Quantitative Analysis of the Impact of Roaming Like at Home on the Business Case of Mobile (Virtual) Network Operators in Europe
Posted: 3 Apr 2017
Date Written: March 30, 2017
In 2007, the European Commission (EC) started capping the wholesale and retail rates for international voice calls within the European Economic Area’ (EEA). Later, additional caps have been introduced for SMS and mobile data; year after year these caps have been lowered and now the EC is ready to take the ultimate step: Roaming Like At Home (RLAH). RLAH implies that a customer pays the same rate for mobile use (voice, SMS, data) wherever within the EEA; the retail rate for roaming traffic will be set to the domestic rate effectively allowing the user to roam (at the same rates) like at home. While this might prove beneficial for end users, it implies a decrease in revenues for mobile operators. These might have to look for ways to cover this loss, e.g. by increasing domestic prices. This publication builds on  which made an extensive qualitative analysis of RLAH, pinpointing the key parameters which will decide how much a mobile operator will be impacted by RLAH. In this publication, we present a quantitative model that allows predicting the short-term and long-term impact of RLAH on the business case of mobile operators based upon these key parameters and a set of presumptions (e.g. about data traffic forecast). Examples of the parameters included are:
(i) geographical location: mobile operators in countries a lot of people travel from will see an increase of outgoing traffic, while mobile operators in popular travel destination will see the same increase for the incoming traffic; and,
(ii) the type of mobile operator (MNO or MVNO): RLAH will impact mobile virtual network operators (MVNOs) differently than mobile network operators (MNO).
MVNOs typically have only outgoing roaming traffic and no incoming roaming traffic, as they do not own a physical network, resulting in large wholesale roaming costs but no wholesale revenues.
Using publicly available data from e.g. BEREC reports, the model will calculate (the change in) the cost and revenue streams for mobile operators, effectively showing the impact of RLAH on the business case. By including additional parameters such as the price-elasticity of mobile data (cheaper data can lead to higher volume usage) and the proposed wholesale and retail caps for the next years, the model will be able to answer questions such as: ‘How much should domestic prices increase to cover revenue losses due to RLAH (if any)?’, ‘Are the benefits for international providers (providers owning networks in multiple countries, such as Vodafone, who can hence “roam” on their own network) significant and disruptive to good market functioning?’ and ‘Should wholesale rates be decreased even further to ensure the competitiveness of MVNOs?’.
 Jonathan Spruytte, Marlies Van der Wee, Mieke de Regt, Sofie Verbrugge, Didier Colle, International roaming in the EU: Current overview, challenges, opportunities and solutions, Telecommunications Policy, Available online 14 February 2017, ISSN 0308-5961, http://dx.doi.org/10.1016/j.telpol.2017.01.009.
Keywords: Roaming, European Union, techno-economics
JEL Classification: D40, E61, K23
Suggested Citation: Suggested Citation