Telecoms.com periodically invites expert third-party contributors to submit analysis on a key topic affecting the telco industry. In this article Jennifer Kyriakakis, Co-Founder and VP Marketing at digital services platform MATRIXX, urges communications service providers to rethink their attitude to roaming rates.

The concept of roaming is undergoing a significant metamorphosis and emerging as a key differentiator for many CSPs.  This is partly down to new roaming regulations and restrictions, as in Europe, where the European Parliament is trying to create a single telecoms market and completely abolish roaming fees. Moreover, CSPs themselves are realizing that their traditional roaming packages are not suitable to meet the majority of subscribers’ requirements, and that more transparent, cost-effective models are needed.

Roaming has so far been priced at a significant premium to domestic rates. However, the revenue that this brings comes from a small percentage of high-value postpaid customers, such as business travelers. When it comes to data, most consumers are reticent and up to 80% switch off data roaming on their smartphones for fear of bill-shock. Driven by regulatory and competitive pressures, CSPs are now reformulating how they price and package roaming, especially for data services. But while reduced roaming rate might appear to primarily benefit consumers, is it really such a bad strategy for CSPs and will it have a negative impact on revenue?

Roaming rates, some argue, are a stream of ‘bad revenue’ that could hurt CSPs’ in the long term. The margins are great, but the fact is that most customers don’t use their mobile devices while they’re roaming, especially for data services, and when they do they reluctantly pay a premium for it. Bill shock is also common due to the lack of transparency that subscribers have over their usage.

Subsequently, CSPs are now lowering roaming prices, offering roaming for free, or packaging it more effectively. This provides them with an opportunity to generate healthy and sustainable data revenues across their entire customer base, rather than collecting premium roaming fees from a small number of their customers who are willing to pay, while alienating the rest.

The idea seems to be catching on as CSPs such as Vodafone, Rogers and Three (UK) have launched ‘Roam like Home’ plans. Furthermore, Google Fi, Google’s recently launched MVNO, offers the same cost for data usage in 210 countries around the world. However, ‘Roam like Home’ does not necessarily guarantee that roaming prices will be transparent and easy to use. Loopholes and restrictions mean that consumers’ wallets can still be stung due to a lack of clear visibility over how much, exactly, they are charged for different data services when abroad.

In order for roaming to work effectively, roaming fees must be completely transparent and consumers must be able to gain a real-time view of their phone bills. Swisscom has taken a step in the right direction and has just announced a new set of plans that offer ‘carefree roaming’ for their customers.  They haven’t actually wiped out roaming charges altogether, what they’ve done is far more intelligent than that.  They’ve bundled in a specific amount of roaming into their packages depending on the level of tariff selected. For example, the lower end plan includes 30 days of roaming per year with unlimited voice and text and up to 1 GB of data without incurring extra charges. A higher end plan includes 100 days and 3GB of data.  If a subscriber reaches their data limit, or runs out of ‘free days’, they are not suddenly hit with extra charges – they are notified and only charged more if they choose to buy more data or make more calls.

This innovative model takes the ‘fear’ out of roaming charges and also makes it simpler for customers to buy and use data. It also encourages consumers to try out value-added services, while simultaneously getting rid of a myriad of customer complaints and experience issues that roaming has traditionally caused.

Ultimately, CSPs’ new roaming strategies should not simply be about satisfying regulators and wooing customers – it’s really about re-building and making mainstream a revenue stream that is fraught with issues and only relevant to a small customer segment.  Make roaming cheaper, yes, but also make it easier to buy and use, include higher speed connectivity so that it is actually valuable to the consumer, and provide 100% clarity on how much it’s going to cost.  Now CSPs have a potentially much larger revenue stream that is predictable, sustainable, and actually drives customer loyalty instead of driving them away.

So in a time when many CSPs are looking at different ways to better monetize data, providing ubiquitous connectivity at a reasonable cost will open up a potentially much larger pot of ‘roaming revenue’ and make customers happy at the same time.

Jennifer Kyriakakis has been working in the Communications Industry for over 18 years in Marketing, Sales and Systems Delivery. Prior to MATRIXX, Jennifer worked for Portal Software (acquired by Oracle) where she was responsible for the global marketing strategy of Portal’s product suite for the broadband and mobile markets. Before joining Portal, she worked with Verizon International Wireless managing large implementations of billing and customer care solutions for their global operating partners. Jennifer began her career in the Communications Practice at Accenture where she developed billing, invoicing, and payment processing applications for wireless operators. She holds a degree in Information Technology and Operations Management from the College of William and Mary.