Why Roaming Will Be Extinct In Ten Years

According to the European Consumers’ Organisation (BEUC), the cost for making a phone call with your mobile while abroad is roughly three times higher than back home. If you dare to go one step further and check your email while traveling, the cost per MB (megabyte) can be as much as 50 times more than usual. Due to lack of competition amongst European telecom operators, coupled with high-profit margins stemming from roaming, the incumbents have had little to no reason to abolish these exuberant charges.

However, the tide is swiftly changing. Thanks to increased pressure from Neelie Kroes, Vice President of the European Commission responsible for its Digital Agenda, vocal tech-savvy consumers and the roll-out of 4G networks combined with innovative third party services, roaming as we know it won’t be anything more than a bad memory in ten years time. Here are four reasons why roaming will become extinct:

1. European Commission is dedicated to increasing market competition. With the roaming issue being addressed as a part of the European Commission’s Digital Agenda, consumers are already seeing a number of measures come into effect that are applicable to all 27 EU member states and safeguard them from falling victim to nasty phone bill shocks.

The new rules were rolled out in two tiers, with the first one coming into force in July of 2010, and the second one in July of this year. These new regulations force all European operators to implement a monthly default cap for data roaming of €50. Naturally, you are free to change that cap to whatever amount you wish, or opt-out entirely. In addition, the per minute cost operators can charge for calls made from abroad have been reduced to maximum of €0.35, and €0.11 for calls received.

And the pressure to reduce rates and increase competition is set to continue as the European Commission considers roaming a vital key for achieving a digital single market and has set the goal to make the difference between roaming charges and domestic charges close to zero by 2015.

2. More and more consumers are sidestepping roaming by using third-party services. Technological advancements driven by innovative technology startups ensure that roaming doesn’t have to break the bank. Thanks to services such as MaxRoam and Rebtel, savvy consumers don’t have to wait the better part of a decade for roaming to disappear.

Ireland-based company MaxRoam offers what can best be referred to as a “global SIM card”, which can be used with 900 carriers in more than 230 countries. Once you’ve ordered a SIM from the company’s website, simply replace your regular SIM in your phone from your UK operator when you land and start browsing the web like you usually do back home, but for about 70 percent less.

Third party VoIP services that integrate with your phone and work with mobile operators on your behalf to deliver cheaper international calls are also proving popular. Services such as Rebtel can be used from any phone; everything from smartphones to your old Nokia 5110. Typically, the minute rates are incredibly cheap – up to 95 percent lower than a regular operator’s – and can connect you even if you don’t have Wi-Fi or 3G.

3. Abolition of roaming acts as a competitive differentiator for operators. The telecom landscape is changing fast with carriers transitioning to a role not dissimilar to regular broadband ISP (Internet Service Provider), but for your mobile. As a result, the voice industry has been forced down an inevitable route of commoditisation. Most of today’s wireless network providers, with few exceptions, aren’t capitalising on the opportunity to stand out by providing value-added services or revamping their pricing schemes to differentiate themselves from their rivals.

However, there are exceptions. Sprint is one, and the other is Meteor; Ireland’s third largest mobile operator after Vodafone Ireland and O2 Ireland. In May of this year, Meteor announced they are to completely abolish roaming charges for all their subscribers. Under this arguably groundbreaking agreement, customers of Meteor will now ‘only’ have to pay the same price for calls and SMS while abroad in any country in the European Union as they do back home in Ireland. As if that wasn’t enough, they will also no longer be charged for receiving receive calls while traveling in the EU.

4. International 4G roaming agreements will further break down barriers. The roll-out of 4G could be the solution to roaming. Sprint, for instance, is the first operator to kick down the roaming door, effectively taking the first steps towards allowing users to make use of data services regardless of where they are in the world.

By signing an international roaming agreement with Digicel in Jamaica and Global Mobile in Taiwan, Sprint customers are able to leverage the global ecosystem for 4G services around the world. Hopefully, this agreement can act as a precedent, lead the way and encourage other operators to jump on the bandwagon sooner rather than later.

These recent moves and trends within the telecom industry demonstrate that, in the not too distant future, consumers will no longer have to feel inhibited when using mobile phones when abroad, allowing people to be connected to what matters wherever and whenever.

Andreas Bernstrom is the CEO at Rebtel, the second largest mobile VoIP provider after Skype (based on revenue). Prior to Rebtel, the Goldman Sachs alum was COO of Taptu, a leading UK-based mobile search engine, and TradeDoubler, Europe’s leading performance based marketing company.