Rod Ullens is CEO and Co-Founder of Voxbone, market leader in worldwide geographical, toll- free and iNum® telephone numbers. Voxbone enables Internet communications services providers, wholesale carriers and mobile and fixed national operators to extend their network reach internationally, rapidly and with limited costs. Voxbone delivers high-quality inbound communications from more than 50 countries and more than 4,000 cities, using its own private global VoIP network – the world’s first and largest backbone dedicated to voice-origination services.
Before founding Voxbone, Mr Ullens provided advice, training and seminars to European carriers, such as Belgacom mobile, KPN, France Telecom and Orange, as well as several European governments.
Rod Ullens holds a B.S. in telecommunication engineering from the University of Louvain in Belgium.
European roaming charges for Voice, and even more - for data, are exorbitant. The European Commission is trying to cap them, but prices are still prohibitively high. This is an opportunity for a new kind of service providers - the global MVNO who offers an ‘international SIM card’ with low international calls. The MVNO business model is allowed in India since 2009, but has not thrived there due to the incumbents’ stronghold on the market and lack of DoT appropriate guidelines. However, global MVNOs could still provide a much needed service to cost concsious travellers in India. Further boost to global MVNOs is the Number Portability regulation which has been in force since 2011. Global MVNOs, with their innovative services and low prices may well bring about the “Fall of the Roaming Empire”.
International MVNOs – New opportunities in a global niche
by Rod Ullens, CEO and Co-Founder of Voxbone
Ever since the first cellular networks were set up in Europe, there was only one direction for the development of retail prices. To the delight of consumers, the average price per minute on a cellular network has been coming down constantly over the past few years. The often quoted declining margins for operators seem to have an effect on all business areas, with one exception - roaming charges are still extremely high across Europe. Nowadays frequent travellers need to have an eye on their roaming charges not only for voice minutes but also, and especially, for data traffic.
Traditional operators usually don't provide attractive roaming plans for a simple reason. It is not because frequent travellers are a niche market that doesn't justify customised offers. It is because the roaming business is very lucrative and provides high margins for voice and data traffic from the average mobile subscribers. For a long time customers were led to believe that roaming charges were not under the control of their operator and the excessive costs had to be accepted. Subscribers simply added the additional fees to their holiday budget or the costs of their business trips without much argument.
This attitude is now changing, especially since the demand for data traffic keeps on growing. Smart phones and new mobile devices such as tablets are driving up the requirements for high bandwidth and large data volumes. However, the current roaming charges in Europe of up to 3000 EURO per gigabyte are way out of proportion, considering that the production cost for the operators is less than one EURO per gigabyte. The European commission is proposing a retail cap of 900 EURO per gigabyte from 1st of July 2012 and 500 EURO from 1st of July 2014. This is a very moderate retraining approach and an indicator that the roaming price gouging by the big mobile operators is not going to change any time soon. Consumers who are looking for transparent and flexible phone plans that are not restricted by geographical location won't find those in the standard service portfolio of the established operators. In order to assure affordable and predictable voice and data charges at home and abroad, they will have to look beyond the standard mobile phone contracts.
The MVNO roaming market
Mobile Virtual Network Operators (MVNOs) have increased their market share massively over the last couple of years. New business models, creative marketing strategies and competitive rate structures are the foundation of this ongoing success. While their customer base has been growing continuously, they usually were not considered a threat to established operators. Besides, the traditional mobile operators would always receive their cut of the revenues for providing the infrastructure. In recent times however we see a new kind of MVNO on the rise, the global MVNO. Companies like Maxroam and Truphone are addressing a market that has been neglected and overcharged by the established players for a long time: the roaming market.
The ‘International SIM card’ has become the buzzword for price-conscious frequent travellers. MVNOs are gearing up to it. There are several reasons why they are very likely to succeed in this:
Smaller operators that don't have their own network infrastructure are in a good position to negotiate roaming agreements in different countries with different operators and they can adapt more easily to the requirements of their partners. They have more room to prioritise the interests of the consumer over the interests of the company.
Many MVNOs are startup companies with the ability to change and with a strong drive for innovation. Flat hierarchies and modern structures within these companies lead to new services and business models. They are also more likely to embrace and implement new technologies such as Voice-over-IP.
International SIM cards are a new concept for frequent travellers and globetrotters. Time-proven marketing strategies from the established players are not effective in this niche market. MVNOs have more room to experiment with new ideas since they are not aiming to protect legacy revenue streams.
Additional SIM cards are more likely to be accepted by the consumers as the penetration rate of mobile devices keeps on growing even above the mark of 100% in Western economies. Tablets, laptops, smart phones and dual SIM phones can all be equipped with additional SIM cards.
“Tru” was founded in the UK in 2006 and started off to challenge the conventions of using mobile phones abroad. Since then, they have been developing numerous VoIP applications for different platforms among which the world's first VoIP application for the iPhone (launched in 2008). The major advantage of their applications was a two-pronged policy. They enabled cheap international calling over 3G and WiFi data networks as well as through traditional GSM calls using an international network of local access numbers. The Tru SIM saw the light of day in 2010 and came along with a re-branding campaign of the service that was formerly known as ‘Truphone’. With innovative advertising campaigns about the ‘Fall of the Roaming Empire’ on in-flight magazines, Tru is aiming straight for their international target markets. Other companies that are active in this niche market are Maxroam, Yackie Mobile, Seven Telecom, and PicCell Wireless.
Global MVNO for India
Global MVNOs offer their services to consumers all over the world and are also accessible from countries that do not have a developed national MVNO market. India has opened its telecommunication market for MVNOs in 2009 but the market is still dominated by the traditional wireless carriers. These operators are highly competitive and the per-minute fees don't leave much room for arbitrage, a challenge for operators that don't possess their own infrastructure.
Another important factor is mobile number portability for Indian mobile phone users. Phone numbers are very sticky and without the option to port a number from one operator to another, it is very difficult for new providers to lure customers away from the established players. Mobile number portability has finally been made available in India in 2011 and will certainly help to make the market more attractive for local MVNOs. In the meantime, Indian residents that travel frequently abroad could still make substantial savings by taking a second mobile subscription from a global roaming service provider. Most of the above mentioned service providers also offer their services to the Indian market.
MVNOs are on the rise all over the world and the market growth opens up opportunities for VoIP providers of all kinds. The competitive advantage of global MVNOs besides their commercial position and their marketing strategy is the open approach towards new routing strategies including the use of IP calling. This poses a serious threat to the international roaming business of the established mobile operators. It remains to be seen whether they can shift their strategies and defend their grounds on the roaming market. Either way, there will be a further increase of competition and a decline of roaming revenues. For the consumers - it is about time for this to happen!