Europe rules shake up roaming rate schemes

Dianne Northfield and Phil Marshall/Tolaga Research
18 Jun 2013
00:00

Under a mandate from the European Commission (EC), mobile network operators (MNOs) across Europe are required to reduce international data roaming rates on a staged basis. From 0.70 euro ($0.90) per MB set until July 2013, the rate will be reduced to $0.58 between July 2013 and June 2014, when the rate will further decline to $0.26.

The prices established for the limited number of international LTE data roaming agreements in place are generally well above the EC's proxy rates.

MNOs are typically pricing their LTE data roaming services on par with 3G roaming rates. However, these 3G based rates are not aligned with the different usage patterns of 4G consumers. 4G LTE users consume, and expect to consume, large amounts of data across multiple sessions relative to 3G users.

Where 3G roaming charges per MB are already high, heavy data usage when an LTE subscriber is overseas will quickly translate to high-cost 4G roaming services and likely bill shock. Pegging LTE roaming charges to existing 3G tariffs will discourage service use and therefore limit roaming monetization opportunities for MNOs.

The few MNOs that have concluded international roaming agreements include South Korea's SK Telecom (SKT) and CSL in Hong Kong, which announced the world's first international reciprocal LTE roaming agreement in 2012. SKT has also concluded similar agreements with M1 in Singapore and Globe Telecom in the Philippines.

Without evolving retail pricing strategies for 4G roaming services, MNOs face risks of losing valuable roaming revenue for all services - voice, text and data - should users opt to disable their services while overseas or seek alternatives such as OTT services and public Wi-Fi access. MNOs are already experiencing the impact of these alternatives in their home markets.

As 4G LTE international roaming advances, MNOs will be forced to refine their end-user pricing strategies to include options such as allowing users to opt for access to 3G rather than 4G roaming services while traveling, allowing users to fall back to 3G roaming for services other than video, offering session-based pricing options, and offering data bundles at a flat rate.

Related content

Comments
No Comments Yet! Be the first to share what you think!