Right to roam

Roaming is a complex aspect of telecoms, but the GCC is moving in the right direction
Adel Darwish thinks retail roaming prices could fall by 30%.
Adel Darwish thinks retail roaming prices could fall by 30%.

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When telecom executives from across the region met up at the annual Roaming Mena conference in Dubai last month, they had plenty to talk about.

Indeed, while regulators in many of the region’s countries often come under fire for the slow pace of regulatory change, the regulators in the GCC have made a concerted effort to join forces in a bid to reduce the wholesale and retail cost of roaming in the Gulf.

Much of the momentum for change stems back to initiatives from a memorandum of understanding (MoU) drafted by the Arab Regulators’ Network (Aragnet) in 2009, which called for mobile users to be protected from “unduly high prices charged for international roaming.”

While the MoU allowed operators to opt out of the section that calls for a cap on roaming costs, telcos were required to increase clarity of roaming options available for users, and most mobile users are now familiar with the text messages they receive when entering a roaming zone.

“On the back of that we have seen a lot of operators take some steps in terms of promoting transparency,” says Kelly Tymburski, an associate at the TMT office, Pinsent Mason.

While Aragnet’s proposals for a cap on roaming rates have not yet been accepted across the MENA region, countries in the GCC have accepted the need for change. According to Lenka Glynn, partner and head of telecoms, media and technology for the MEASA region, Pinsent Masons, the decision by the GCC steering committee in June 2010 to impose caps on roaming fees was “one of the most tangible steps taken” to reduce roaming costs.

Adel Darwish, manager of market and competition, TRA Bahrain, says that the resulting GCC Roaming Regulation essentially places a cap on retail and wholesale roaming rates charged by operators in the Gulf.

The regulation is being introduced in two stages. The first step became effective in September 2010, and the second step will be introduced in June 2011. Once implemented, Darwish is optimistic that the regulations could lead to a reduction in roaming costs of between 30% and 40%, although he stressed that the TRA would need to see the results of the implementation.

Darwish added that the main purpose of the regulation is to protect consumers from being overcharged when they roam. Christine Beylouni, director for regulatory, roaming and external affairs, Samena Council, says that if the GCC regulation follows its European predecessor, the price cap will be reviewed – and possibly reduced - every year.

“The Council of Ministers of the Gulf mentioned that these prices applied in September 2010 and will be decreased further to reach another decreased cap. “It is like the European Commission regulations from 2007 that are reviewed every year. In Europe the roaming prices have been decreased by around 70% since 2007. They even want roaming prices to reach the same as local prices by 2015.”

But implementing regulation across the GCC countries, which each have different legal systems and regulators, has not been easy. “Unfortunately, due to the fact that the telecom laws of each country, and the powers of the regulators in each country differs, the mechanics of implementing a GCC-wide decision differs from one country to another,” Darwish said.

So far, the UAE has implemented the regulation, and other countries including Bahrain, Saudi Arabia and Oman are understood to be in the process of implementing it. Darwish said that there had been some delays in Bahrain owing to concerns raised by operators, which the regulator is looking at. “We will engage with the industry in that process and see what that concern is and try to make sure that the final decision approved by the TRA does not harm the industry or the consumer,” he said.

While there is a lack of clarity about how exactly the implementation of the regulation will be enforced, Darwish said that there was another working group meeting scheduled for the end of January.

“One of the agenda points is to talk to the involved parties and see why they haven’t implemented the decision so far and to discuss the next stage of the decision, because it doesn’t stop here.”

The next phase of the regulation will see the working group look at the cost of outgoing calls, SMS, MMS and data roaming. However, Darwish stressed that the working group will ensure that the price caps are fair to operators as well as consumers.

“We can’t bring the roaming prices of operators down to the floor because there still needs to be competition,” he said.

The GCC roaming regulation has drawn some criticism, with some operators questioning how it will be implemented across the different GCC countries. However, not all operators have been impressed with the regulation. One telecom professional from a Gulf operator, who preferred not to be named, told CommsMEA that he thinks there is a “serious lack of coordination” in terms of the implementation of the regulation.

“It seems that though it was agreed centrally, when it comes to local implementation, everyone has taken a different path, so obviously there are operators that are faster to implement it, and others that are slower to implement it,” he says. Furthermore, he adds that the operators that are faster to implement the regulation face the biggest hurdle from a financial standpoint by having reduced their rates earliest.

He also thinks the regulation should have been better enforced, explaining that “very few” of the GCC’s operators – possibly less than 50% - had implemented the first phase of the regulation, a situation that could be compounded with the second phase of the regulation due in just a few months.

He says that he is also skeptical about the benefits the regulation will bring, and questions the impact of similar regulations that were passed in Europe in 2008. “This is actually showing in Europe where regulation was introduced in 2008 but so far it doesn’t look like the customers have dramatically increased their usage,” he says.

“Regulation is not always something that the operators see positively, because there is a very important school of thought that says a free market delivers better for customers and not a regulated market,” he adds.

“Usually, operators are discussing more on a one-to-one basis, commercial agreements that unlock opportunities to encourage usage.” The spokesman points to some positive developments in roaming from some of the region’s operators as evidence that self regulation could offer an alternative to external regulation.

“Two or three years ago there was a very complicated standard of pricing applicable everywhere. “Now most of the operators have moved away from that approach to introduce standard pricing, promotions, and initiatives,” he says.

Samena Council’s Beylouni adds that while self regulation might have failed in Europe, there are signs that some operators in the MENA region are forging competitive bilateral agreements, with significant cost savings being passed on to end-users. Indeed, in the past few years, operators including Zain, Etisalat and Du have launched attractive roaming initiatives that simplify charging – and offer lower rates for many calls – while roaming.

Data roaming

While the situation for roaming voice services appears to be improving, mobile data users are still likely to find some nasty surprises on their bills when they return from a holiday or business trip.

The Gulf-based telecom professional who preferred not to be named, says: “When it comes to roaming in the GCC was definitely the year of data. This was something which had been experienced earlier by operators from different regions such as Far East Asia and the West but had not reached these countries yet.”

But with Apple’s iPhone growing in popularity in the region from 2009, and with many operators investing heavily in 3G and HSPA+, operators in the Gulf have experienced a surge in data use.

“Moving forward, there will be more challenges in terms of these bill-shocks and unless operators can find some counter measures it could become a bigger problem,” he adds. Lenka Glynn, of Pinsent Masons, points out that overpriced roaming charges are not just limited to the Middle East, but are a worldwide problem.

“Very often the margins charged by the operators are not always reasonable and this is happening even in the markets where mobile competition is established,” she says.

For Glynn, part of the problem is not just high wholesale prices, but also a lack of transparency about the prices passed on to the end-user. The fact that most people fail to take roaming costs into consideration when they choose a mobile package also gives operators a freer hand to charge higher fees.

“Many customers don’t seem to take into account roaming charges when they are choosing a bundled mobile offer. We look at the price of domestic and international calls and SMS,” Glynn says.

“There is a lack of transparency in international roaming charges, hardly anyone understands how it works, or the difference between roaming and a regular connection. There is also a very low awareness of alternative solutions such as buying an alternative sim card or calling card, or VOIP,” she adds.

“All these reasons combined mean there is a lack of market pressure on the operators to actually lower the retail rates.” Despite this, Glynn and Tymburski believe that there has been some significant progress in the Middle East.

“We have definitely seen some tangible steps being taken in the region, in particular with respect to transparency,” Tymburski says. She points to SMS notifications sent to users when they enter a roaming zone, and regulators’ adoption of more comprehensive roaming regulations, as particularly encouraging signs.

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