The Real Impact of Roam Like at Home on MVNOs

By Michael Dargue

In April, I was delighted to return to the annual MVNOs World Congress – the premier conference for the MVNO sector. At this year’s event, I was invited to moderate a panel on the impact of the European Roam Like At Home (RLAH) regulations on MVNOs.

For anyone not aware, RLAH was introduced in May 2017 and entitles EU mobile subscribers to enjoy the full benefits of their domestic package when roaming in EU countries, at no additional cost.

Joining me on the panel were Benjamin Grimm (Head of Carrier Relations & Offer Management, Mobilcom-Debitel), Maria Merino (Manager of Regulation of Competition, Orange Spain), and Nigel Portley (Data Roaming Specialist, BICS). So, an MVNO, a MNO and an international carrier, together providing a range of vantage points for a well-informed discussion.

The panellists first turned their attention to the impact of the regulation. All agreed that while RLAH had caused MVNOs to lose some roaming revenue, it was the margin impact that was worse. Data traffic in particular has seen dramatic growth. In the year before RLAH, increases of up to 40x were observed as retail price caps took effect.[i] RLAH has driven this higher still, with Nigel commenting that BICS had since seen increases of up to 10x.

This isn’t to say that all MVNOs have seen such dramatic increases in usage: some will have a customer base that does less EU roaming than average. However, the impact for all MVNOs is magnified as they are unable to collect roaming-in revenue from visitor traffic, so the growth in usage is purely a cost.

The panel identified that MVNOs most exposed to the changes in regulation would be those with subscribers that were data hungry and travelled in Europe, and those operating in markets with low domestic prices.

We then discussed what MVNOs could do to mitigate the impacts. Four ideas were raised, with the panel acknowledging that none offered a silver bullet.

MVNOs can apply for a temporary exemption from their National Regulatory Authority (NRA). This will be granted if the MVNO can prove that RLAH has a major impact on its margins. However – and as the panel rightly pointed out – charging for roaming when your competitors offer it for free is unlikely to be well received in the market.
Another retail option is to offer domestic-only plans, i.e. with no roaming. Again, for competitive reasons, the panel felt that this would be unlikely to appeal.
On the wholesale side, I posed the question of whether MNOs could reduce wholesale rates to help struggling MVNOs. This was less provocative than expected, with a consensus that MNOs will need to take a business case view, weighing up the cost of rate reductions versus the risk of having an MVNO customer face collapse. Maria added that MVNOs can already benefit from their host’s roaming agreements.
Following on from this, a further option was raised: negotiate your own roaming deals. This would be possible for full MVNOs, although – given the lack of balanced traffic – there will be a limit on the rates that can be achieved.

Looking ahead, the panel agreed that we have yet to see the full impact of RLAH. Summer 2018 will be worse than last year as greater consumer awareness leads to fewer roamers to switch off mobile data when abroad. Also, new for 2018, is the EC portability regulation permitting citizens to use online content services when travelling within the EU.[ii]

The prospect of roamers, sitting by the pool, watching Netflix on their smartphones is the stuff of mobile business case nightmares. When asked whether the new regulation could ultimately cause MVNOs to collapse, Benjamin’s view was that where an MVNO was already operating on slim margins, RLAH could tip them over the edge. Otherwise, the panel believed MVNOs would survive RLAH, albeit less profitably than before.

Wrapping up, the panel agreed that the RLAH regulation seemed only to consider consumers and MNOs, with the position of MVNOs apparently ignored. With MVNOs playing an important role in consumer choice, innovation and competition, the panel saw this as contradictory. The EC is due to review the regulation in 2019 and there was a hope that the impact on MVNOs would be reconsidered then, perhaps leading to adjustments in RLAH to reduce the financial burden.<>

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Over the last three decades, Cartesian has worked on over 40 MVNO-related projects throughout the US, Europe, Middle East and Asia. With over 25 years providing consulting and managed services in the communications sector, at Cartesian, we help our clients more effectively compete and manage operations by addressing their specific challenges and rapidly delivering transparent and actionable insights.

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