European telecoms operators still have the opportunity to make money from roaming services, particularly if they can persuade more people to use their phones while travelling abroad, but it seems unlikely that alternative roaming providers will be able to break into the market.
Many mobile users in the EU turn off their phones – or at the very least disable data roaming – when they are overseas, Adrian Baschnonga, lead analyst at EY said in a presentation at Total Telecom's IPX Summit 2014 in London on Wednesday. "They are still scared of using their phones abroad."
Some believe that by offering more affordable and – crucially – more transparent and easy to understand roaming tariffs, operators could boost usage and thereby revenues.
"[Operators] don't really believe they can make it into something big," said Isabelle Paradis, president of Hot Telecom. "I think they are mistaken."
But it is not just a question of driving the volumes up. New technologies that require certain levels of quality of service (QoS), such as VoLTE, RCS and machine-to-machine, are gaining traction in the mobile space. And those QoS requirements do not go away when a customer is roaming.
"There are certainly opportunities there for operators to differentiate," Baschnonga said.
IPX "is key" for operators looking to monetise data roaming, he said. "As roaming revenues come under pressure, operators are looking for this cheaper roaming structure," he explained. "IPX hubbing makes it simpler and cheaper," compared with brokering bilateral deals, he said.
That pressure on revenues means that alternative roaming providers (ARPs) – a concept first suggested by the European Union a year ago as one way to introduce more competition into the market – are unlikely to attempt to break into the market.
"What's the business case for the alternative roaming provider?" Baschnonga asked. ARPs would have to contend with falling revenues, customer experience challenges and operational costs, amongst other things, he noted. "The business case does look challenging in a number of regards."
The EU roaming proposal that included the ARP option was approved by the European Parliament in April, a move that should have paved the way
