Why don’t we do it in the road…

Roaming revenues have always been a lucrative source of high-margin revenue contributions for mobile operators. One can easily understand the GSM-community’s reluctance towards lowering prices, at least as long as end customers are not considering the roaming charges when selecting their subscription.

With the overwhelming success of both mobile broadband and data-hungry smart phones, it has become obvious that the current roaming model does not satisfy the needs of the end-users. It is not only the cost level that is the problem, but also the lack of transparency. Strong willingness to pay is proven by travelers (especially business but more and more consumers) that are happily paying the odd 20 € or so for WiFi access at hotels or airports. But those who have tried to use their mobile broadband or iPhone when traveling are not likely to do it again. (My colleague’s football match a couple days ago (see previous blog post) would have cost above 10,000 Euro in a roaming scenario…).

No, what is needed is clearly a kind of flat rate also in the roaming case. Paying for daily usage is the most transparent model for travelers. And if the market is segmented in an appropriate way, it will for sure lead to increased revenues rather than decreased, not to talk about user satisfaction and the ensuing increased uptake and usage. Segmentation is about packaging a product in suitable packages so everybody pays what they are willing to pay. This maximizes both revenues and profit. Exactly how it is solved commercially and technically is to be determined, but this industry has managed more difficult challenges than this, and there are already markets, notably in Asia, where this scheme is already deployed.

Many are the industries that have undergone drastic reshaping of their business models due to changes in user behavior or innovative competition from newcomers, and many are the giants that have not adapted in time (lots of examples in music industry, airline industry, auto industry), so for the mobile equivalents to grab the opportunity it’s really time to bring an attractive roaming model to its billions of users to deserve (and get) a bigger portion of their spending.

At least I would start using both my mobile broadband and my iPhone when travelling and happily (well…) increase my mobile spending.

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