The games are seen as a major driver for mobile roaming

At the recent Roaming World Congress hosted by IIR an animated panel session highlighted a number of challenges and opportunities imminent in the forthcoming London Olympics. These Olympics have been heralded as a major opportunity for medals to be won and sport to be celebrated but there are also a number of reasons to celebrate the games as a major driver for mobile roaming.

Millions of inbound roamers (forecast at around seven million) will enter the UK market as a result of the games while the countries operators will see their networks having to deal with billions of additional voice minutes and MB of data over the duration of the games and within the relatively small footprint of London and a number of regional centres. This demand is also likely to be ‘bursty’ being tied to particular events (finals) and the respective national sporting obsessions of the Olympic visitors. This issue was highlighted at a recent IIR Roaming Summit held in Barcelona when discussing the last roaming mega event, the World Cup held in South Africa. At key points during this event operator’s experienced dramatic increase in demand related to key matches and specific events within them. Jaques Bonifay CEO of Transatel, went on to state that it would have been better from a roaming perspective if France had won as international calls were expected to have ‘gone through the roof’. This aside there are serious ramifications of mega-events, like the Olympics for roaming service providers and London 2012 is of particular concern as the first mega-event in which smartphones and data will be an integral part.

Operators have taken a proactive stance in preparing for the event with capacity planning and additional cell tower support. However the panellist were quick to point out that when Germany hosted the UEFA European Football Championship (2008) Deutsche Telekom was somewhat over-prepared with an abundance of repeaters and portable cell towers but a decided lack of roaming. This approach has been emulated with London 2012 with temporary cell towers popping up at both staging centres and sporting sites. In respect of the UEFA experience the consensus was that roaming prices were still prohibitively high when the event was held which would have dissuaded use. However, it was felt that this would be less of an issue with London 2012, at least if roamers were from the European Union, due to the price cuts legislated in this region.

The agreements reached on May 10 regarding Roaming III regulation have come at a particularly fortuitous time. The radically reduced roaming rates will provide a strong incentive to experiment with roaming at the London 2012 event with both roaming voice and data service set to benefit.

It was the panellists view that cellular use would be huge over the period of the Olympics, indeed panellist member Duncan Hill of Europa technologies stated they were rolling out additional support for their coverage mapping service to clients and end customers in Olympic hotspots; as Europa’s main customers are operators there is obviously some concern regarding coverage. Duncan went on to share the fact they are also providing wifi mapping adding further credence to this assumption. Paolo Silvi of Keynote SIGOS argued that coverage for roamers during the Olympics was the tip of the iceberg. He argued that without demonstrable quality of service roamers would simply not make use of cellular services claiming that QoS as well as coverage needed to be guaranteed to facilitate such mega-events.

The panellists agreed that capacity planning for the summer months already incorporated expected increases based on vacationing patterns but they were divided as to whether this would be enough to cope with both holidaymakers and the inspected influx of Olympic visitors. Edward Van Kuijk, EVP Sales and Marketing Hub services for Vodafone roaming was relatively downbeat on the potential for roaming during the Olympics. His assertions came on the back of his own analysis of the number of international roamers expected and their likely avoidance of high tariff international roaming charges.

A challenge from an unexpected quarter was highlighted by Jaques Bonifay who stated MVNOs could potential impact the roaming opportunity at London 212. Bonifay highlighted a particular approach his company was taking in cooperation with the Chinese Olympic delegation in which they are partnering with China Unicom. Transatel will be setting up an MVNO for the duration of the event providing a local calling alternative for the Chinese Olympic delegation and Chinese nationals. The service is being marketed via China Unicom. Fielding questions Jaques agreed that while he sees this approach as a highly attractive one for users visiting international mega-events it does require a pre-existing relationship to be in place between the roamers home network operators and any potential partner MVNO. Without this it is not a cost effective based on the setup costs, COA and relatively short time in which the MVNO can generate revenues.

Whether the Olympics will be a great opportunity for all roaming players bearing in mind preferred partners and steering will be remain in place is debateable.  Whether roaming data use will increase over the Olympics or impact the consumption habits of roaming users is also unknown. What is known is the London 2012 Olympic Games will be an important testing ground for data roaming in a regulated market and an opportunity for data usage profile testing within an international mega-event.

The rules laid out in Regulation III contain provisions for strict pricing cuts with additional reductions being implemented on a 12 month rolling basis until at least 2014. Enforced cuts can be kept active until 2022 if it is felt that it is required. Effectively prices will be slashed by 46 per cent for voice and data roaming services will be cut from averages of around $4 to just $0.26 per MB by 2014 while competitors will be allowed to compete in roaming markets previously reserved for operators alone.  That is should they be interested in doing so. Anecdotal evidence shows there has been little interest in the opportunities roaming offers to such players; thus far only one MVNO (Lebaro Mobile) has expressed any interest directly to the EU. No doubt other players will express an interest as the market matures and opportunities become clearer but at this point commitment from MVNOs is thin on the ground.

From the operator perspective with a voice or data bundle the per min/MB charge can be kept within the boundary of regulated price cap while room is left for potential profit. The larger the bundle offered the lower the per minute/MB charge if the bundle is completely used. However, the larger the bundle the lower the likelihood a roamer will be able to fully use the bundle.

Another important point to remember is that price caps must be offered as a Euro-tariff but it is not compulsory to offer the Euro-tariff alone; other packages and tariff offerings are sanctioned. Analysis undertaken for our latest roaming research (http://www.ic.informatm.com/spreadsheets/show/121329)  demonstrates that pricing options vary with the picture for average prices in the region differing from what one would expect in a price capped market.

Figure 1: Selected bundled Roaming offerings average durations

Source Informa Telecoms and Media

Figure 1 shows the strong prevalence for long bundle lengths despite the average length of a roaming trip being four days for a consumer and three days for an enterprise user (frequency of calls varies between these segments).

Figure 2: Regional Cost per MB bundled and unbundled data roaming plans – Average 1MB cost

Copyright Informa Telecoms and Media – 2012

In figure 2 the relative cost of 1 MB of data is compared between bundled and unbundled offerings using OECD averages and Informa bundled data roaming tariff research.

The correlation shown here between the size of the discount and the  bundle compared to unbundled offerings is substantial and adds support to the claim operators are relying on roaming bundling as a mechanism to fulfil roaming price caps.

Looking at the regional variations in bundled and unbundled pricing the greatest differential is seen in the Asia Pacific region. This is due to the competitive nature in this market that see’s large data bundles offered to attract customers. The substantial differential seen in Europe is most likely an illustration of the strategy operators are using to counteract pricing regulation – encouraging bundle take-up.

The conclusion one can draw from all this is that we are heading for a future defined by roaming bundles, at least in heavily regulated markets like Western Europe.  What  regulators will have to say about this, if anything, remains to be seen.

While it’s difficult to gauge how much competition the new structural changes will bring to the market, what’s certain is that operators will have to innovate much more than in the past to try and increase the amount their subscribers use their mobiles while travelling in the EU, and also to ensure they don’t churn to rivals for roaming services.

The problem for operators is not that they haven’t innovated at all on roaming tariffs, it’s that they haven’t innovated enough. There have been relatively bold moves by operators to both reduce the amount they charge for roaming services and to innovate on how they price them. Each of the major pan-European operators have reduced some of their roaming prices below the regulated rates in recent years, and some, such as Orange, have introduced innovative applications that allow users to monitor their usage while abroad – a move designed to increase transparency on roaming behaviour to encourage greater use. Most recently (a day after the European Parliament vote), Telefonica announced that all its European subscribers will be able to use 25MB of data while roaming in the EU for as little as €2 a day – significantly less than the new initial €0.70/ MB regulated price.

What’s now clear is that operators need to be more bold and creative in the way they approach roaming. They need to build on the steps they have already taken and price services more compellingly and in new user-friendly ways to stimulate usage to offset reductions in prices. While hard facts on the elasticity of roaming are sketchy and to a degree inconsistent, there is nonetheless sufficient evidence to suggest that reducing prices in the right ways and effectively communicating these reductions does lead to an increase in roaming usage.

It’s sometimes the case that operators’ roaming departments innovate on pricing and tariff structures but organisational impediments prevent these innovations from being put into practice. Where this is the case operators need to remove these barriers to allow innovation on roaming tariffs to take effect – for the simple reason that revenues are now more than ever at stake.

Operators now face a choice – either price roaming services at or just below the new regulated rates, or, like Telefonica today, take bold steps to align their pricing with consumers’ expectations. Operators have for too long held on to the view that roaming is a premium service and so should be priced accordingly. They have lost this battle. New roaming service providers will come to the market as a result of the structural changes – and they will price services significantly below the new regulated ceiling and in new user-friendly ways. It’s time for operators to move forward with compelling and innovative roaming tariffs and applications – before rivals seize their opportunity and do it for them.

Telefonica is offering 25MB of data usage for €2 to customers roaming within the EU

Telefónica has announced a pan-European data roaming tariff, which it claims is “up to ten times cheaper” than the new price caps approved by the European Parliament this week.

Customers of the firm’s Movistar and O2 networks will be able to use up to 25MB of data each day, anywhere across the 27 European Union member states, for just €2 per day.

“Our European data tariff gives our smartphone customers great value while allowing them to do what really matters – to stay connected wherever they are in a simple and transparent way and with complete peace of mind,”said José María Álvarez-Pallete, chairman and CEO at Telefónica Europe.

The European Union approved legislation earlier this week, ruling that as of 1 July 2012, 1MB data usage should cost no more than 70 Cents – working out at €17.50 for the 25MB Telefónica is offering for just €2. In the EU markets Telefónica does not have its own network, the operator said it is absorbing the cost of connecting with foreign operators.

“This is the exact type of thing that the Commission would have hoped to see happen,” said Matthew Howett, lead analyst at Ovum. “The idea of the regulation isn’t to necessarily decide what the optimum rate for roaming should be but rather prompt operators to come up with new and innovative tariffs.”

He added that, until now, operators have all offered tariffs at or around the cap specified by the EU Parliament, and there has not been evidence of very much innovation or movement below them.

“So this is certainly a welcome move in that direction and it is something which we are likely to see other operators follow.”

Customers will only pay for the days that they choose to use data and customers who exceed the 25 MB limit will be immediately notified. The Pan-European tariff is being launched first in Germany in May and will be available this summer to O2 and Movistar customers in Spain, United Kingdom, Ireland, the Czech Republic and Slovakia.

The EU has voted in favour of the creation of a roaming market and reduced rates for roaming

Members of the European Parliament and representatives of the Council and the European Commission have voted in favour of new rules that will lower roaming rates in the EU and see the creation of an EU-wide roaming market.

The new rules will create more competition in the roaming market and in the meantime impose new safeguard limits on consumer prices, including a new price cap for data roaming, which will progressively bring prices down from current high levels until the benefits of competition have fully kicked in.

“Consumers are fed up with being ripped off by high roaming charges,” said Neelie Kroes, European Commission vice president for the Digital Agenda.”The new roaming deal gives us a long-term structural solution, with lower prices, more choice and a new smart approach for data and internet browsing. The benefits will be felt in time for the summer break – and by summer 2014, people can shop around for the best deal.”

Mark Newman, Chief Research Officer at Informa Telecoms and Media said that most smartphone users today turn data roaming off when they travel because of the high costs and unpredictability of roaming charges. But over the next two years, the cost of sending an email while roaming abroad will fall from, on average, €0.07 when the price caps come into effect in July, to €0.02 in 2014.

The cost of five minutes on Facebook will fall from €0.35 to €0.10 per megabyte while a five minute video on Youtube will fall in price from €3.50 to €1 per megabyte.

“In addition to the new price caps for data services, voice and SMS, the European Parliament has approved new rules that will allow new players such as mobile virtual network operators (MVNOs) to enter the roaming market,” said Newman. ”However, Informa Telecoms & Media is sceptical that this will result in a significant increase in competition. The most likely new entrants, Informa believes, could be Apple and Google.”

To reduce the risk of this happening mobile operators in Europe are keeping the cost of wholesale mobile data high enough to deter any MVNOs from offering a service that is attractive to heavy data users. Wholesale prices tend not to be regulated so it is pretty easy for operators to set a pricing structure that would prevent, for example, an MVNO from setting a high retail price for SMS and voice services and a competitive price for data.

But what if regulators did start setting price caps for data wholesale tariffs? Might this be enough to encourage the likes of Apple and Google to enter the MVNO business?

This is precisely what the European Union is in the process of doing for roaming services. And if new players such as Google or Apple enter the roaming data business, as Informa Telecoms & Media believes they will, might this not give them the appetite – and a backdoor into – the national mobile data market?

New EU roaming proposals

In late March the European Parliament, Council and Commission agreed to new wholesale and retail price caps for roaming services for the period July 2012 to June 2017. The glide path for data roaming will see the maximum price of wholesale data fall to €0.05 per megabyte by July 2014 compared with a retail price cap of €0.20 per megabyte. These prices are interesting on two levels. First, the difference between the wholesale and retail price caps means that there is a significant opportunity for new players to compete in the data roaming market so long as they can build enough volumes to justify the investment in setting up a roaming MVNO. Secondly, the price of €0.05 per roaming megabyte is, according to research by Informa Telecoms & Media, about the same price that many mobile operators are offering MVNOs for national data services.

The new EU roaming regulations – which will be ratified within the next few weeks – is designed to help both existing “national” MVNOs and future “roaming-only” MVNOs – to compete with operators in providing roaming services to end users. In the same way that national MVNOs buy national voice and SMS services at a discount of around 50% on retail prices, they will now be allowed to buy roaming services at a discount of 50-70% on the retail price cap.

“Roaming-only” MVNOs will be able to enter the market from July 2014 by offering (voice, SMS and data) roaming services to people who want to stay with their existing operator for their national services. The Commission wants the industry to develop a technology which puts a second identity (dual-IMSI) on mobile users’ SIM cards which allows them to have separate providers of national and European roaming services while retaining the same number for both. There is a variation on this approach which relates only to data roaming. The concept is called “local break-out” with the idea being that when someone crosses an EU –border they can then subscribe, on the spot, to a mobile data service provided by one of the networks in that country. The visited network operator would set the price for the service but it would appear on the bill provided by the user’s home network operator.

European regulators are still trying to figure out the best technical approach for allowing these dedicated “roaming” MVNOs to enter the market. There is some concern that the cost of implementing the dual-IMSI approach will outweigh the benefits in terms of lower costs to mobile users.

Data offers the best opportunity for new players

But the local-breakout option is relatively straightforward and easy to implement from a technical perspective. The real question here is who will have the brand, the marketing reach and the distribution channels to pitch their roaming-only services to end users. We are doubtful that many existing MVNOs can compete in this space because they do not have good enough access to those mobile users who might be interested in buying a mobile-only data service. Another possibility is travel companies, insurance firms or airlines who could offer roaming packs on intra-European flights. But we believe that the most likely players to enter this space are either the operators themselves or smartphone OEMs via their application stores.

Most smartphone users today turn off data roaming when they arrive (or before they arrive) in a foreign country. With an activated data connection many data applications run in the background without the mobile user even benefitting from using service. So, it is possible to run up a high mobile roaming bill even without using the service because most roaming data price plans are charged on a per-megabyte basis.

This is frustrating for smartphone vendors because it means that their customers cannot use their devices when, arguably, a data connection could be most useful to them. There is massive pent-up demand for data roaming services because when people are away from home they could use the Internet for a whole range of communications, information and entertainment services that they may be able to access at home using other media. In the case of Google, no data connection means no advertising revenues.

Data roaming could also be a lucrative opportunity for players such as Apple or Google. By the end of this year there will be close to 100 million Android and 50 million iPhone users in Western Europe. The profile of iPhone and Android users correlates closely with mobile roamers because they are mostly high-end consumers and business users. Furthermore, both Google and Apple would be able to market roaming services via their applications stores, Google Play (formerly Android Marketplace) and Apple’s Applications Store.

Neither Google nor Apple has commented on this potential new opportunity but we think it inevitable that they will assess its potential. The easiest way for them to enter the market would be either to set up an MVNO business themselves and go around negotiating deals with operators in each country or, what  is more likely,  to work with an operator or MVNO (or MVNE) who already has these agreements in place.

If Apple or Google do enter the market, and their customers like the idea of buying a service from them rather than the operators, it would only be logical for them to look to start providing services in national markets. As we pointed out earlier, operators can use wholesale pricing approaches to prevent an MVNO from being competitive in the retail market. But such is the level of competition between operators in many European markets that it is quite feasible that one operator would take the view that it has more to gain than to lose by acting opportunistically and becoming the preferred wholesale partner of a smartphone OEM. Once this happens then Apple or Google will have the chance to become fully-fledged providers of mobile services.

The EU could soon see a revamped roaming marketplace

Legislation being passed through European courts could radically change the EU roaming market and see operators competing for the business of travellers and the creation of an EU-wide “roaming marketplace”.

The European Parliament and Danish Presidency of the Council of Ministers have provisionally agreed a deal to revamp the roaming services market, which will be voted on in May. Operators will have to allow customers to buy roaming services separately from alternative providers, from 1 July 2014. Roaming prices would be lowered into line with domestic prices by 2015.

Paul Lambert, analyst at Informa Telecoms and Media believes that the proposals, if voted into effect on May 10, will significantly increase the pressure on mobile operators to offer more competitive roaming rates to their customers.

“This, in turn, will reduce roaming revenues at a faster rate of decline than has been seen in recent years, potentially leading to more expensive mobile services for consumers in their home market,” he said.

Whilst consumer groups have welcomed the news, hailing the benefits of reduced rates for roaming, the creation of an EU-wide roaming marketplace also opens up an opportunity for operators, who have been missing out on revenue, due to customer apprehension towards roaming.

According to research based on insights from transactions processed by mobile communication solutions provider Syniverse with Informa Telecoms and Media, mobile operators around the world will miss out on more than $1.2bn in additional roaming revenues over 2012, due to the prevalence of “silent roamers”. “Silent roamers” are those international roamers who opt either to minimise or to discontinue their use of mobile services while abroad, generally due to fear of bill shock.

“These silent roamers are arriving in a foreign country, their phone is on – that’s how we know that they are there – they’re registering on the network, but they’re not using any services; neither voice or data,” explained John Wick, SVP Networks at Syniverse.

Wick suggests that another opportunity to encourage the take-up of roaming services could be in the provision of wifi services. The GSMA has recently announced a collaborative effort with the Wireless Broadband Alliance aimed at simplifying the process by which mobile devices connect to wifi networks. The joint initiative will see the SIM adopted as the principal means by which managed wifi networks identify mobile devices, paving the way for cross-network roaming agreements.

Wick said that Syniverse has been exploring the possibilities that wifi could offer to promote roaming usage, but stated that the problem with wifi hotspots is that they are not part of a managed environment.

“It’s a case of ‘best effort’. It’s easy to find a wifi signal and economically feasible, but 10,000 people could potentially be trying to connect to that network at the same time. Wifi is going to play a key part of the environment and servicing data, but what has to happen is the wifi footprint needs to brought to the same level as the 3G core networks.”

While on a 3G network, an operator can manage a customer’s experience, and guarantee that the customer has been assigned a certain slot in the 3G spectrum and that their experience is going to be of a certain standard, the same can’t be said for wifi hotspots.

Wick argues that the industry needs to create a solution to that takes all of the hotspots around the world and provide some layer of management to the wifi hotspots to provide users with the best experience available, and revealed that this is a solution that Syniverse is currently working on developing.

However, Thomas Wehmeier, principal analyst at Informa Telecoms & Media, warned that it is not clear that the widespread deployment of wifi outside of the home is going to deliver to operators the sustainable and profitable future their shareholders and investors demand.

“One of the principal conclusions I have made from my research is that many operators are seemingly “blindly” deploying wifi without a clear understanding of the overall impact of their investments on their business in the future, especially with regards to the effect on mobile data usage from their 3G and 4G networks,” he said.

While there is a huge opportunity in roaming being missed by operators that the new EU legislation and managed wifi services could help capitalise on, they should not lose focus on the fact that there is much more money to be made for every MB of data that goes over their 3G and 4G networks than they when that traffic goes over wifi. However, in the EU, a more competitive landscape for roaming services  could well benefit both consumers and operators, given that there is a $1.2bn revenue global opportunity that is not being grasped.

Africa’s roamers are biased toward enterprise users who generally have higher expendable incomes

A recent Informa T&M client request for analysis on the African roaming market brought up a number of interesting conclusions and insights on the continent: its approach to roaming and the future of this developing region.

The opportunity for roaming in Africa is tied to the available audience which is limited by factors that include the available audience for such services based on national expenditures and the GDP PPP of would-be roamers and travel patterns in the region. On the positive-side Africa’s roamers are biased toward enterprise users who generally have higher expendable incomes and greater resistance to price fluctuations (price inelastic).

This characteristic will result in the region seeing a CAGR of 13.37 per cent between 2012 and 2016 according to our latest forecasts (www.informatandm.com/gmroaming) the largest growth of any region over this period albeit coming from a lower starting point.

One of the main challenges facing operators in Africa and beyond is customer perception of roaming. Issues range through a full gamut of customer emotion from fear of overspend (bill shock) to confusion regarding services (service and pricing transparency).  What is universal is the urge to be in control of the roaming experience.

In Africa a number of operators have sought to tackle this challenge. Safaricom offers a simplified roaming activation process whereby exactly the same services are available in the home network as when roaming while setup is simplified by removing the requirement for subscribers to migrate to any special roaming tariffs.

The operator also allows all its customers to roaming without the need to have roamed before. Although this is slightly more of revenue loss risk it does engender a greater comfort with the roaming process; an invaluable asset when attempting to encourage roaming use.

Indeed this open transparent and simplified approach touches upon many of the most important features required to popularise a service which had historically been perceived negatively i.e. roaming and Bill shock.

The need for transparency is particularly important with data services. Data is the next great opportunity for roaming as it is resistant to commoditisation and potentially a more attractive proposition than simple voice being more adaptable, having greater scope for service development and being something more than a communication platform. However historical approaches to data roaming have not taken on board the need for transparency. Whilst a number of African operators have migrated to zonal pricing, a mechanism that has greatly simplified tariff tracking for customers in the region, the majority sell data in terms of kilobytes and megabytes. This approach is almost universally derided by customers based on their inability to reconcile specific services with data consumed. A far simpler approach is to provide a data calculator that shows how specific services consume data in a customer’s data plan. Vodacom is one operator who has experimented with this approach in the region. Alternatively offering unlimited data plans that incorporate voice and SMS allowances is an option, but perhaps not the best one for Africa were customers have limited expendable income. In this case data limits and automatic shutdown of data roaming when thresholds are breached would be applicable. It is immensely important roaming operators implement such protocols in the African region early in the development of data roaming in order to avoid the legacy of bill shock.

In some quarters it has been argued that due to the lower average mobile spend of customers in Africa and the lack of cross regional and international travel there is little potential for roaming. However this argument misses a glaring point specifically that roaming is a two way revenue generating process. There is both outbound (revenue generated by the HLR owning operator when their customers roam to other regions) and inbound (revenue generated by interconnection with incoming roamers from their home networks) revenue opportunities. Although this is a lower opportunity that retail being based on wholesale relations it is nonetheless an opportunity. Analysis undertaken around the World Cup held in South Africa by the data exchange provider AICENT showed a marked increase in data roaming traffic in the region while specific matches were ongoing, in some cases growing by 300 per cent. Consequently it would be in the best interests of roaming operators in the region to provide specific roaming price plans tied into both international and regional events. Such an approach would also create opportunities for customer segmentation along interest lines i.e. events geared to specific customer roaming segments. In this manner roaming can be popularised through association with popular large-scale and niche events.

There are a number of challenges to face in the African continent but the potential market for roaming is palpable. The voracious appetite for mobile services in the region will no doubt drive roaming take-up but regional operators can also encourage roaming trends as they occupy a pivotal position in the process.

The EU has agreed a provisional agreement for operators to reduce roaming rates

Prices for roaming in Europe are set to drop after the European Parliament and Danish Presidency of the Council of Ministers provisionally agreed a deal to revamp the market, forcing operators in Europe to lower costs when their customers use their devices abroad.

The plans, which will be voted on in the European Parliament in May, could see roaming prices lowered to 29 Cents per minute for calls and 70 Cents per MB for internet access in July 2012, if approved. They will then decrease further to 19 Cents per minute for calls and 20 Cents per MB for internet access by 2014. The European Parliament aims to bring roaming tariffs into line with domestic prices by 2015.

In addition, operators would have to enable customers to buy roaming services separately from July 1 2014, allowing them to chose alternative service suppliers for roaming whilst retaining their chosen operator for domestic use and keeping their domestic phone number. Home country providers would have to inform their customers of this right and any switch to an alternative roaming service provider would have to be free of charge.

Domestic mobile service suppliers would also have to enable their customers to access local mobile data services while abroad without having to unsubscribe from their existing data roaming contract or arrangement, and while keeping their mobile number.

According to Paul Lambert, senior analyst at Informa Telecoms & Media, the agreement poses the most profound change that operators have to deal with since European roaming regulation first came into effect in 2007.

He said that although the willingness of European consumers to buy mobile services from operators other than their home service provider is hard to gauge, the proposals will significantly increase the pressure on mobile operators to offer more competitive roaming rates to their customers.

“This will in turn reduce roaming revenues at a faster rate of decline than has been seen in recent years, potentially leading to more expensive mobile services for consumers in their home market – the “waterbed effect” operators often speak about when discussing the effects of roaming regulation.”

Lambert added that the European politicians have largely been unimpressed by the way in which and the speed with which operators in the region have reduced roaming rates. They perceive that European operators have done just enough to reduce rates in line with the different price ceilings that have been put in place since 2007 and that fundamental structural changes are needed to bring rates more in line with the rates consumers pay while at home.

“On the other side of the debate, operators have long been entrenched in the mindset that roaming is a premium service and should be charged accordingly – at a premium to home rates. While they have long enjoyed significant revenues from this position, persistent noises from the European Parliament and Council, along with a willingness to act on them, should have made it clear to them that they could only enjoy this position for so long.”

Bengt Beier, coordinator of the citizens’ initiative Europeans for Fair Roaming added that the interest group had hoped for a faster reduction in prices, but welcomed the news nonetheless.

“For a short time, it looked like some governments were more interested in corporate interests than in consumer-friendly prices. But the deal struck will not only prevent consumers from suffering high prices but will also help the European economy in general.”

The collaboration is intended to ease mobile authentication on wifi networks

The GSMA has announced a collaboration with the Wireless Broadband Alliance aimed at simplifying the process by which mobile devices connect to wifi networks. The joint initiative will see the SIM adopted as the principal means by which managed wifi networks identify mobile devices, paving the way for cross-network roaming agreements.

While some wifi operators also run cellular networks, others are independent and have no access to SIM details. Dan Warren, technology director at the GSMA, said this collaboration would enable any operators to create the kind of roaming agreements that have been central to the success of the GSM family of cellular standards.

Warren said the benefits to consumers would be significant. “Consumers get wifi thrown into the mix so, if I’m attached to a wifi network I can be confident that it’s the best connectivity available to me. It’s ready to use and I can attach to that network without the need to find the right SSID, or get a password from the coffee shop or tap in my credit card details. All of that authentication and connectivity is configured onto my phone and happens automatically because of the roaming agreement.”

The initiative also opens the door for operators to extend the offering of any SIM-based services into an offload environment. Mobile operators are keen to make the SIM the secure element of mobile payment services, for example, and this project would allow transactions to be carried out without the need for cellular access.

“The evolution of voice away from TDM towards IP in LTE means that this could lead to voice being implemented in a very similar way over wifi as well,” said Warren, “with the operator being able to offer the good things which a carrier class voice service is capable of.”

GSMA expects the remainder of the work between the two organisations to last nine months, with the first commercial deployments in 12 – 18 months’ time.