LONDON (June 14 ^th 2017) – IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, today provided analysis on the introduction of ‘Roam Like at Home’ regulations across the EU and EFTA. According to new IHS Markit Operator Multiplay and Mobile Media Intelligence Services analysis, the wholesale roaming data price cap will apply directly to prepaid users and set the limits for post-paid users Fair Use Policy. However, caps on ‘Roam like at Home’ are set generously and moderately priced, and unlimited data tariffs will leave operators exposed to data costs twice the total bundle tariff. Volume limitations do not apply to voice and SMS as risks of abuse are considered lower.

Rules will be reviewed every two years and an interim report into the impact of the regulations is due by December 2018. Many operators have already launched ‘Roam Like at Home’ tariffs; the impact on tariff structure will vary between markets with some markets showing indications of price rises and some showing no movement.

Consumers to benefit

This will slash roaming costs for over 670 million mobile subscriptions across the EU. While immediate losses from high-margin roaming costs may be balanced somewhat by growing use, the long-term impact is hard to quantify and operators expect some negative impact to revenues.

Operators could take a hit on some tariffs

“The cost structure of the ‘Roam Like at Home’ regulations has some intriguing quirks,” says Seth Wallis-Jones, senior telecoms analyst at IHS Markit. “Users on mid-range cost or unlimited tariffs potentially could cost operators twice the revenue that they generate, if the wholesale costs paid by operators are similar to rates set by the EU wholesale data price cap.”

With the wholesale cap set to fall rapidly, that may be the case in coming years. In that case, relatively high end, highly mobile users who travel regularly around the EU will either be effectively subsidised by operators or see the cost defrayed onto the mass market.

Additional pressure on operator revenues

Average Revenue Per User (ARPU) in European markets has long been under pressure, with IHS Markit tracking a fall in the average across 21 European markets from $37.66 in 2008 to $20.93 in 2016. While lowering the risk of consumer “bill shock,” this latest regulatory intervention will put additional pressure on ARPU. With limited room for core subscriber growth, forecast by IHS Markit at four percent in total over the next five years, operators will need to build on uptake of non-core services to generate additional revenues.  In the consumer segment, the falling cost of data has itself created the conditions for potential new services with home broadband replacement and subscriber video on demand services now tenable over mobile networks.

“The impact is likely to be more significant on smaller, local operators,” Wallis-Jones adds. “They will lack the international scale which delivers roaming on their own networks, supports bargaining leverage for cheaper roaming agreements for their customers, and for deals to be struck for visitors to default to roaming on their network. However, they may conversely benefit from the wholesale rate caps, which could, at some points in the process, level the playing field when negotiating roaming rates.”

Please see linked document for further, in depth analysis.

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