1.0 : What are the challenges for Telcos when the new EU roaming regulation comes into force?

01 Jun

1.0 : What are the challenges for Telcos when the new EU roaming regulation comes into force?

Laura Petrone
Senior Research Analyst

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Rosie Secchi
Research Manager, European Wireless and Mobile Communications

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From June 15th, mobile roaming charges will be abolished for EU member States, after the European Council gave final clearance to the new regulation approved by the European Parliament. The effect of the new legislation will be that as of June 2017 telecom operators cannot apply any surcharge in addition to the domestic retail price on any EU roaming customer for voice call, SMS and use of data outside the customer’s host country while periodically travelling.

IDC foresees a smooth implementation of the new rules and successful adaptation of operators’ business models, given the safeguard mechanisms put in place in the regulation and the good balance achieved in wholesale roaming caps by negotiators. In both the consumer and business segments we do not foresee any hike in mobile tariffs in the short term, as operators are already adapting their business models to the new rules, and some of them have launched “Roaming Like at Home” (RLAH) schemes. It is also increasingly common for operators to bundle roaming allowances into their tariffs for business users.

In particular, we expect that the glide path of the wholesale data cap reduction will gradually ease structural differences among the countries and allows operators to adjust their business models without any substantial revenue loss. In the long term this will lead to low price and high volume (especially data) business structures across the EU area, with the corrective measures introduced with the new roaming regulation (Fair Use Policy in particular) helping preventing the risk of abusive or anomalous usage of RLAH and of rising prices from the operators’ side. Particularly, the level of detail of FUP policy guidelines will ensure a smooth implementation of RLAH, with sufficient level of transparency and control mechanism at the retail level. Besides, RLAH will work as a stimulus to reduce fragmentation across EU and more uniformity will be reached in terms of market characteristics, such as consumption patterns and costs of running the network, also ensured by operators’ ability to monetize roaming as a new business. A more unified European telecoms market, working from a single pricing approach and similar cost base, will be better prepared to collaborate, invest and innovate.

In the case of UK, the impact of Brexit on the English mobile market will depend on UK’s impending negotiations on withdrawal from the EU membership. However, even in the case of no agreement between UK and EU as well as no EU regulation to keep the roaming prices low, it is unlikely that mobile operators will explicitly re-introduce roaming fees to their UK customers travelling in Europe: operators are already moving towards roaming free/cheap plans, and even though they may be allowed to re-apply roaming charges, the move would be quite unpopular with the risk of undermining customers’ loyalty.

However, the final outcome does not depend on exogenous factors only, and eventually the future of the roaming business will greatly depend on the ability of operators to respond to the new challenges.

Coming soon 2.0 : What Does The European Roaming Market Look Like After The Legislation Comes Into Force? Advice For Telcos

For more information, please contact Laura Petrone (lpetrone@idc.com) and Rosie Secchi (rsecchi@idc.com)

 

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