Western Europe will be overwhelmed by the strict EU regulations implemented. With the price of voice calls falling by 46% and data roaming services cut from average costs of around $4 (€3.22) to just $0.26 by 2014 European operators will face a challenging time ahead.
These regulations have been a long time coming with the EU attempting to threaten, cajole and even embarrass European operators into cutting roaming charges, which in some extreme cases see mark-ups in thousands of percent.
Paul Merry, author of Informa Telecoms and Media’s latest analysis of the roaming market states, “The Western European market is expected to continue to grow but at a considerably slower rate than it had. The region is expected to generate $12.5 billion by 2016, $6bn less than the Asia-pacific region over the same period.
European operators will also be heavily impacted by the decisions made in meetings between the European Parliament, the European Council and the European Commission on local break-out, also known as decoupling. This process involves giving access to alternate roaming providers that might include MVNOs or even manufacturers should they so wish – Apple has been touted as a potential alternate provider. Access must be provided to these players with owning operators having to facilitate the process of porting their existing numbers so they can be used while roaming . This decision will effectively open the market to specialist roaming providers and MVNOs, increasing competition for European roaming operators in a single broad sweep.
The only reason Europe is not in freefall is due to a combination of the vagaries of the region which sees consumers being a relatively underpenetrated segment and one that is likely to be encouraged to experiment with roaming as prices fall and the exaggerated effect of economic recovery. This recovery, expected in the latter stages of the forecast period, has a disproportionate effect on roaming revenues. In effect the market saw an artificial and almost immediate drop in usage as the downturn took hold and the market recovery and growth over the forecast period is actually a reflection of the return to pre-downturn levels rather than an indication of the health of the roaming market in the region.
In contrast, the Asia Pacific roaming market is being driven by a voracious demand for mobile services from the business sector in developing countries and less exposure to the global banking system. In addition the strong manufacturing basis in these countries is driving business travel as contracts are negotiated and sales established increasing the aggregate number of business roaming calls. These factors will combine to see a positive CAGR of 8.63% in the region over the 2011-2016 period.
Undoubtedly the influence of regulation will have a paradigm shifting effect on the roaming industry in Europe but its reverberation will be felt throughout the world as legislators seek to encourage roaming use and protect end users from excess charging and bill shock using Europe’s approach as a guide.
Paul Merry is a senior analyst of operator strategies at Informa Telecoms & Media.