EU Commissioner bans roaming charges

This is a big deal. And potentially a huge opportunity for mobile operators.

Europeans could see a sharp drop in international phone costs in time for their summer holidays next year as a result of planned laws being rushed through by the European Commission.

The EU Telecoms Commissioner, Viviane Reding, has decreed that roaming charges violate the principles of the free transfer of goods and services within the EU. Mobile operators have essentially been "punishing" their subscribers for travelling.

While the MNOs will certainly complain bitterly and challenge the ruling, it appears that this is really going to happen. The European Commission has been arguing with the mobile industry for some time and is fed up that operators haven't done anything on their own to eliminate roaming fees.

But the cloud has a silver lining for sure. There is very clear price elasticity when it comes to making calls abroad. It costs a lot more so people make shorter or no calls at all. So by getting rid of roaming charges, subs will make more phone calls and send more SMSs. In fact SMS substitutes for voice calls for many people while abroad - it's cheaper to keep in touch with people back home via SMS. The demand is there, but the pricing is inefficient to maximising revenue. Basic microeconomics.

Forward thinking mobile operators will take advantage of the ruling by scrapping roaming charges early and using it as a marketing gimick. Tomi Ahonen explains this in more detail.

It really is good news for everyone - the industry and its customers.

Fixed/Mobile *Network* Convergence should be a big driver for next gen investment

I seem to be reading a lot of reports lately.

Infonetics has released their latest report: Service Provider Plans for Next Gen and Wireless broadband: North America, Europe and Pacific 2006. It's a survey of 18 North American, European and Asia Pacific wireless carriers and gets their views on why they would deploy next gen mobile networks.

67% of respondents said they viewed offering bundled services as a strong driver for investing in next-generation equipment. Infonetics notes that offering triple-play service, with mobile IPTV, will become increasingly important as voice revenues decline.

Operators are looking at a range of mobile broadband technologies for next-generation networks, including WCDMA, WiFi and WiMAX. Unlicensed technologies such as WiFi and WiMAX present opportunities to provide bundled services. 6% of respondents offer bundled VoIP with WiFi; this is expected to grow to 44% by 2007.

So what about fixed/mobile NETWORK convergence? It just doesn't make sense for a mobile operator to jump into the triple-play fray only offering wireless/mobility. Sure, customers may be happy with a mobile phone instead of a fixed, they may be happy with a wireless broadband connection instead of DSL, but what about TV?

Cable operators already offering triple-play can very easily bolt on a mobile service to make quadruple-play. Witness NTL and Virgin.

Mobile operators absolutely need to build next-gen wireless networks so they can grow revenue and regain the "mobility premium" that's disappearing in voice. But I think they're missing a BIG TRICK by restricting themselves to wireless access only.

After all, mobile operators have huge access networks - why don't they leverage them to offer fixed line services??

Latest mobile market forecasts

Portio Research just released their latest mobile market forecasts. Here is a quick summary. There are some interesting conclusions. For example, Russia will plateau during 2006-2011 and there's still a lot of steam left in the good ol' US of A:

Worldwide mobile subs end 2005: 2.129 billion
Forecast for 2011: 3.964 billion

Net adds by region by 2011:

• Asia Pac: 1 billion
• Africa: 265 million
• Latin America: 205 million
• Middle East: 79 million (largely Iran/Iraq)
  
• Central, eastern, southern Europe: 79 million
• North America: 75 million
• Northern Europe: 30 million

Asia Pac will account for 50% of total subs by 2011.

Rankings by country:

• 1 and 2: India and China will have just over a billion subs combined.
• 3, 4 and 5: Brazil, Indonesia and Nigeria (73 million net adds EACH)
• 6: USA (66 million net adds)
• 7-10: Pakistan, Mexico, Bangladesh and Iran (182 million net adds between them)
• Others: Russia (28 million net adds), Japan (14 million net adds)
  

Surprisingly, Argentina, South Africa, Saudi Arabia and Canada fall lower in the rankings.

Keep in mind that lower subs growth in developing markets doesn't mean the network operators won't be investing in their networks. In fact they will probably be playing catch up for a long while after the onslaught of next couple of years.

More on mobile broadband - HSDPA report

Informa's just released their latest report on HSDPA deployments and I'm glad to see they've singled out tariffs as being pretty important.

MNO's have so far resisted flat-rate tariffs for mobile broadband. But the fixed line broadband market didn't take off until low flat-rates became a reality. True, some operators have increased their fair usage limits but they are still stifling the market with high prices. The funny thing is that they seem to be aware that they're own pricing policies are the cause of low data usage!

Pricing is still between Euro50 and Euro70 per month, for 1-2Gbit usage.

Is this the "mobility premium" I've talked about before? Yes. And no.

What do I mean by 'yes?' That's easy. MNO's will leverage HSDPA's one key advantage over both fixed DSL and Wi-Fi, mobility, to justify premium pricing. In the voice world, this 'mobility premium' has for years allowed mobile operators to get away with vastly higher tariffs than those charged by the fixed line guys. As competition continues to exert downward pressure on prices and to erode this premium, MNOs will look to leverage HSDPA's mobility benefits to establish a new 'mobile premium' for mobile broadband over its fixed counterparts of Wi-Fi and DSL.

What do I mean by 'no?' I think that they're scared of a free for all. Their networks would fall flat on their faces if people started blasting broadband traffic through a 3G network the same as they do on their DSL at home.

Mobile to PC video calling

Does anyone think this will boost video calling usage? Perhaps this will create the critical mass of video-enabled devices that's stifled video calling to date.

From Telegeography 14 3 2006
T-Online and T-Mobile to launch mobile-to-PC telephony
Deutsche Telekom subsidiaries T-Online and T-Mobile have revealed plans to launch a mobile-to-PC video-telephony service which will enable customers to make video phone calls between 3G mobile handsets and PCs. The launch will be the first of its kind in Germany.