Telecom operators can follow a number of strategies to manage the significant drop in revenue from roaming due to the impact of the abolition of roaming charges in EU countries.
Juniper Research said annual revenues from mobile roaming will dip 11 percent to $48 billion in 2017 from an estimated $54 billion in 2016.
“This decline in global revenues is due to a 33 percent fall in European roaming revenues, following the EU regulation to end roaming surcharges,” Juniper Research author Nitin Bhas said.
Gain to enterprises?
The abolition of roaming charges within the EU does not automatically lead to lower calling charges or reduced expenses for companies. Calling abroad has not become cheaper, and is sometimes even more expensive.
“Roaming charges are applied in other European countries. Calling from Switzerland, for example, has even become more expensive than before,” said Ron Rijkenberg, CEO of A&B Groep.
Jorg Wiedijk, global marketing director of A&B Groep, said: “We work for a large European customer with subsidiaries throughout Europe. It now appears that the charges for calling from Switzerland to a EU country have been increased over the past months. The same applies for calls made from a EU country to Switzerland.”
Revenue shrinks
Globally, telecom operators are eyeing data growth for generating additional revenue streams. IoT is also a big focus area for telecoms. Both mobile Internet and IoT are becoming revenue generating measures to avoid drop in voice related revenues.
Decline in monthly ARPU is a major concern for global telecom operators despite the fact that the MNO subscriber base is expected to increase 1.24 times their 2015 value in 2022. ARPU will decline to less than 75 percent of its 2015 value.
Telecoms strategies
Removal of roaming charges will force some operators to reduce investment in their networks. Top mobile operators spend 15 percent to 20 percent on Capex (capital expenditure), and their main aim is to cut Opex.
In other markets, some telecom operators configure or deploy GMSC / MSCs to surreptitiously drop incoming roaming calls.
Squire Technologies has 4G Roaming Solutions that allow operators to commercially and technically begin small and scale up when demand improves.
Telecoms should introduce services such as voice over LTE, video over LTE and voice over Wi-FI to handle issues related to roaming.
“If operators move to open, programmable, IP networks, that are built on scalable and cost-effective virtual network functions, they can launch such services, increase market share and offset the loss of their roaming revenue,” said Ian MacLean, chief marketing officer of Metaswitch.
Juniper Research said average roaming spend per annum per international mobile roamer will decline over the forecast period to reach $62 in 2022.
Telecom operators need to offer innovative tariffs to roaming users. MNOs can revisit strategies to protect the value of roaming due to strict telecom regulations in some parts of the world.
“While we expect roaming tariffs outside Europe will be unregulated and to be significantly higher, operator focus will need to shift to innovative bundles and tailored pricing to preserve or grow revenues from travelers and immigrant workers,” Nitin Bhas of Juniper Research said.
Revenues will begin to recover in 2018, following a significant increase in active roamers and data usage.
Following Britain’s decision to leave the EU, UK operators may make up for the loss by increasing domestic prices, especially since their margins have been dipping at the rate of 1-2 percent per annum over the last 5 years. These operators could adopt Rest of the World tariffs for mobile roamers in the UK.
The average roaming spend per active mobile roamer will double in 2022 due to higher costs, reaching $150 per annum, compared to current estimates of $75.
Baburajan K
