How does a clever mobile operator capitalize on the new EU ruling that bans international roaming surcharges inside Europe?
The Information Society and Media Commissioner for the European Union, Viviane Reding today announced her decision that international roaming charges within Europe are against the principles of free transfer of goods and services within Europe, that European consumers are punished for travelling, and therefore roaming charges will be made illegal. The EU had been at odds with the mobile operators, and had warned that if they did not voluntarily reduce the roaming charges, she would act. Today the Commissioner announced her decision. The commission ruling will be made by summer of 2006, and with member states of the EU implementing the regulation over the following year, roaming charges inside Europe should be eliminated by summer of 2007.
We here at Communities Dominate blogsite applaud all changes that herald lower tariffs for any services. Furthermore we have been quite vocal about the perceived greed of mobile operators. There is no technical or commercial reason for the unreasonably high roaming charges in Europe, so this is a very welcome change.
With any change comes an opportunity. Here is where the optimist in me has a moment of wishful thinking. If the European mobile operators now know that their business is about to change. That this part which is a significant element of international voice calls and international text messages (among European Union member states, obviously) is going to become extinct. Why not use this opportunity for some market innovation ahead of the ruling.
One of the big mobile operator groups in Europe (Vodafone, Orange, T-Mobile, Telefonica/O2) or even a regional strong player like TeliaSonera, Telenor or TIM, could now make a strategic marketing move to capitalize on this change.
We need to bear in mind the European 100% penetration level issue, and take it into this context. Who has a second mobile phone? The young employed. If 25% of the British or Germans or Spanish have two phones (ok, technically it is two subscriptions, but that almost always also means two phones), it is a very sizeable population, meaning just about everybody between ages 20-35.
Who loves to travel? This group. Who has disposable income and can afford to travel? This group. Who has time as they postpone having kids into an older age? This group.
While older people also travel, they are more careful with their mobile phone usage (not as addicted). And while younger people increasingly travel (students, teenagers), their disposable income did not afford heavy usage of the phone abroad.
Probably the vast majority of all roaming phone calls and text messages in Europe are actually originated by this age group. (Incidentially it is very closely correlated with the Generation-C for Community which Alan and I talk about in our book, Gen-C want to remain connected with their community even when they go for a quick partying visit to Amsterdam or attend the university time best friend's wedding in Rome etc)
So if the vast majority of the 20-35 year olds initiate the roaming calls, and also carry two phones... it now presents us with a fascinating marketing opportunity.
Any mobile operator group (Vodafone, T-Mobile, Orange etc) will have a remarkably high probability of the travelling young employed person having their phone as ONE of the two phones (or SIM cards at least) that the traveller carries.
We KNOW the churn/loyalty/marketing game of mobile has shifted to the multiple SIM card game. It is much like Visa and Mastercard. You have both in your wallet. Which card gets the majority of your money traffic.
We in mobile telecoms have to think in the same way. The traveller has two phones. How can I raise the preference so that my phone is used more than that on a rival network.
Here is where one of the European big groups could now snatch victory from the jaws of defeat. Why not turn the issue around and eliminate the roaming charges totally, immediately (with calls and texts originating within the EU obviously). Then make a big marketing splash about it.
The point initially is that this only of course applies when you are on their sister network when roaming (Vodafone could not force T-Mobile to do this, customers do understand that). So whenever my phone displays the Vodafone logo when roaming, I get slapped no roaming charges. This would also raise the likelihood that when travelling, the roaming European will have his/her phone selected onto the given sister network, rather than the 2 or 3 or 4 rival networks.
Would this generate an immediate shift of all discretionary calling and messaging traffic when roaming to that network? Of course it would.
Would it be a short-term customer-stealing proposition in churn/loyalty? To capture heavily travelling mobile phone users to join this one network, of course it would.
Would all the other operators have to follow suit? By summer of 2007 they would, but many would still not be pushing this, so it is likely to be a competitive advantage for much of 2006, perhaps even into the Spring of 2007.
The key point I would urge, is NOT to try to manage the price cuts, in a gradual way. No, the marketing opportunity is by abandoning roaming charges (whenever on your network affiliates within the EU).
For those in the accounting/finance of mobile telecoms. Do the calculation. If there is added discretionary outbound traffic, this will partially offset the lost profit. If there is a selected preference of your sister network (more paying attention to the matter of whose logo is visible) this switches more of the random outbound traffic to your network. And most of all, the inbound traffic is of course also profitable: the more your roaming traveller accepts calls while travelling, the more that will compensate for any profits lost from the few high-priced calls. The total financial cost of doing this is near negligable, but the actual good will by the related marketing is considerable.
I would hope there are bright marketing managers with mobile operators who can see the wisdom of this, and do it.
We know now the EU commissioner has mandated it. It will have to be done anyway. Why take the anger of customers? Why not give customers what they want, and get some positive image out of it along the way.
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