Transcript Regulation of Roaming Services by Kristian Dahlgren

Regulation of Roaming
Services
by Kristian Dahlgren
T-109.7510
Research Seminar on Telecommunications
Business, Spring 2006
20.4.2006
Helsinki University of Technology
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Agenda
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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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Helsinki University of Technology
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Introduction to roaming
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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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Helsinki University of Technology
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Introduction to roaming
cont.
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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
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Introduction to roaming
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Share of roaming traffic of operator revenue
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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
20.4.2006
Helsinki University of Technology
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Share of roaming traffic
of operator revenue
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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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Helsinki University of Technology
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Agenda
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Introduction to roaming
Share of roaming traffic of operator revenue
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Pricing practices of roaming
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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
20.4.2006
Helsinki University of Technology
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Pricing practices of
roaming
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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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Helsinki University of Technology
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Pricing practices of
roaming cont.
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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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Helsinki University of Technology
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Agenda
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Introduction to roaming
Share of roaming traffic of operator revenue
Pricing practices of roaming
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Marketing practices of roaming
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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
20.4.2006
Helsinki University of Technology
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Marketing practices of
roaming
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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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Helsinki University of Technology
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Marketing practices of
roaming cont.
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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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Helsinki University of Technology
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Agenda
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Introduction to roaming
Share of roaming traffic of operator revenue
Pricing practices of roaming
Marketing practices of roaming
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Roaming contracts between operators
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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
20.4.2006
Helsinki University of Technology
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Roaming contracts
between operators
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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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Helsinki University of Technology
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Agenda
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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
20.4.2006
Helsinki University of Technology
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Influence of international
consolidation of operators
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Mergers and acquisitions (M&A) 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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Helsinki University of Technology
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Agenda
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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
20.4.2006
Helsinki University of Technology
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Impact of MMS, Internet access
and broadcasting (DVB-H)
services to roaming
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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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Helsinki University of Technology
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Agenda
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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
20.4.2006
Helsinki University of Technology
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How to (de)regulate roaming in
Europe more efficiently?
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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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Helsinki University of Technology
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How to (de)regulate roaming in
Europe more efficiently? cont.
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The EC’s 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 telecommunications 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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Helsinki University of Technology
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Conclusions
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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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Helsinki University of Technology
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Keep on roaming
Thank You
Time for the opponent
Questions and discussions
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Helsinki University of Technology
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