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Summary

If all goes as planned, a "connected Americas" might become a possibility by 2022, as countries from North, South, and Central America and the Caribbean work toward abolishing all roaming charges within the region, or implementing "zero roaming." In the seventh annual meeting of the Inter-American Telecommunication Commission in Buenos Aires, delegates from 19 countries signed an agreement to commit to phasing out roaming fees by 2022. The agreement was signed by Argentina, Bahamas, Barbados, Belize, Brazil, Canada, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Mexico, Nicaragua, Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay, and the US, while Chile and Bolivia refrained from doing so. The agreement is still just a declaration, however, without any enforcement power. It is to be noted that the EU has already eliminated roaming charges within its countries, effective as of June 15, 2017.

Consumers will pay the price anyway

Although the signatories have pledged to work toward eliminating international roaming charges by 2022, it is too early to guess when users will actually be able to "roam like at home." However, once implemented, mobile subscribers from the 19 participating countries would be able to call, access data services, and send messages from within any of those countries at the same price as they do on their home network.

Such a move would be beneficial for the handful of users who do a lot of international traveling, but it would mean an effective price hike for a major portion of users. The business model across the telecoms sector is evolving, and data is beginning to take center stage across most markets. Data revenue is already surpassing call and message revenues for most operators, which makes it a no-brainer that data revenues would be hit heavily by the elimination of roaming charges. Such a move would surely lead to increased data consumption while roaming but would reduce an important part of revenues to zero. If the increase in data consumption is unable to compensate for the loss of roaming revenues, it would surely push prices up.

Somebody has to bear the cost, and in this case it would be the subscribers. So if you are a user with no or minimal international travel, you are sharing the cost of a service that you are not even benefiting from. Currently, there is no pan-regional regulation in the Americas, whereas in Europe this type of rule can be enforced because of the existence of EU regulations. The regulators would have to deal with the wholesale prices that operators charge among themselves, which is a different ball game altogether, while managing the high impact of double taxation. All in all, the regulators have a lot of homework to do before zero roaming can be implemented.

Previous attempts at zero roaming

This is not the first attempt at eliminating roaming charges in the Americas; earlier initiatives have already been moving the region in that direction. Chile and Argentina announced at the end of 2017 that they are working toward eliminating roaming charges between the two countries by 2020, and America Movil has announced free roaming for its high-end postpaid Claro customers throughout Latin America. America Movil began by eliminating roaming in the Pacific Alliance bloc of Peru, Chile, Colombia, and Mexico, and at end-2016, America Movil announced the elimination of roaming charges for certain plans across 16 countries: Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Puerto Rico, and Uruguay.

Permanent roaming is a potential bottleneck

One concern that regulatory bodies would need to address before the Americas does away with roaming fees is the issue of "permanent roaming," in which subscribers buy connections from markets that are cheaper than their home country and continue using them even when they are in their home country. This would especially be a concern with prepaid connections, which are a lot easier to obtain than a postpaid connection. If not addressed with proper regulation, it can create a problem where a major portion of the prepaid base from a more expensive country shifts to subscriptions from a cheaper market.

A similar phenomenon occurred when roaming fees were eliminated in the EU, and many users shifted to cheaper connections. The EU found a solution in a fair-use policy, implementing a number of conditions including a requirement that each operator monitor the roaming activity of its users. In cases where a user has spent more time on a network outside the home country and roaming usage exceeds domestic usage over a four-month period, the subscriber needs to provide a valid reason for this pattern, such as excessive travel. The operator has the right to apply roaming charges on usage outside the home country if subscribers fail to comply. However, such regulations could turn out to be complex and costly for telecoms operators in the Americas to follow.

Appendix

Further reading

Mobile Roaming Forecast Report: 2015–20, TE0009-001521 (May 2016)

Mobile Roaming Forecast: 2015–20, TE0009-001522 (May 2016)

""Roam like at home" is likely to be impossible in some countries," TE0007-001163 (June 2017)

""Roam like at home" in the EU is already causing price increases," TE0007-001136 (April 2017)

Author

Vipul Babbar, Analyst, Americas Service Provider & Markets

vipul.babbar@ovum.com

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