Sunday, 2 May 2010

What Apple's iPad tells us about mobile roaming

At this moment I'm working on various jobs that all are linked around the theme Machine to Machine communication. Most of it is for clients so I can't be too open about it. However the iPad and it's roaming deals give some good food for thought on how difficult it is to get a good roaming deal.

Apple is without a doubt one of the behemoths of the mobile world. It can demand that AT&T changes its game in exchange for an exclusive deal on the iPhone. But it can't when it comes to roaming. Steve Jobs just isn't powerful enough (hoping to tease him to prove me wrong.) (Updated to make it clearer for the reader that roaming on the iPad isn't a game changer)

Some people thought that they might come up with a game changer for mobile roaming as well. The best example I have found was from the Macrumors forum and pointed to me by Sam, who is quite the roaming expert himself. A chap called Mike Ruggeri said the following:

I just went to the Apple Store to check this all out. The Apple tech person told me that the system is open. So you will not be moving micro chips around. Instead, you will cancel your AT&T plan before traveling and when you get to your travel destination, just click on settings and the iPad will tell you which national companies there offer a monthly plan. You can choose one, see what their rates are, and if your like the rates which are based on national rates and not huge AT&T international roaming rates and huge per minute charges, you can then just click on the monthly rate and company you like and you are in. No looking for stores to find microchips and swapping out chips.

It sounds so simple, right? But we now know it isn't this way as AT&T has just said how much it will really be:



  • 20 MB of data for 30 days for $24.99 (ex. VAT)
  • 50 MB of data for 30 days for $59.99
  • 100 MB of data for 30 days for $119.99
  • 200 MB of data for 30 days for $199.99
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/04/30/businessinsider-heres-how-much-itll-cost-to-use-your-ipad-3g-overseas-2010-4.DTL#ixzz0mmSNbiTH

This is hideously expensive, though not necessarily more than what you would pay under EU regulation, which currently stand at 1 euro per MB excluding taxes, going down to 80cent this year and 50 cent next year. (Attention: Pat rightly informed me in the comments that this is the wholesale charge that networks charge each other. Your network may charge you any arbitrary amount as the retail charge.) Yes, contrary to the situation with voice and SMS where the retail charge is capped, with data someone could introduce a 10 euro per MB charge and still follow the rules of the EU. )

Unfortunately it is impossible for Apple to negotiate roaming for its customers in various nations itself. If it could it would be able to negotiate domestic rates which could according to Ericsson go as low as 1 euro per Gigabyte and still make the network a profit. Apple now has to go through AT&T for it's USA customers and has to accept any price AT&T is quoting. 

The reason it seems that Apple can't use its purchasing power to negotiate better deals or to open up the market so that customers can negotiate a local deal by selecting an operator on screen when in another country is that it isn't a member of the GSMA. Roaming deals can only be negotiated by members of the GSMA it seems. And to be a member of the GSMA you have to have a spectrum license in some country. Without a license no GSMA membership and without GSMA membership no roaming deal. 

The need for having a spectrum license to get a roaming deal is quite paradoxical. If you have spectrum in an area, why would a spectrum license holder need roaming. It is when you don't have spectrum that's when you need roaming. 

There is quite a bit more to discuss in this area, but I've got some more stuff to do :-) Some things to think about are the demands for reciprocity that are the basis for roaming deals between networks and the transparancy in prices for roaming within the GSMA. Want to know more? Have a look at this paper by the OECD and this one by the Dutch OPTA and at my simple proposal for mobile roaming 

3 comments:

  1. Your note on Eu roaming is wrong
    That pricing of €1 per meg is a wholesale carrier to carrier rate, its not a retail rate between customers and carriers
    For example my carrier charges me €5 per megabyte for roaming
    there are now legalities on data roaming like there are on voice.

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  2. Pat is right... it's the wholesale charge that is capped for data and not the retail charge. So all it does is make sure the network you are roaming on has it's profits limited. Your home network doesn't have its profits limited...

    Text changed to reflect comment

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  3. @Rudolf
    I am seldom wrong :-)
    But seriously,The carrier to carrier pricing was enforced to create a "wait and see" attitude from the regulators, they want to see if the carriers can now self regulate data, its also worth pointing out that even if this was law it would be only for Eu citizens travelling in the EU

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