Moves by the European Commission to cut roaming charges will have a big effect on consumers but do little for Europe’s biggest users of roaming service, its multinational corporations.
Mobile operators have been accused of charging consumers “unjustifiably high” roaming tariffs in spite of drops in wholesale prices for such calls.
Viviane Reding, the European Commission’s information society and media commissioner, wants to eliminate roaming charges for calls while travelling within Europe by harmonising them with domestic prices.
But Ms Reding’s battle seems to be ignoring business users, who represent 75 per cent of roamers, according to consultancy AT Kearney.
“Roaming typically makes up 30 to 40 per cent of a multinational’s mobile spend, though it represents just 10-12 per cent of its call volume,” says Nigel Springhall, general manager of Mobile Partners at BT Global Services, BT’s outsourcing unit. For some, the burden can be far greater. One consulting firm reported that roaming accounts for nearly 70 per cent of its total mobile budget.
“Cheaper roaming costs remain enterprise users’ prime concern. This would come in the form of better tailored voice tariffs – for example global and multi-country tariffs – and a consistent service in all countries where the multinational is present,” says Richard Ireland, Ernst & Young’s UK head of telecommunications.
Reacting to the Commission’s threats, T-Mobile cut its retail roaming tariffs by about 45 per cent and has signed up with five other operators to cut wholesale roaming rates by half before 2008. Vodafone has promised to reduce its rates next year. But these tariff cuts target consumers and will have little effect on the rates that businesses pay. “We think this will result in a 10-15 per cent reduction on the bill for companies,” says Mr Springhall.
Multinationals often pay lower per-minute tariffs than retail customers. “They have been getting a better deal because of their size, but are they happy with it? No,” says Rob Bamforth, analyst at Quocirca. BT says a typical corporate rate for roaming within Europe is between 40 and 50 pence a minute, though this can vary widely.
Because each company tends to have a unique geographical footprint and usage profile, there are no standard corporate rates. Some operators do nonetheless offer packages aimed at multinationals. For instance, Orange’s International VPN service sets a roaming tariff on calls made to mobile and fixed numbers within the same company that is 30-50 per cent lower than roaming calls to the outside world.
But just as important as the price of roaming is predictability and transparency of these costs. “Mobile fleet managers open roaming to more users within an enterprise when pricing is predictable,” says Robert Swift, head of voice marketing at Orange.
Predictability can be as simple as offering a single roaming tariff in each market, as do T-Mobile and Orange. Vodafone charging is based on which service provider network is used in a particular country. “We believe the choice of network is a problem for us, not for our customers. Making them choose is an absurd way to deal with corporate buyers,” warns Mr Swift.
Centralised billing, rather than receiving one or more invoices in each country of operation, is another way to gain control over mobile spending. But this appears to be a “nice to have” service rather than an essential one, says Mr Bamforth. “If the cost is lower on a country-by-country basis, then multinationals tend to do that.”
Some large enterprises are turning to outsourcers to manage these matters. For instance, Unilever outsourced management of 30,000 mobile phones in more than 70 countries to BT Global Services, as part of a communications outsourcing deal.
Mr Swift at BT says a quarter of outsourcing tenders ask for mobile service management, which tends to represent 15 per cent of the contract value.
Outsourcers can reduce the cost of basic management – which BT estimates at about $5 per user per month – as well as tariffs. Often, they have the tools to analyse spending patterns and can negotiate better rates with service providers. “Our general experience is that we can save 15-16 per cent on mobile spend, half of this coming from tariff reductions and half from lower management costs,” says Mr Springhall.
For now, multinationals are focused on reducing the roaming cost of voice rather than of using GPRS or 3G data services. But this is likely to change as mobile data usage increases.
“Mobile data roaming costs remain particularly high and some firms have stopped using 3G data cards as a result,” says Mr Ireland. “Enterprise users want less variation in price-per-megabyte and more warning of charges. The market for Wi-Fi roaming has developed more beneficially for the end user.”
Unfortunately, Commissioner Reding seems to have overlooked this as well.