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Summary

In a positive development, telecoms regulators in Belgium and Luxembourg have announced a bilateral agreement aimed at ending mobile roaming premiums between the two countries. Under the agreement, operators in both countries can issue multi-IMSI (International Mobile Subscriber Identity) SIMs – ­a single SIM card that contains more than one phone line – to link Belgian mobile users to Luxembourg networks and vice versa, enabling customers to use mobile services in both countries without incurring any roaming charges.

Multi-IMSI SIMs could bring an end to roaming premiums

The need for global connectivity is the key driver for mobile roaming, but high roaming premiums have traditionally been a major barrier to usage. Many operators have launched innovative roaming tariffs, such as “roam like home” plans – which enable customers to use their standard voice and data allowances overseas at no extra charge – and flat-rate roaming data bundles, to encourage roaming usage. Ovum research has shown that such deals have helped operators significantly increase the number of roamers and roaming usage on their networks.

For example, Vodafone Italy reported in November 2013 that since the introduction of its daily roaming plans, only 31% of its customers have been switching off data services when roaming, compared with 54% before those plans were introduced. And 3 UK’s Feel at Home roam-like-home offer, which is free to all users, precipitated a 50-fold increase in the amount of roaming data used per customer, as reported in December. However, such offers are still few and far between, due to the inherent commercial challenges linked to wholesale rates and business-model arrangements.

Multi-IMSI roaming is an emerging trend, and there are already a few vendors offering multi-IMSI roaming solutions, such as Truphone’s disruptive World SIM offering (though focused primarily on the enterprise market), Globetouch’s CloudSIM ecosystem, and few other MVNO roaming propositions. The recent launch of Google’s Fi service is also believed to be based on the multi-IMSI approach, linking the service to two host operators (Sprint and T-Mobile in this case) and enabling automatic handover between the operators, based on network coverage. Google’s potential wholesale deal with Hutchison could essentially eliminate roaming charges for Fi users when they travel outside of the US.

This new development in Europe will be the first example of an operator-led cross-border mobile service to reduce roaming costs for customers. Join Experience, a 4G operator in Luxembourg, is expected to be the first operator to employ the regulatory opportunity to offer consumer-focused cross-border mobile plans to its customers. Join’s existing mobile tariffs already include voice, SMS, and data roaming allowances for use within Europe. The new plans (not announced yet, but expected in as little as a week) are expected to be disruptive in bringing an end to roaming premiums in the two markets. This is expected to be a step toward the European Commission’s plan to create a single digital market for Europe.

If Join succeeds in its cross-border expedition, it might convince other regulators to follow suit. And increasing pressure from multi-IMSI vendors and the likes of Fi and roaming MVNOs could push operators to act on the opportunity sooner. However, it will all depend on operators’ wholesale negotiations to balance wholesale revenue opportunities with retail roaming revenues. The trend could also lead to an increase in domestic mobile tariffs, in an attempt by operators to compensate for the increase in wholesale costs resulting from higher usage volumes, to optimize their margins.

Appendix

Further reading

“Google Fi shifts the MVNO paradigm, threatens global connectivity disruption,” TE0012-000541 (April 2015)

“On the Radar: GlobeTouch,” TE0009-001380 (January 2015)

“On the Radar: Truphone,” TE007-000702 (September 2013)

Author

Nishi Verma Nangia, Senior Analyst, Service Provider & Markets

nishiverma.nangia@ovum.com

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