July 1st 2013 marked the first day of a new regime of roaming charges across Europe.  Reaction to this has been mixed and has varied from positive (EU Roaming rates slashed) to negative (EU Roaming rates slashed).  Opinion varies from those that see this as a step on the road to a more customer friendly approach to travelling abroad to those that highlight the almighty cost that is still associated with roaming charges within Europe.

Before the advent of the smartphone the whole question of mobile consumption abroad was a less controversial issue.  If you made or received calls away from your home country you knew that, broadly speaking, you were going to be charged considerably more.   You either waited until you returned or accepted the cost.

Smartphones changed this.  Many of the apps that run on smartphones rely on constant communication between the phone and the network to operate.  Meanwhile people have become more reliant on their smartphones to communicate and get informed.  And whilst consumers might know the cost of a call, which is based on time, it is much harder to understand the volume of data that they are using on a daily basis.

All this matters for operators because, whilst they might perceive today’s changes as bad news from a revenue perspective, they probably should not.

First many operators are writing off huge amounts of revenues to customers experiencing ‘bill shock’ – in other words those that mistakenly use large volumes of data and get a huge bill.  To retain happy customers, networks often write off these costs and savvy consumers are becoming aware of this.  A consumer can think of almost any scenario through which a large bill could be created whilst abroad and it is easier for the network to write off the cost as goodwill than continue to pursue a customer for the charge.

Secondly, vast bills for roaming are perceived as unfair by customers.  Why should they receive such huge bills for simply using a phone abroad?  Operators risk alienating customers and being seen as a fair target for fraud, non-payment of bills or other revenue risking activities.  Whilst it is not true that every individual facing a large roaming bill will then bear a grudge against a mobile operator driving them to then defraud the network, the more that fraud against operators is seen as a ‘victimless crime’ the more likely that this activity takes place.

The lack of fair and meaningful tariffs for international roamers and the consequent EU legislation has painted operators as laggards in customer service, holding onto a wholly unreasonable cash cow for too long.  The first operator to deliver more transparency in mobile roaming rates, particularly for data, may find they benefit, not just in additional revenue gains but less revenue in lost to fraud and write offs to customer goodwill.