Storming the ramparts of roaming

VoIP carriers attack last bastion of mobile telecoms cost

April 16, 2012

VoIP carriers attack last bastion of mobile telecoms cost

“As high mobile telephony and data costs are steadily whittled down by regulation and innovative Voice over IP-enabled communication models, exorbitant roaming costs are among the last remaining bastions of high mobile charges,” says Rob Lith, Director of Connection Telecom.

A world-wide phenomenon, exorbitant roaming costs came about because of the price-making power of mobile market oligopolies. But even as these powerful companies lose their hold over pricing, they are digging in their heels by keeping roaming charges as high as possible for as long as they can.

MVNOs
But the VoIP offensive is taking several forms, and it is steadily winning the war. In one battle falling to VoIP, smaller operators are making quick inroads in cross-border roaming markets with low-cost data-based mobile telephony.

Mobile virtual network operators (MVNOs), which already use other operators’ networks to avoid the cost of building their own networks, are making further innovative use of host networks by offering cross-border VoIP telephony on them.

Eschewing call minutes for data traffic, their cost is minimal, as it excludes the per-minute roaming charges they would have had to pay host operators for use of their in-country networks. Their only stock in trade, besides use of a network, is a partnership with a SIM card company, which orders data SIMs manufactured in small production runs from Far East manufacturers.

In another VoIP-enabled attack on roaming costs, VoIP carriers offer their customers a facility to route calls to roaming employees through a local 087 number (called ‘forward function’).

Calls to and from roaming mobile phones enter the cost-free long-distance VoIP network via a local access point and break out onto the public network again in the destination country, via a local SIM card – for a total cost of as little as a third of a normal roaming call.

Regulation
For the past decade at least, VoIP offered little refuge for business travellers in territories like Europe, with roaming voice charges up to five times higher than domestic rates on average, and data rates 500 to 1000 times higher (source: Wikipedia).

This was the case despite a sector enquiry initiated by the European Commission in 1999. Finally, new regulations introduced the “Eurotariff” in all EU member states, removing exorbitant data charges and, by and large, introducing voice relief as well – thus making VoIP possible as a cost-saving communications model again in this territory.

Further refinement
As subsequent enquiries still found prices to be too high, further refinement followed. Among others, it is envisaged that the price difference between domestic and foreign calls will be zero by 2015.

In addition, 3G data roaming prices will be abolished completely over the next few years, in favour of flat rate data charges. EU roaming is likely to flourish under this increasingly vigilant and sophisticated regulatory regime, but it is also possible that other dynamic economic territories (such as SADC, the East African Community and South East Asia) can likewise benefit from flat rate pricing.

And even when that day arrives, the aforementioned emerging business model involving MVNOs and SIM providers can still be viable, given the low capital and operating costs of such arrangements.

Proven
With mobile roaming costs remaining high, VoIP remains an effective and quality-proven means of sending calls over the lowest possible route. Customers should look into hosted enterprise VoIP solutions with guaranteed relief from the pain of roaming.