The early impact of Roam Like at Home

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Vishal Gandhi, Associate Vice President of Product Management at Mobileum, takes a look at the pros and cons of the European roaming rules.

EU Regulation IV, which came into effect on 15th June 2017, was unsurprisingly welcomed by consumers as a major win in the battle against spiralling roaming costs when travelling. The legislation requires operators within the European Union (EU) to implement a ‘Roam Like at Home’ with fair usage policy for all of their roaming subscribers, designed to prevent abusive or anomalous usage of regulated retail roaming services by roaming customers.

However, the regulation was also expected to present EU operators with a number of significant challenges, with traffic volumes, revenue, retail rates, IT, fraud and abuse all predicted to be areas of concern.

So how have European operators coped in the early stages of implementation? Has the predicted increase in traffic materialised? Are compensating revenues being detected to make up for increases where they have been felt? How are IT systems handling any increase in volumes? Are early signs of fraud and abuse appearing? And have the large group of previously silent roamers become active users?

Mobileum recently conducted an in depth piece of research with operators across 28 EU states to investigate all of the above during the first month after roaming charges were abolished throughout the EU.

As was forecast with subscribers expected to lose their concerns around ‘bill shock’, volumes have increased, with 87% of respondents reporting a strong or very strong increase in data traffic. Similarly, Voice usage has also seen an increase (71%), although only half of operators highlighted an increase in SMS usage.

But the key question in relation to this is if such increases in usage have been enough to offset any loss in revenue for operators as a result of the introduction of EU Regulation IV. Responses to this were surprisingly somewhat mixed among our research, with more than three in four (76%) respondents stating that the usage increase they experienced was not sufficient to bridge the gap, but over a fifth (22%) highlighting the opposite. Of the latter group, there was a wide spread of countries, networks and network sizes, with the majority holding commercial roles within their respective organisation.

The EU commission stated that domestic retail rates shouldn’t rise to make up for this additional cost, but there are some reports of this happening in some EU countries. Indeed, over a third (35%) of operators responding to our survey indicated that they are planning on changing retail rates based on usage changes. This will undoubtedly be a temptation for operators once EU Regulation IV has had further time to bed in.

Respondents were somewhat mixed on whether wholesale rates dropped in line with retail rates, with 59% saying no and 37% yes. It will be interesting to review the interim report due to be published by the EU Commission in December 2018 on the effects of the new roaming rules in terms of if these costs have indeed been moved to retail plans.

When it comes to roaming abuse, over a quarter (26%) of EU operators said they had witnessed an increase or strong increase. Less (17%) reported a similar impact in terms of fraud at this early stage, with the majority in both cases unsurprisingly reporting no change. However, the generous fair usage policy does mean that it is becoming far more difficult for operators to watch out for abuse and fraud.

Fraudsters are undoubtedly going to be monitoring what loopholes have appeared and how they can be exploited. Given the arbitrage between wholesale interconnect rates for international calls terminating to EU vs. low retail tariffs for regulated calls in some EU markets, we may see a surge in frauds related to CLI filing and international SIM Boxes.

There has also been much debate about whether existing IT systems will be able to cope with the increase in traffic volumes following the implementation of EU Regulation IV. Anecdotally, there had been reports that a sizeable number of operators were adopting a ‘wait-and-see’ policy with regard to implementing new solutions to cope with the changes. A third (33%) of respondents to our survey said that their IT systems were not sufficiently coping, although further analysis is required in order to ascertain if this is related to abuse, fraud, fair usage policy tracking or other reasons.

We have identified a disparity between operators when it comes to the visibility of silent roamers. More than half (59%) stated that between 0-25% of their roaming customers remained silent, while over a third (34%) estimated it is between 25-50%, and just 7% seeing more than half of their roaming customers as silent. However, we would expect to see a significant portion of these silent roamers becoming active as subscribers get more used to the introduction of the legislation.

Overall, our data also indicates that there is not as pronounced a divide between Northern Europe and Southern Europe as may have been expected, with similar responses to questions regarding increases in traffic, compensation, rates and IT across the board.

While operators may have implemented fair usage policy for open data bundles, it is clear that they are finding detection and action on permanent roamers to be really complex in nature. This is an area that needs to be addressed, but for the long term we believe it is more important that operators focus on innovative roaming bundles for international roamers. Understanding customers via analytics, segmentation and dynamic/spot pricing is the key to grow roaming revenues.