Mobile Operators Tout Roaming Reforms Ahead of EU Regulation

On May 8th Vodafone and T-Mobile joined Orange in announcing initiatives to cut the cost of roaming within the EU. Ahead of any EU proposals for regulation in this area, Vodafone proposes to cut roaming charges by at least 40% by April 2007, T-Mobile by between 21% and 45% and Orange an average of 25%.

Recommended Competitive Responses

► O2/Telefonica should look to offer similar roaming packages and pricing to that proposed by Vodafone and T-Mobile. O2 UK should also look to offer summertime deals for holidaymakers travelling to Spain and using the Telefonica network.

► Mobile operators across Europe should consider revising their international roaming tariffs ahead of any proposed EU regulation. Operators directly competing with the likes of Vodafone, T-Mobile and Orange should compare their offers against the proposed average price of EUR 0.55 per minute.

► EU regulators should also consider the international roaming pricing for data services, since this is an area which mobile operators are keen to promote. Whilst voice still forms the bulk of roaming revenue, data is slowly increasing and the costs are largely unregulated even at a national level.

Recommended End User/Customer Responses

► End users should still be wary of the cost of international roaming and seek to understand the charges that they may incur. Offers such as Vodafone Passport offer some degree of certainty, especially for users with inclusive minute packages and end users should look to fix their call charges in this way.

► Consumers should consider purchasing a pre-paid SIM in their destination country if they intend to make local in-country calls whilst travelling. Consumers should also consider text messages as an alternative to a voice call since this also limits costs.

► End users should seek further clarification on the price reductions from mobile operators before they travel. Whilst phrases of ‘savings up to 40%’ look good in headlines, the devil, as always, is in the detail. End users should pressure mobile operators for greater clarity in this area.

Proximus Focuses on Simpler Prepaid

On April 19 Proximus simplified its prepaid calling card rates for its Pay&Go Classic and FreeStyle Classic offers. Now, there is no longer a distinction between peak and off-peak times and users can sign up for a lifetime promotion of 20% off the top-ups.

Recommended Competitor Actions

► BASE needs to launch a BASE Unlimited offer for prepaid services, but it needs to learn from its mistakes with the now-expired contract offer. BASE should name a prepaid card ‘BASE Extra-Limits’ and offer a bonus for heavy users only. For example, users that send 100 SMS per month get 50 SMS free. Users that top-up EUR 25 per month get EUR 25 free for the rest of the month. This would give BASE a particular bonus style that would immediately appeal to consumers.

► Mobistar should be careful. It is eager to win in the contract stakes, but it should be mindful of the cost. No-commitment tariffs can be messy and complicated for consumers to understand, so it must ensure that its prepaid base remains happy and loyal. The operator can only achieve this by offering stronger, leaner prepaid tariffs to cater to that segment.

► BASE is the community player and its CHIama service is a breath of fresh air to communities in Belgium, complementing Ay Yildiz. However, local communities (and not just the ethnic ones) can drive greater value and revenue for the operator if cleverly targeted.

T-Mobile UK Offers a New Deal for Prepay, but Fuels Confusion

On April 27th T-Mobile UK launched new pay-as-you-go plans, aiming to cut the average cost of prepay bills and to increase prepay call volumes.

Recommended Competitive Responses

► Rivals should point out that, whilst T-Mobile is grabbing headlines, the devil is in the details. Rivals offer lower stepped rates after three minutes or lower headline pricing. T-Mobile’s changes are nothing revolutionary.

► Tesco Mobile should ensure that customers understand the benefits of its Extra tariff, which offers a lower per-minute price of 10p in return for a minimum monthly top-up.

► Virgin Mobile should continue to promote its prepay offers as cost-effective voice rates coupled with low everyday on-net text pricing. T-Mobile’s prepay offers cannot match this in one single tariff, which Virgin Mobile should look to exploit since low voice and text pricing appeals to many customers.

► Vodafone and O2 should look to cut their headline 30p/min and 25p/min rates to make their tariffs look more attractive in comparison to the market average of 10p to 15p per minute. Whilst the higher rates only apply to the first three minutes, as T-Mobile has demonstrated, headlines are important in catching the attention of consumers.

Recommended End User/Customer Responses

► Existing T-Mobile prepaid customers should consider which option best fits with their predicted mobile usage. Consumers should also note that ‘Mates Rates’ only offers a good deal if their friends and family are also T-Mobile customers.

► Consumers considering prepaid need to weigh their options carefully and read beyond the headline. With all mobile operators offering different rates and options, consumers need to tread carefully and understand how they use a mobile phone on a monthly basis to ensure that they get the best deal.

► Customers who switch to T-Mobile should ensure that they realize some savings on the new tariffs. If they do not feel that they are saving money, then they should be prepared to churn as soon as possible. There is no need to by loyal on prepay; customers should regularly shop around for the best deal.

Virgin Mobile Agrees to Purchase by ntl

On April 4th Virgin Mobile and ntl agreed on terms for the purchase of the mobile operator for the higher price of GBP 962.4 million. Using the Virgin brand for consumer services boosts ntl’s position in the UK market and leads the way for quad-play services.

Recommended Competitive Responses

► Competitors for multi-play services such as BSkyB, BT and Orange should press ahead with the communication of their offers to consumers. With multi-play customers harder to churn, then unless they signup customers from the outset the SACs will be prohibitive.

► Mobile operators need to counter the moves in the fixed line network by offering HSDPA services as soon as possible, since this offers a better comparison to the slower speed fixed DSL services. With multi-play becoming popular amongst operators such as BT, ntl/Virgin and BSkyB then mobile operators need to consider alliances to bring their own brand of wireless technologies to the triple-play party.

Recommended End User/Customer Responses

► ntl customers can sit back at this point and see how the deal unfolds. The advantage for ntl customers is that competition usually means lower prices and ntl can potentially come up with some attractive service bundles across pay TV, broadband, fixed voice and now mobile voice services.

► Virgin Mobile customers should look for additional deals on broadband and fixed voice services to compliment their existing mobile service.