Regulation of Roaming Services by Kristian Dahlgren

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Regulation of Roaming Services by Kristian
Dahlgren

• T-109.7510
• Research Seminar on Telecommunications Business,
  Spring 2006

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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Introduction to roaming

• What is roaming?
• The ability for a cellular customer to
  automatically make and receive voice calls, send
  and receive data, or access other services when
  traveling outside the geographical coverage area
  of the home network, by means of using a visited
  network.
• Different types of roaming
• National roaming, international roaming or
  global roaming,
• inter-technology roaming, inter-regional
  roaming, GSM roaming, GPRS roaming, SMS roaming
  and MMS roaming

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Introduction to roaming cont.

• The prices of roaming services in Europe have
  maintained their high levels.
• The European Commission (EC) thinks that
  something needs to be done.
• Second phase of a public consultation on mobile
  roaming services has been launched by the EC.
• The GSM Association (GSMA) is very skeptical
  about the need for regulation.
• Wrong decisions could jeopardize the status of
  the European mobile markets.

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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Share of roaming traffic of operator revenue

• Big business for the operators
• More than 6 billion roaming calls were made in
  year 2000.
• Recent research from the Informa analyst group on
  Global Mobile Roaming estimates that the number
  of international roamers will more than quadruple
  between 2004 and 2010.
• In 2004 the number of international roamers were
  210,000,000 and in 2010 it could be as much as
  850,000,000.
• Lower airline ticket prices are boosting peoples
  willingness to travel.
• People want to use their mobile phones when
  visiting foreign countries.
• Share of roaming traffic of operator revenue
  should increase.

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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Pricing practices of roaming

• Pricing practices of roaming are still complex,
  but things are improving.
• Many companies offer different kind of roaming
  solutions for operators.
• By centralizing all the financial aspects of
  roaming in a single place, operators can achieve
  competitive advantage and flexibility.
• Roaming prices depend on three things the home
  network, the visited network and the destination
  of the call.
• There are thousands of possible variants of
  international retail roaming charges in Europe
  alone.

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Pricing practices of roaming cont.

• Consumers are demanding greater transparency in
  international retail roaming prices.
• The level of service transparency varies
  depending on the roaming agreement between the
  home and the visited network operators.
• Many operators have already launched single-rate,
  zone-based roaming tariffs.
• The purpose is to simplify operators offerings.
• Some operators charge monthly fees, which reduce
  costs.
• Some say that these new pricing practices do not
  bring anything new.
• The finding of the best deal is left to the
  consumer.

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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Marketing practices of roaming

• Marketing practices of roaming services need
  improvements.
• Roaming customers very seldom know how much
  roaming costs. It is argued that only 10 know
  the price.
• Detailed information about the prices can be
  found from the operator websites.
• Information about the pricing of roaming services
  is mostly received from the mail sent by the
  operators.
• In Finland Ficora and Consumer Agency would like
  to see the awareness of roaming prices among
  consumers increasing.
• More information about how to save in roaming
  charges is also needed. 33 do not try to save at
  all.

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Marketing practices of roaming cont.

• Some roamers do not even think about different
  issues related to roaming.
• It is not always clear what network should be
  chosen.
• 80 of roamers use the network, which is
  automatically selected by the mobile phone.
• People are satisfied to the functionality, but
  very unsatisfied to the price levels of using
  mobile phone abroad.
• Operators could increase their roaming revenues,
  if the issues mentioned would be solved.

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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Roaming contracts between operators

• Operators have more than 20,000 roaming
  agreements.
• Elisa has roaming partners in 160 countries, with
  300 operators.
• Finnet has partners in 120 countries, with 200
  operators.
• Sonera has partners in 172 countries, with 269
  operators.
• Operators can to some extent differentiate them
  from rivals by having extensive roaming
  agreements.
• Operators are constantly finding new roaming
  partners and new roaming agreements are quite
  common.
• Roaming agreements are based on business issues.

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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Influence of international consolidation of
operators

• Mergers and acquisitions (MA) have been very
  common activities in the telecommunications
  industry.
• Alliances, fusions and purchases are almost a
  weekly thing.
• 3G is an important reason for the increase of
  consolidation.
• Consolidation does not help the industry and
  operators automatically.
• Consolidation and integration need to be well
  managed.
• There are discussions whether the increased
  consolidation could enable a global billing
  architecture.
• Possible cost reductions could have an impact on
  roaming charges.
• Huge companies like Vodafone offer good coverage
  almost anywhere.

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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Impact of MMS, Internet access and broadcasting
(DVB-H) services to roaming

• These new services will have an impact to
  roaming.
• MMS is becoming more and more popular.
• MMS could shrink the share of traditional
  postcards.
• People would use these new services more
  frequently when traveling, if the prices are
  better known.
• It is important that the new services are easy to
  use.
• Operators today mostly compete on value and
  quality in their core services and by offering
  innovative services in newer areas.
• Terminals are becoming more advanced.
• Pricing practices and usability could be the
  bottlenecks.

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Agenda

• Introduction to roaming
• Share of roaming traffic of operator revenue
• Pricing practices of roaming
• Marketing practices of roaming
• Roaming contracts between operators
• Influence of international consolidation of
  operators
• Impact of MMS, Internet access and broadcasting
  (DVB-H) services to roaming
• How to (de)regulate roaming in Europe more
  efficiently?
• Conclusions

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How to (de)regulate roaming in Europe more
efficiently?

• The European Commission (EC) is planning to
  regulate international roaming in Europe.
• The proposal has already met resistance from the
  GSMA.
• The EC should avoid the unwanted consequences.
• Negative outcomes would have long term, negative
  effect on jobs, competitiveness and investment in
  the European telecommunications industry.
• The big question is that whether the increased
  competition is enough to drive the international
  roaming prices down or is some regulation by the
  EC needed and what is the right balance between
  regulation and deregulation.

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How to (de)regulate roaming in Europe more
efficiently? cont.

• The ECs viewpoint is aiming for greater consumer
  surplus.
• Operators investments would be dangerously
  harmed.
• Investing in innovations is one important way to
  differentiate from rivals in the mobile market.
• International roaming is not an exception.
• The continuous fierce battle in the European
  telecommuni-cations industry is forcing operators
  to be highly innovative and to offer new services
  and different price tariffs to consumers.
• Operators are benefiting from the increased
  number of international travelers and mobile
  phone users, but face challenges as users find
  ways to reduce costs and the general cost of
  telephony is declining.

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Conclusions

• We are living exciting times.
• Consumers are demanding more and their awareness
  of the issues related to roaming is constantly
  improving.
• The EC is not happy with the current price levels
  of roaming.
• Retail roaming prices declined 8 last year.
• The European mobile market is highly competitive.
• Regulation could seriously harm the entire
  business.
• Thorough studies are needed before any regulation
  is accepted.
• The importance of roaming is increasing.
• With right decisions and favorable developments,
  the future of roaming will be bright.

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Keep on roaming

• Thank You
• Time for the opponent
• Questions and discussions