In case you didn’t know, the European Commission has been working in the recent years (they started in 2007!) to abolish the often ridiculously expensive roaming charges within the European Union countries. That is a very important step towards the bigger goal of converting the EU into a Digital Single Market.
The strategy towards Digital Single Market was enforced via decreasing data roaming price caps in the European Union countries. Those caps are stating maximum price levels for the retail and wholesale markets that we have already been enjoying for quite some time.
For the retail market (prices for subscribers / end users) the crowning point is coming soon: from the 15th of June 2017, consumers and companies across Europe will be able to Roam Like at Home (RlaH). This means that more than 500 million Europeans will be able to use their mobile services around Europe with the same plan that they use at their home country. Up to this point (from 30 Apr 2016 - to 14 Jun 2017) the pricing cap was set at €0.05 per MB (€50 per GB).
And, that is not the end. For the wholesale market, there will be a yearly step by step reduction over 5 years for data caps decreasing from €0.0077 per MB (€7.7 per GB) from 15 June 2017 to €0.0025 per MB (€2.5 per GB) by 2022 for ensuring cheaper access to data roaming in the future.
Wholesale pricing cap per GB
|15 Jun 2017||1 Jan 2018||1 Jan 2019||1 Jan 2020||1 Jan 2021||1 Jan 2022|
|Wholesale caps per GB||€7.7||€6.0||€4.5||€3.5||€3.0||€2.50|
Mobile Network Operators (MNOs) concern: permanent roaming
Aside from the loss of their highly profitable monopolistic business model, MNOs are concerned about the misuse of RLaH by consumers & companies as there is the risk of people buying SIM cards from countries with lower price plans and using them permanently in their more-expensive regions, or devices staying permanently abroad with their domestic subscription. This would distort the RLaH system: operators offering lower prices would raise their domestic rates for compensating potential losses, thus causing a negative impact on consumers.
For preventing that, the European Commission set up a Fair Use Policy. The problem for MNOs is that it is quite soft and user friendly: if the user spends more time abroad than at home or uses the service more abroad than at home over the period of four months, then the operator can ask the user to clarify the situation within 14 days. Only after this period, and if the user does not change the behaviour, the operator can start applying a small charge (according to the European Commission caps) for the roaming consumption.
Because of that, MNO’s will have to invest resources on monitoring consumer behaviour in order to prosecute and minimise abuse and fraud.
Mobile Virtual Network Operators (MVNOs) concern: wholesale price caps are still too high, smaller operators will suffer and data prices likely to increase for consumers using prepaid offers or unlimited bundles.
On the flip side of the coin, MVNOs are concerned by the price caps: “[…] despite repeated calls to go lower from the European Parliament, data caps are set at a level which is still too high. This will not only strongly affect competition but lead to higher overall prices for the Europeans.”
“But what exactly is wrong with the European Commission caps?” you may ask. Well, the problem is that they are not coherent with this basic economic principle:
Retail price ≥ wholesale charge ≥ wholesale cost.
Why? Because nowadays in European countries, domestic retail data offers are already below € 1 or €2 per GB.
According to MVNO Europe: “As smaller operators and MVNOs pay wholesale access at the level of EU regulated caps, there is a high risk for these operators not being able to recover their costs. This will have a direct effect on customers: the higher the wholesale caps are, the fewer there will be “Roam-like-at-home” offers for consumers on the market using prepaid offers or unlimited bundles.
With excessive wholesale roaming charges, dominant mobile operators will be the only ones to drive the market, adding more barriers for smaller players”.
And where does that lead? Yeah, you guessed it: higher prices.
What concerns the IoT?
Thanks to RLaH, the “silent roamer” phenomenon (have you ever turned off data before going abroad?) will come to an end within the European Union, which means people will use cellular internet even more. That will definitely improve the business and innovation environment, increasing the number of cross-border connected devices, services and apps, thus giving more opportunities for the IoT device makers to provide products and services that consumers across the EU can use.
On the other hand, most MNOs don’t differentiate Internet of Things and Machine to Machine data traffic from ordinary traffic in the financial terms of their contracts, some MNOs are concerned about the connection cost of IoT devices, because in many cases the data consumption is so low that it doesn’t cover the 24/7/365 signalling and other production costs, especially when permanently roaming.
That means that IoT makers must be careful when choosing which service provider they use, as some operators receiving permanent roaming IoT devices, not identified as such, may charge additional fees or even refuse to provide service to them.
This is why 1oT’s tailor-made solution for IoT devices is the perfect fit in this changing environment, offering hassle free cellular connectivity not only in the EU, but in more than 150 countries. Feel free to contact us at sales[at]1oT.mobi