status of data roaming
DESCRIPTION
Flat-rate Pricing for International Mobile Data Roaming Heikki Hämmäinen , Hannu Verkasalo , K.R. Renjish Kumar EuroCPR2009 Sevilla March 31, 2009. Regulation approved by EU on March 2009 For wholesale tariffs only Volume-based wholesale price cap of max 0.50EUR/MB - PowerPoint PPT PresentationTRANSCRIPT
Flat-rate Pricing for International Mobile Data Roaming
Heikki Hämmäinen, Hannu Verkasalo, K.R. Renjish KumarEuroCPR2009
SevillaMarch 31, 2009
Status of Data Roaming
• Regulation approved by EU on March 2009– For wholesale tariffs only
– Volume-based wholesale price cap of max 0.50EUR/MB
• Commercial launches of flat-rate data roaming exist– Bridge Alliance (11 Asian operators) launched a monthly(?) flat-rate of 30USD a
month for 15MB and 60USD for40MB
– April 2008 Conexus Mobile Alliance (7 Asian mobile operators) launched a daily flat-rate varying in the range of 10-22USD (also unlimited volumes!)
– July 2007 Vodafone launched a Euro flat-rate service for business travelers with laptops, 12EUR per day, max 50MB (and a wholesale price of 0.50EUR/MB)
– May 2008 Orange launched a daily Euro flat-rate of 12-15EUR per day, max 50MB.
• Commercial experimentation focused on business users
Research Hypothesis
• Market-based mechanisms will not produce flat-rate data roaming
regulatory intervention is needed
• Volume-based price cap will not trigger the Internet machinery
some kind of flat-rate-based price cap is needed
• How about a regulated daily flat-rate?
Flat-rate Preference in Internet Access
• Mitomo et al. (2007) demonstrated the existence of flat-rate preference among Japanese mobile users
• Observations from the Finnish market– Rapid growth of fixed Internet (ADSL) started at launch of flat-rate (1999)
– Rapid growth of mobile Internet started at launch of flat-rate (2007)
– Laptops generate 98% of mobile cellular data traffic (via USB stick modems)
– Flat-rate has not spoiled the profitability of operators-rate
• Rapid growth of Internet roaming will start at launch of flat-rate?
0,050,01
Usage-based
0,59
0,07
Block-priced / Flat-rate
-89%
-89%
0,0
1,0
0,5
Average MB /user / day
Data roaming prices are detrimental?
Home
Roaming
Domestic data pricing plan from operator
Impact of Roaming Context on Usage?
+256%
+191%
+31%4,2
1,2
8,0
2,82,11,6
ClockCameraMaps
5,8
1,0
3,6
1,2
3,53,6
20,0
25,0
30,0
Messaging
Average minutes/ user / day
-67%
Roaming
Home
-83%
18,1
15,3
Browsing Games
+18%
-3%
0,0
10,0
15,0
Music
5,0
Application usage
AVERAGED OVER ALL DAYS
Dataset: 578 panelists and 425 261 application sessions at home, 117 panelists and 8 266 application sessions abroad, Finnish smartphone study 2007
1,7
1,0
Inbound
2,1
1,3
Outbound
-40%
-37%
0,0
1,0
2,0
Average calls/ user / day
Voice call usage
8,0
4,4
6,7
Inbound
3,2
4,0
Outbound
Home
Roaming+53%
+27%
0,0
2,0
4,0
6,0
Average messages/ user / day
SMS usage
0,20
0,15
0,07
Inbound
0,07
0,14
Outbound
+58%
+89%
0,00
0,05 0,05
0,10
Average messages/ user / day
MMS usage
AVERAGED OVER ALL DAYS
Dataset: 254 panelists and 58 751 calls at home, 30 panelists and 624 calls abroad, Finnish smartphone study 2007
Dataset: 577 panelists and 116 789 SMSs at home, 105 panelists and 2 850 SMSs abroad, Finnish smartphone study 2007
Dataset: 311 panelists and 1 839 MMSs at home, 11 panelists and 56 MMSs abroad, Finnish smartphone study 2007
Obstacles of Flat-rate Data Roaming
• Roaming industry structure: operators depend on each other no first mover advantage regulator needed
• Threat of Internet: concern of the loss of voice revenues operators’ ”no hurry” strategy
• Radio access bottleneck: spectrum shortage and poor radio operators’ ”business users first” strategy
• GRX transport bottleneck: complex architecture higher transit prices than in the Internet backbone
• Traffic segmentation: difficult to discriminate laptop vs handset operators cannot price handset traffic reasonably
But, no hard obstacles exist!
European Solution: Daily Flat-rate Proposal
• Pricing structure is (here) more important than price level– Regulation of wholesale tariffs is not sufficient
• Daily flat-rate for data roaming looks promising
• Wholesale IOT price cap– Initially 5 EUR per day for basic data rate (up to 384kbs in 3G)
– Relative to the tariff basket of European domestic mobile flat-rates
– Quota-based traffic restriction, initially at 100MB per day
• Retail price cap– Twice the wholesale price, i.e. initially 10 EUR per day
– To secure fast deployment of flat-rate to consumers
Why should operators like daily flat-rates?
• Simplicity (already tested on the market)
• Roaming traffic increase revenue increase
• High profitability compared to domestic data traffic• E.g. average domestic monthly flat-rate / 30 = 0.35EUR (in Finland)
• Price cap easily covers the roaming costs of home and visited operator
• Balance between home and visited operator
• Manageability of bottleneck resources• Traffic quota allows prioritization of the radio resource usage
• Market-based management of higher bitrates (initially above 384kbs)
• Simple book-keeping between home and visited operator
• Anyway, roaming traffic << domestic traffic !
Conclusion
• Europe is badly fragmented to roaming areas
• Internet roaming can become the issue that terminated the European success in the global mobile market
• Unless, the Commission uses its power wisely to drive the Internet innovation machinery through– mobile flat-rates in Europe (roaming and domestic)
– roaming flat-rates outside Europe
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THANK YOU!
System Dynamic Model
EU non-dataroaming tariffs
EU-external volume-based roaming tariffs
Data roaming profit
Internet VoIP
Flat-ratepreference
Domestic monthlyflat-rate data tariffs
EU data roaming cost
Data roamingtraffic
Data roaming days
EU data roamingrevenue
Capacity investments
Service quality
Domesticsubscribers