Mobile operators' profit strategy: Data roaming - a wanted or wanted excess?
The landscape of mobile phone services has undergone significant changes since the abolition of data roaming charges within the EU, which took effect in June 2017. This move, part of the EU's "Roam Like Home" policy, has led to a shift in pricing models and services offered by providers.
No Extra Fees for Roaming
Under this policy, users no longer incur additional charges for data, voice, or text services when they travel within the EU. This means seamless connectivity without extra costs for roaming, ensuring all EU member states offer the same level of service[5].
Changes in Pricing Models
In response to the abolition of roaming charges, many providers have shifted towards offering flat-rate or bundle plans that include international roaming within the EU. These plans often include a set amount of data, voice minutes, and texts that can be used both domestically and internationally without additional roaming charges[4].
However, to manage costs, some providers have introduced fair-use policies, which limit data usage when roaming to prevent abuse. These policies typically cap data speeds or limit the amount of data available for roaming[4].
Impact on Profitability and Competition
The absence of roaming charges can increase competition among providers, as consumers are no longer deterred by potential roaming costs when traveling. This can lead to more competitive pricing and better services[3].
While roaming charges are abolished, providers may adjust overall pricing structures to maintain profitability. This could involve increasing base tariffs or offering fewer discounts for international usage[3].
Adam Hayes, CFO of Eseye, emphasises the need for mobile phone providers to readdress their pricing in other areas to compensate for the inevitable loss in revenue due to the scrapping of roaming charges. Providers will also need to convince customers that other aspects of the service are worth paying for, as increasingly, the data quantity consumed is no longer the major part of the overall cost[6].
Data Neutrality
The EU's regulation of reductions in the roaming rate, driven by increased travel within the EU and consumer complaints about costs, has led to the principle of data neutrality being reached for the first time in Europe. This principle requires telecom operators to treat most mobile data equally[2].
The principle of data neutrality was long-awaited, particularly in light of the US adoption of net-neutrality rules. The 'eat as much as you can' model, while beneficial for service providers in terms of invoicing and back office/infrastructure needs, faces challenges due to the perceived unfairness when someone's phone isn't connecting because another is consuming capacity streaming music all day[7].
In conclusion, the abolition of data roaming charges within the EU has led to a shift towards inclusive pricing models with no extra roaming fees, increased competition among providers, and the implementation of fair-use policies to control data usage. However, there is also the potential for price adjustments in base tariffs to compensate for lost revenue from roaming charges.
Sources: 1. BBC News 2. EU Commission 3. The Guardian 4. TechRadar 5. PCMag 6. Mobile World Live 7. ZDNet
Finance plays a crucial role in the adjustment of pricing structures among mobile phone providers, as they seek to maintain profitability post-abolition of roaming charges. Providers may increase base tariffs or offer fewer discounts for international usage to compensate.
The impact of technology on the landscape of mobile phone services is visible through the shift towards flat-rate or bundle plans that include international roaming within the EU. These plans leverage technology to provide seamless connectivity across EU member states.
