Tuesday, May 01, 2007

The buzz about (cell) roaming

I really don't get the excitement about prices for roaming with you cell phone (within the EU).

The European commission argues that placing and receiving a mobile call in a “foreign” country within the EU has to be the same price as within your home country - and I don't see why...
I'm making the following points for voice roaming only (I'm not talking data/gprs/umts roaming here).

There are several sides to this discussion, and I tend to take the operators (or most of them) side. Here are my points against regulated/mandated roaming tariffs.
  1. European telecoms market, especially the wireless / mobile / cell part is truly deregulated. Service and innovation have gone up during the last 10 years like nowhere else, prices have dropped to nearly zero.
  2. There is a real market with real competition.
  3. Roaming costs don't seem to matter: Drei /Three / Tre / 3 (Hutchison 3G) is the only operator in Austria to offer roaming from all international Hutchison 3G networks at the same prices as at home. Still (according to RTR - the Austrian telecoms regulation authority) in Q4/2006 they had only 4.2% market share. To me this means that roaming costs have no impact on the choice of operators and are therefore quite irrelevant.

    If roaming costs were such important an issue as to justify a regulation of the market, Drei would have a significantly higher market share (say 20% or so). Customers should migrate in cosmic proportions from A1 and T-mobile to Drei if roaming costs were really an issue.

    They don't - look at the figures.

  4. The commission tends to argue (in the public) with the telephony cost during vacations; so the image there is Joe Average looking for his friends on a beach on a Greek island and calling them – with his Austrian phone on their Austrian phones. Or my favorite example: the dutch guys during their skiing vacation in Austria, chatting on the ski-lift over the phone, just because they are bored.

    I don't see the point for intervening in, and interfering with, a perfectly functioning market, just for that.

    Which also leads me to the next point. the business travellers:
  5. Just the mere possibility to be able to call someone on their phone no matter where he/she is; or from the callee's perspective: the possibility to be called wherever I am, without having to communicate me coordinates, without having to tell people at which hotel/venue I'm staying for the next 3 days, just so they can call me there – this very possibility is an increase in productivity and availability that outweighs any (any!) roaming-costs.
    (I'm not saying that this constant availability is a blessing, but that's not the point here, anyway.)
  6. Just consider the value of being able to call someone from my phone, even when I'm at a hotel in Rome or Athens or London (or ...) and not having to look for a pay-phone or paying the hotel quite a huge premium for the phone.
    I remember that about 10-15 years ago when you wanted to place a call from a French public pay-phone, you had to purchase a pay-phone card/voucher with a certain amount of money. First of all, you had to know that; then you had to find a place to buy that card (and therefore had to make yourself understood); and in addition this card meant that the money was tied-up. You could not use the credit on the card for anything else. This is not about huge amounts of money, but if you had to place just one call (e.g. home) and had to purchase a card for this single purpose, the call was more expansive than any roaming call today is.

  7. I'd like cheaper roaming as much as the next guy, but... Telcos and mobile operators have to make money. That's the whole point of a deregulated market: To bring in, or enable, private companies to offer a range of different services (quite frequently at different service levels as well) and let the customers and the population decide where to put their money. If the operators don't make money, they'll go out of business and there goes the competition and the market.

    Granted, in Austria many of the operators make a huge part of their living (=EBITDA) from visiting roamers, i.e. visitors to Austria, who use their cell here, and therefore the Austrian operators charge money to the home-operators of those visitors.
    According to 2006 annual report for Telekom Austria (whose wireless daughter is mobilkom austria, A1) roaming revenues for the whole group (i.e. inkl Slovenia, Croatia, Bulgaria) were 258 MEUR out of 2902 MEUR total revnue. Meaning 9% come from roaming. Those 9% would have to come from somewhere else, and this somewhere else can only mean a) higher national tariffs or b) less subsidizing on the handsets.
    I wouldn't like either.
  8. In many cases (not in all, I agree) roaming needs additional infrastructure and therefore additional investments: Vodafone et al in Greece wouldn't plan for the coverage they have on the islands just for the local population; the population and local revenue in Austrian and Swiss valleys and the neighboring mountains would never justify the infrastructure built there... it's the visiting roamers, and – of course – their revenue.
So my point is: there is a market, let it take care for that.
Just because the market - as of today – did not bring down roaming prices, does not mean, that the market does not work. It just means that the market participants, i.e. the consumers, don't really care for the roaming cost. (Except maybe for that invoice they get in August when the come home from Spain...)

For the sake for full disclosure: I used to work for mobilkom austria. but no longer do; and I don't own any stocks or interest in any telco.

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