How can operators meet EU legislation and raise more revenue from roaming?
Holiday season is over again, a time to relax, unwind and take a well earned break from work. The last thing that you want while you are away is a fear of how much your mobile bill is going to be when you get back. Thanks to the new legislation passed by the EU, consumers can rest assured that they will not be greeted by a "bill shock" when they return. A few mobile operators have already reacted to this enforcement, most notably Vodafone who abolished its roaming charges for the duration of the summer period this year. Many other operators, however, are still looking at how best to move forward.
The legislation
The legislation follows on from the European Commission's original proposal back in 2008 to reduce consumer roaming charges, and this led to the European Parliament voting in favour of new legislation on roaming during an Industry Committee meeting in March 2009.
The new enforced rules require operators to help subscribers monitor and control their mobile data usage while abroad. This is likely to affect the operator's bottom line as the legislation includes caps on charges for SMS, data and voice roaming costs. To help subscribers monitor their spending operators will also need to send notifications to subscribers confirming the price of data usage while abroad and give them the option of capping their spending for the time they are away.
The roaming price caps are as follows:
– Text message – 11 euro cents (10p; 14 US cents) per SMS
– Data downloads – 1 euro per megabyte
– Voice calls – 43 euro cents per minute (outgoing); 19 euro cents per minute (receiving)
Every UK operator must have these new charges in place immediately as well as introducing real-time billing alerts and caps by mid 2010. This means that every subscriber roaming will be in a position to set their own spending limit with real-time updates. Operators like 3 and Vodafone have since reacted to the imposed legislation by deciding to offer customers rates well below the imposed caps, which has further stimulated competition.
What do the consumers think?
Research carried out by Acision, the messaging company, sought to find out how consumers feel about using their mobiles abroad. Would they like to use their mobile more/less, what would they like to use their mobile for and what can operators do to encourage consumers to increase mobile use abroad?
The results confirmed that consumers just aren't using their mobiles abroad – in fact only 12 per cent used their mobiles as much overseas as when they were in the UK. This is a massive opportunity for potential revenue growth for operators and if they are able to answer customer's fears and needs they can surely embrace it. The research highlighted that over two thirds (62%) of consumers are completely unaware of the charges associated with using their mobiles abroad while only 10 per cent feel they are being charged a fair price.
The research also showed that 42 per cent of consumers would love to use their mobiles more abroad if they could set a cap on their spending. This gives them the control and freedom to use their mobiles without the worry of an uncontrollable bill mounting up. Consumers would also feel more at ease if their operator offered roaming bundles and 67 per cent said that they would purchase a bundle to call and text home while on holiday. But it's not just calls and texting that consumers are interested in while on holiday, 11 per cent would also like to buy a data package to access the internet for a variety of things including email and social media. Further to that, 22 per cent would like to access social networking sites, 18 per cent would watch TV and 11 per cent would like to download TV programmes or movies.
Overall the research concluded that consumers would like to use their mobile more abroad, providing they feel they are in control and billing is transparent.
How will operators meet the legislation's 2010 deadline?
Operators are going to find it difficult to implement the infrastructure changes needed to deploy these new mechanisms and will need to either upgrade or introduce new systems that give them and consumers access to real-time information. The technology platform will need to be equipped for real-time monitoring, so that consumers can be notified when they have reached their set spend limit. This transparency will give consumers the added security of feeling in control of their mobile use abroad as well as much needed trust in their operator.
Ideally, operators need to have a charging solution that fits into the existing infrastructure without any complicated changes to the network, avoiding unnecessary additional cost and disruption. This type of solution would make the July 2010 deadline a much easier target.
Such a solution should be able to be deployed as a standalone or adjacent solution and so fit directly into the operator's current infrastructure. Operators should look for a real-time system that enables consumers to set spending caps and be notified once these have been reached, whilst being given the option to upgrade to a higher spending cap immediately. The solution should also enable an operator to offer customers multiple service bundles which can include its own rules, expiry and lifecycle, as well as convergent bundles of voice, messaging, data sessions and content.
Conclusion
The research from Acision clearly shows that consumers want to use their mobiles while abroad and for a variety of things including social networking and multimedia messaging. Consumers want a clear billing system that shows them exactly what they are being charged and gives them control to cap their spending. The reduction in the cost of roaming charges is an added incentive.
Operators need to deploy an appropriate technology platform to help them meet the 2010 deadline and better serve consumers' needs. The legislation not only means a fairer deal for consumers but with the right technology solution, operators can encourage consumers to use their mobiles more abroad -creating new revenue opportunities from roaming.
About the author: Mike Beech, is VP product marketing, charging, Acision
The new EU roaming rules
– Limit the consumer price for sending a text message while abroad to 0.11 Euro (excl. VAT), compared to a current average 0.28 Euro.
– Further reduce prices for mobile roaming calls. As of 1 July, caps are 0.43 Euro for calls made and 0.19 Euro for calls received abroad, falling to 0.39 Euro and 0.15 Euro on 1 July 2010 and to 0.35 Euro and 0.11 Euro on 1 July 2011 (prices per minute, excl. VAT). Until 30 June, the maximum price is 0.46 Euro for calls made and 0.22 Euro for calls received abroad. In summer 2005, before EU action, a roamed call in the EU could cost around 1.70 Euro per minute for a German roaming in Austria, 1.47 Euro for a Briton roaming in Italy and 2.50 Euro for a Belgian calling from Cyprus.
– Introduce per-second billing after 30 seconds for roamed calls made and from the first second for calls received abroad. Until now, consumers paid up to 24% more than the time actually used making or receiving calls.
– Reduce the cost of surfing the web and downloading movies or video programs with a mobile phone while abroad with a new wholesale cap of 1 Euro per MB downloaded, compared to an average wholesale price of 1.68 Euro per MB, with peaks in Ireland (6.82 Euro), Greece (5.30 Euro) and Estonia (5.10 Euro). The wholesale cap for downloading will fall during the next two years: to 0.80 Euro in 2010 and 0.50 Euro in 2011. Consumers will be informed on what they will pay for data services, as the new rules require mobile operators to provide (via an SMS or pop-up window) free, country-specific information on roaming charges to their customers when they enter another Member State and use data services.
– The new rules will also protect consumers from "bill shocks" by introducing a cut-off mechanism once the bill reaches 50 Euro, unless they choose another cut-off limit (recently, a German downloading a TV programme while roaming in France faced a bill of 46,000 Euro). Operators have until March 2010 to put this cut-off limit in place.