Why the end of European roaming charges will spur new service innovation

After a protracted regulatory effort, the European Union has finally abolished mobile roaming charges. As of June 15, mobile network operators can no longer charge customers a premium for calling and using data while travelling in any of the 28 EU countries.

This is great news for European consumers, holidaymakers and business travellers who will not have to suffer “bill shock” when they return home. Mobile phone bills loaded with exorbitant roaming charges have a way of making the post-holiday blues worse and sending the corporate accounts department into conniptions. Indeed, EU policymakers have hailed the 10-year project to eliminate roaming charges as a true European success story.

But not everyone is celebrating. Mobile operators and mobile virtual network operators (MVNOs) are not exactly eager to raise a glass to regulatory intervention that directly impacts their revenue. From now on, the bill shock will be all theirs when they stare at the gaping hole in their turnover where roaming income used to be. At one point in the negotiating and lobbying process, the European Telecommunications Network Operators (ETNO) association claimed that abolishing roaming fees could wipe out some €7 billion in revenue across the industry by 2020. The extent of the impact on each operator will vary, of course, but all operators will certainly feel a pinch.

The new rules also come into effect at a time when levels of customer growth at some of Europe’s largest operators have slowed due to highly competitive market conditions. Squeezed by competitive and regulatory pressures, some have little room to manoeuvre. Their options are to find efficiencies to cut costs or raise prices to make up for roaming revenue shortfalls. Alternatively, a much better option is to respond by developing new revenue-generating services.

Operators and MVNOs have known regulated roaming cuts were coming for some time. In fact, they have had two years to prepare for this final phase of implementation. In anticipation, many operators started offering “roam-like-at-home” plans long before they were legally required to, which allowed them to differentiate and steal a march on rivals.

But now that all operators are required to charge the same for mobile services at home and abroad, operators need new ways to differentiate services. Without the worry of incurring roaming charges, subscribers will be more relaxed about using mobile data abroad and not as tempted to turn off data services, which gives operators the perfect opportunity to create compelling data services that their customers will value wherever they roam.

This is a good time for operators to consider IP-based services like Voice over LTE (VoLTE), Video over LTE (ViLTE) and Voice over Wi-Fi (VoWiFi) as part of their Network Functions Virtualization (NFV) strategy. These are essentially voice and video services that run over mobile data or Wi-Fi networks. But when coupled with NFV and cloud-native design principles, they also lay the foundation for other innovative services.

VoLTE and VoWiFi are sound foundations to build upon. VoWiFi ensures that good quality voice services will be available to subscribers even in places where cellular coverage is poor, such as inside homes and office buildings, while VoLTE provides better quality voice services and increases spectrum use efficiency. They are powered by the same core network elements deployed as scalable, cloud-native virtual network functions (VNFs) that allow operators to innovate and launch services quickly.

Once in place, the cloud-native VNFs that underpin VoWiFi and VoLTE services effectively become open platforms for migrating legacy services and creating new services, such as collaborative mobile unified communications for families, prosumers and small business owners. These are typically underserved market segments, but the service creation platforms enable operators to expand offerings to meet their needs. Such offers might include group chat functionality, support for multiple lines or multiple identities (i.e., personal and business) on the same device, or rich messaging services.

Thanks to the end of mobile roaming charges in Europe, the reliable, innovative services that subscribers are accustomed to in their home markets are no longer limited by country borders in Europe. Subscribers will likely use more mobile data services when travelling abroad from now on. When operators create excellent customer experiences, their subscribers will want to have it wherever they go.

By moving to open, programmable, all-IP networks that are built on highly scalable and cost-effective VNFs, operators can rapidly launch new services, increase market share and offset the loss of their roaming revenue.

View Comments
Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *