Roam like home: not so simple as hoped

Monday 12 June 2017 | 14:26 CET | Market Commentary

The long-awaited introduction of roam-like-at-home in the EU is set to come into effect on 15 June. In principle, it’s a simple change: we pay the same when travelling in the EU as we do at home. However, in practice the implementation of RLAH is appearing much more complicated. Particularly operators in the north of Europe have taken advantage of the ‘fair use’ rules adopted by the EC and a potential opt-out for operators that can show they will lose money on RLAH. Others have taken the inclusion of RLAH as an opportunity to introduce higher prices, either for monthly plans, roaming elsewhere or other charges. Consumers may find they are not as well as off as hoped.

Some operators started early with the introduction of RLAH, at least on selected plans. According to Telecompaper’s annual EU Mobile Benchmark report, 33 percent of postpaid plans in the 16 European countries surveyed in Q1 2017 included some form of EU usage/roaming, up from 22 percent in Q1 2016. Mainly these were at big international groups, such as Orange and Vodafone, which started including a year ago RLAH in mainly more expensive postpaid plans.

In the past couple months, the number of announcements on roaming price changes has accelerated and there are several interesting developments:

  • The opt-out. The EU regulation allows for an opt-out if operators can prove to their national regulator they will lose money on RLH. This means they can continue to apply regulated surcharges for roaming, on top of the domestic price. This option was adopted notably by the Finish operators Elisa and DNA, a move not so surprising when we see that Finland has the lowest domestic cost per GB. Others receiving an opt-out include all the operators in Lithuania and Estonia, O2 Slovakia and Voo in Belgium.
  • Fair use policy. Agreed after some confusion by the European Commission, this allows operators to limit the volume of roaming used by some customers, notably on unlimited and prepaid contracts. Most operators have taken to limiting the amount of data that can be used while roaming, especially for customers on large or unlimited plans. For example, Free Mobile in France limits data roaming to 5 GB per month on its unlimited plan for EUR 20 per month. Tele2 also set limits on data roaming in its recently introduced unlimited plans, ranging from 30 GB in Sweden to 6 GB in the Netherlands. T-Mobile Poland notably gave customers more of a choice: after using up the data allocated for EU roaming, they can either block data use, pay a small surcharge on RLAH with the rest of their monthly bundle or buy an add-on data roaming package.
  • New, more expensive plans. Many operators have taken the introduction of RLAH as an opportunity to introduce new postpaid plans. While this goes hand-in-hand with the general trend to offer bigger data bundles, many have also raised their prices at the same time, as in Denmark. The 3 Group has notably taken this approach, changing its pricing already in the UK a year ago to offer RLH only on ‘Advanced’ plans (read: more expensive plans). In Ireland, it quickly received a warning from the regulator for taking this idea too far, and in Austria it took a more cautious approach, allowing customers to cancel, but was still followed by the other main operators. Orange Slovakia had to quickly backtrack after trying to withdraw old plans, while Telia Finland is pushing customers to new plans if they want full RLAH.
  • In addition to dearer monthly plans, operators are increasing a variety of other charges to try and offset the end to roaming surcharges. For example, at MVNO Fayn in Czech Republic, on-net calls will not be considered free when roaming (also at Vodafone), or in Spain, where Vodafone has raised prices for roaming outside the EU and Orange increased the call set-up fee for prepaid users. Many are continuing to promote alternative roaming plans as well, such as Vodafone UK and Telenor Sweden, which offer RLAH in a wider range of countries for an additional fee or on a more expensive plan.

The above is only a small sample of operators taking a more limited approach to RLAH – many are implementing the regulation to the letter and customers will see no limits on their usage or change in prices. Still, we can draw a few conclusions from the trends we outlined above:

  • North vs South. The regional divides formed during the negotiations on the new roaming regulation are apparent in the pricing changes. Operators in northern and eastern Europe, where mobile prices tend to be lower and there is more outgoing roaming, appear much more likely to be implementing fair-use rules than those in the southern countries, which benefit more from incoming roaming. Even with the agreed cuts in wholesale roaming prices, the northern operators are likely to see their costs increase as customers take advantage of RLAH, with little compensation on the revenue side without increasing prices.
  • Big vs small. Smaller countries, where operators benefit less from economies of scale, also appear more likely to be experiencing price rises or usage limits than bigger countries. The same applies for small or independent operators in big countries, such as Bouygues Telecom in France or Cyfrowy Polsat in Poland, which are not part of big multinationals that can spread the costs across the group. MVNOs, such as Hot in Austria, face a similar problem, with only roaming costs and no revenues.

The issues for consumers have not gone unnoticed by regulators and consumer groups. The assembly of EU telecom regulators, Berec published in late March guidelines for enforcing the new roaming rules. German consumer group VZBV said more recently that RLH is a "great success for consumers, but the devil is in the details", as many will still face fair-use limits and surcharges on data usage. It warned that it will be watching closely to see how providers apply the rules, and the Slovak telecom regulator issued a similar warning, underlining that operators can face fines of up to 5 percent of revenues for violations. In Poland, the confusion over different methods of implementation has already led to questions in Parliament and may require regulatory intervention.  

The impact on operators will vary considerably, depending on their mix of traffic and roaming destinations and whether they have their own network or are part of a multinational group. All expect an increase in volumes as a result of RLAH, as consumers feel more at ease leaving particularly data roaming on, but whether this will result in increased revenue is another question. Many are using RLAH as another tool in their battle to convince customers to migrate to higher-spend, ‘all-in’ plans, so the extra revenue will be incremental and at best offset the end to surcharges for roaming. 

However, only the operators that can also offset their costs for roaming will benefit in the long run. This is likely to strengthen the position of the bigger, multinational groups, to the detriment of smaller, independent operators and MVNOs, who may find the gradual reduction in wholesale roaming costs does not go fast enough. It will be up to the European Commission to decide whether its first review of the regulation needs to come earlier than the second half of 2019.

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