In general I believe that the mobile industry and its ecosystem is functioning quite well. Throughout all the links in the value chain, from chipmakers all the way to service providers, we have intense competition. The best evidence of how well it is functioning is the fact that we have mobile networks in practically all countries in the world, serving close to 5 billion customers with affordable voice, text and data services, most of which are interoperable as well. When you consider that these networks have been built without any direct government funding or at any risk for taxpayers’ money, it is quite an achievement. In many ways it is a showcase of how important and effective the private sector can be in infrastructure investments and rollouts if the rules and regulations have been thought through and set up properly. One could compare it with other infrastructure investments such as energy, roads and railroads and be reminded of how it could have looked like, i.e. slow moving government controlled entities that over years underinvest (and mis-invest) in their businesses.
Still, having said this, the mobile industry is not well functioning in all aspects. While we have strong competition between operators in most markets, resulting in lower than ever prices for domestic voice, text and data services, we are still paying a lot (magnitude of difference) for exactly the same services when we travel outside our home markets. It is well known that this is not because there is a higher cost for serving non-domestic customers; it is only a marginal difference for the operators. Rather it is because this is an area where operators have decided not to compete, resulting in an oligopolistic style of price inelasticity. This issue is beginning to be addressed on a regional level, like the EU, where it is likely that premium charges for roaming services will at large be history by 2015. You can already today for daily fees of about 6-8€ get decent data packages of about 50MByte in Europe. It is a good start. It is a different ball game, however, when you travel with a European subscription in Asia Pacific. There you get exposed to roaming fees that really even belong to the monopolistic era of this industry. Last week I have been visiting Hong Kong and Japan. When I arrive in these places I get the greeting SMSs from my home operator that a call to Sweden from Hong Kong will cost me €1.5 per minute, text 30c and data €5.5 per MB. From Japan to Sweden it is even worse. Calling and sending SMS is the same, but for using data, I was charged at €13 per MB. This would mean calling for 20 minutes, sending 10 SMS and using 15 MB of data would cost me more than €200 a day. So, I do what most people do when they are travelling outside their home country; I turn off mobile data and selectively use voice and text services. Instead, like many more, I am constantly on the hunt for free wifi zones (the oases of communication when you travel) or I might even buy local SIM cards. In this era where any and all services provider in the world are focusing on customer experience, and even appoint managers and teams to be dedicated to the task, it is quite obvious that most mobile operators are just paying lip service when it comes to roaming. A good customer experience would be to not be forced to completely change usage behavior just because you travel abroad. In many ways it goes against the whole idea of the mobile industry, it is called m-o-b-i-l-e for a reason.
We have created a global technical standard that through scale and enormous volumes in manufacturing, distribution and provisioning brings down prices for products and services across the value chain, everywhere. It is long overdue for operators to stop the cartel-like behavior and deliver a mobile user experience worth the name for their travelling users. In the end, I believe (and I am convinced operators do too), the business case is positive as the users will start turning to the operators even when travelling and usage behavior will change, as will the customer experience. And we all win.
Bengt is the CEO of Northstream