices, offering 100MB a day for EUR3.1 ($3.57) -- roughly one sixth of the EU roaming data cap.

In South East Asia, where Telenor runs several operators, rival Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY) is also putting its toes in the water. Its roaming service to Malaysia and Australia provides 1GB for S$10 ($7.14) and is valid for one month.

In a report last year, Juniper Research predicted that roaming revenues would rise by a hefty 58% over 2014 to 2018. By the end of that period, operators are expected to be generating $90 million annually in roaming revenues, which will account for 8% of total billed revenues, according to the market research company.

Nitin Bhas, the head of research at Juniper, believes there is a lot of price elasticity in developed countries in the Asia Pacific, such as Singapore and Australia. Bhas also reckons the increase in global airline travel -- driven by Chinese travelers, in particular -- will shore up revenues.


For all the latest news from the wireless networking and services sector, check out our dedicated Mobile content channel here on Light Reading.


But the fat margins in roaming are also an irresistible target for non-traditional operators.

Some of the new Chinese MVNOs are targeting the more than 100 million Chinese tourists who venture abroad each year. (See Snail Sets Pace for China's MVNOs.)

Roaming is a big part of Google (Nasdaq: GOOG)'s game plan with Project Fi, a WiFi-MVNO play that charges customers $10 per GB from anywhere in the world. Fi is still in development phase and for the time being works only with the Nexus 6 phone. It also roams only on 3G networks outside the US market. (See Google's WiFi-First Mobile Service 'Fi' Is Here.)

Then there are the innovators, like Taiwan's Taisys. A long-time supplier of SIMs for mobile banking, it is building a global roaming business on the back of its "slim SIM" technology. Taisys is not the only company selling a roaming SIM, but its SIM is actually a transparent sticker that wraps around the existing SIM, which means users can fit two SIMs in the one slot and avoid the awkward process of swapping out SIMs.

The service is sold through Taisys's GreenRoam subsidiary. It has already signed up Chunghwa Telecom Co. Ltd. (NYSE: CHT), China Mobile HK and StarHub as partners, allowing the company to sell local prepaid SIMs direct to customers.

Business development manager Jennifer Chang says it is expecting to sign an agreement with a major operator in the EU and has further deals in the pipeline with mobile carriers in Canada, Australia and Russia.

"We definitely expect the same kind of growth as international travel continues to grow," she says. "The silent roamers that avoid expensive roaming charges will opt for local prepaid packages or alternative mobile connectivity."

Finally, a Canadian startup called Piece has raised C$298,000 ($224,000) for a Bluetooth-based device that supports a second SIM card.

Juniper's Bhas believes the growth in the travel market will drive the demand for roaming data services, but says the key, both for operators and newcomers, will be "simple and clear roaming tariffs."

— Robert Clark, contributing editor, special to Light Reading

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Nick73
Nick73
9/22/2015 | 10:29:23 AM
Re: New Roads Lead to Roam
Two reasons, really - firstly, domestic operators make a lot of money from roaming fees. For example, in Germany last year, the figure was in the region of 5 billion euros. It was about the same for the UK, and in that region for every other country in the EU. Hundreds of billions of pounds or euros for Europe alone. Vast amounts of money worldwide. People know roaming is a rip-off, so they tend to just leave their phone off or at home when they travel. But now they know that it doesn't have to be this way.

The second reason, and the reason why this is all being dragged into the light after so long, is that people's habits have changed - mobiles are capable of, and are used for, so much more than making calls and texts. Now it's all about mobile data. Now operators are wising up to the fact that people leaving their phones behind while abroad is costing them money. Not as much money as they'd make with the old roaming costs, but enough for them to compromise and lower their costs.
nasimson
nasimson
9/21/2015 | 11:43:18 PM
Re: New Roads Lead to Roam
@Nick: If the solutions like GO-SIM are so effective, why do we still have users paying high roaming fee for decades?
kq4ym
kq4ym
9/12/2015 | 7:45:00 PM
Re: Wherever I may roam
I'm a bit skeptical about the " increase in global airline travel -- driven by Chinese travelers, in particular -- will shore up revenues," by one observer. And while Google's latest plan seemed to hold promise for lower costs to consumers, the reviews have not all been that glowing. Seems, they have some limitations not only the limited devices that are now requred.
Joe Stanganelli
Joe Stanganelli
9/4/2015 | 5:54:23 AM
Re: Wherever I may roam
Roaming was never turned on, so that didn't work.

Actually now that I think of it, I didn't have to turn off the phone; just put it into Airplane Mode.

But still, no calls.
nasimson
nasimson
9/3/2015 | 11:57:49 PM
Re: Wherever I may roam
@Joe: That's a hassle. Could you not simply turned off roaming instead of turning off the phone?
Nick73
Nick73
9/3/2015 | 8:05:12 AM
Re: New Roads Lead to Roam
There's not much new going on here that I can see, save for the tech. Sure, a sticker on your SIM is an interesting innovation, certainly more useful than a Bluetooth device. But here at GO-SIM, we've been offering prepaid, truly global roaming solutions for over 7 years, and this is a huge advantage for consumers. Companies such as Taisys are talking about potential arrangements worldwide that we already have in place - only we don't have an arrangement with one major operator in the EU, but all of them, not to mention all the other regions of the world. Roaming solutions operators need to offer rates on all carriers, so that situations that Joe mentions above while in Vermont become irrelevant, and to offer greater choice. Because we work with multiple carriers, issues of coverage - which are a serious pain even to domestic users tied to a single network - are dealt with simply by switching to a new network.


Don't get me wrong, I'm all for the abolishment of unfair and outrageous roaming fees. But in this market, experience and longevity count for an awful lot.
R Clark
R Clark
8/31/2015 | 11:42:12 PM
Re: Wherever I may roam
Roaming has long been something of a legalised scam. Good to see some smart alternatives are hitting the market.
Joe Stanganelli
Joe Stanganelli
8/31/2015 | 11:03:30 PM
Wherever I may roam
It would be nice to see less roam-related nickel-and-diming.  I've been to parts of Vermont where I had to turn off my phone simply because I was sufficiently close to Canada to trigger roaming charges -- even though I was still well within the US.
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