Guaranteed service levels command LTE roaming premium, says survey

LTE came to market with a price premium but during 2013 the industry saw instances of that premium eroding under competitive pressure. The Telecoms.com Intelligence Industry Survey 2014 set out to see how the industry feels about price premiums that are likely to be attached to LTE roaming and found that less than half of respondents agreed LTE roaming should command a premium.

A number of industry pundits have suggested that LTE premiums could disappear altogether in some markets and so it was interesting to find that less than half of survey respondents agreed that mobile operators are justified in charging more for LTE roaming than for other roaming services. One third of respondents disagreed and a further 23.1 per cent remained neutral.

Respondents were asked to express their strength of feeling by rating their response on a scale of one to seven, where seven was “strongly agree” and one “strongly disagree”. 21.4 per cent of respondents rated their agreement as six or seven on this scale, with only 5.3 per cent voicing the strongest agreement.

For Which Roaming Services (Not Within The Eu) Will Operators Be Able To Charge A Premium Over The Next Five Years?

Among mobile operators, however, a six or seven rating was given by 27.8 per cent of respondents, indicating fairly robust resistance to the idea that LTE roaming should come at no extra cost to the user. Nonetheless, almost a quarter of mobile operator respondents felt that no premium is justified and 24.7 per cent remained neutral.

Operators may have to look to more advanced services if they want to command a premium, rather than simply charging more for LTE as a basic connection. Asked which kind of roaming services might justify a premium in future (outside of the EU, where regulatory pressure is intense) operator respondents backed guaranteed QoS for LTE data strongly. This option drew the highest level of support, selected by 61 per cent of respondents, followed by application-specific data (selected by 44.3 per cent) and tiered throughput for LTE data (selected by 37.3 per cent).

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There was acceptance that legacy services like SMS and MMS will struggle to continue to command roaming premiums, with just 11.8 per cent and 8.5 per cent of operator respondents selecting these options respectively. Indeed there was widespread agreement that legacy voice and SMS roaming traffic will decline as users become increasingly reliant on IP communications apps while roaming, which offers a potential threat to operator revenues. 47 per cent of respondents and 49.4 per cent of operator respondents ranked their agreement with this statement six or seven.

We then asked respondents to rate eight potential charging models for LTE roaming services in terms of their benefit to the mobile operator. Each model was rated on a scale of one to seven where seven was “extremely beneficial”. If we rank the responses according to which models were given the highest number of high ratings (six or seven) the results, for overall respondents and operator respondents, are as follows:

The highest rated option overall sees application providers, such as Facebook or Twitter, subsidising the roaming traffic. This may well be beneficial to operators but it is not clear that OTT players are prepared to engage in these kind of business models. Indeed, there is a high level of ambiguity in the business model.

The 2014 Telecoms.com Intelligence Global Industry Survey drew responses from more than 2,000 industry professionals, including more than 700 operator representatives. The full report from the survey will be made available in mid-February. You can register to receive the report here.