The EU’s new regulations to abolish roaming charges, which came into effect on 15 June 2017, has added enormous pressure to an industry already threatened by slimming margins, requiring each player to react quickly and preemptively, to forsake the dangers and, most importantly, realize and act upon new opportunity.
The EU "roam like at home" rules mean that you pay exactly the same price for using these services when travelling in the EU as you would if you were at home. In practice, your operator simply charges or takes your roaming consumption from the volumes in your domestic mobile tariff plan / bundle. These rules also apply when receiving calls or texts while roaming even if the person you are calling is using a different service provider.
But few regulation changes have had such a direct impact and operators must change to avoid succumbing to its new weight. It’s estimated that operators face an immediate 50-60% drop in EU roaming revenues. This comes at a time in which the sector is facing existing challenges from rapidly changing user behavior.
As operators phase out charges, annual revenues, which amount to $54 billion globally, are expected to fall by 7% in 2017, and by 28% in Europe.
When we consider the rising consumption of data, the loss of revenue could be even greater than anticipated since roaming is already being abolished. Consumers are increasingly relying on OTT (Over-the-Top) apps and services that reduce the need for minute and text tariffs. Whilst cellular phone calls and text messaging remains relevant for many consumers and continue to feature in packaged deals, their importance as a revenue stream is diminishing. In 2015, EE recorded a 10.3% drop in revenues from cellular calling per customer, whilst noting a 50% increase for average data usage.
Data is king and will remain so for the foreseeable future.
The impact on data revenues is expected to be far greater than any other, the need to offer more data at lower per GB wholesale cost becomes readily apparent. In this scenario, the key to competitive advantage is the ability to offer generous amounts of data without prohibitive usage restrictions or considerably higher tariff costs. Data must be adequately abundant, but sustainable in cost and revenue.
More creative solutions are required through the adoption of new technology, to provide the necessary quantity of roaming data, reliably so, whilst remaining profitable. It follows that any structure deemed sustainable in the immediate future, will need to remain so in a few years. Solutions must scale with the growth in data consumption as our reliance grows, and the file sizes of distributed content increases.
The urgency for a solution to roaming data is highlighted by decision to limit download speeds over the summer of 2017, to mitigate the impact of increased usage. Whilst this may appear an attempt to circumvent the cost of increased usage, as users no longer seek to limit their Internet activity during holidays or rely on alternative roaming providers, it is also one of necessity: few operators have the capacity to accommodate roaming usage equal to domestic tariffs whilst also maintaining an acceptable user experience. Such moves, however, harm operators’ brands and damage the customer experience, and do not represent a long-term solution.
So what are Operators doing to satisfy their customers and are they looking into further developing data plans? If not, we advise to do so the earliest as this will soon be one of the biggest incomes for Operators that will allow them to compensate their roaming losses!