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Guide for NRAs on International Mobile Roaming Cost analysis – Technical Paper

T-Mobile’s anti-roaming-charge strategy is a competitive weapon

In the USA, on 10 October 2013, the president of T-Mobile, USA, John Legere, announced that
T-Mobile USA would abolish additional roaming charges for texting and mobile data in over
100 countries, with a flat global rate of 20 cents per minute for users who make voice calls while they
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are abroad on their "Simple Choice" tariff. He stated :
"The cost of staying connected across borders is completely crazy. Today's phones are designed to
work around the world, but we're forced to pay insanely inflated international connectivity fees to
actually use them."

T-Mobile estimated that if the average user operates their phone abroad in the same way they do at
home, charges of up to USD 1'000 a day are possible, causing 40% of customers to turn off data
roaming completely. Legere noted:
"It doesn’t have to be this way. The truth is that the industry's been charging huge fees for data
roaming. But what's most surprising is that no one's called them out – until now."

In the USA, T-Mobile is using retail price differentiation as a key competitive weapon. It has added
some 650'000 new subscribers just in Q3 2013 in the USA with roaming playing a major part in this
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strategy.

Two further examples come from Africa:
Airtel has progressively eliminated roaming charges

In Africa, Airtel (ex-Zain) with its One Network offering launched in 2006 began to eliminate IMR
charges for its customers, by covering 16 African countries on its own network. With this offer,
customers pay domestic rates for outbound roaming calls and are not charged for incoming calls. It is
also possible to use visited network recharge cards, whereby Airtel makes incoming calls free, for up
to 100 minutes of use, for 20 countries. Outgoing calls are charged at local rates with a 30% mark-up
using current exchange rates.

MTN score on SMS and data while Vodafone has 'One Africa Family'

Also in Africa, MTN operates its "MTN One World" offering for send/receive SMS and browse/use data
at a unified call rate while visiting countries where MTN operates.

In a similar vein, Vodacom has its "One Africa Family", offering free incoming calls in 10 African
countries and a default rate when roaming on Vodacom network outgoing calls.

One question is – how would such offers work when the consumer has unlimited calls on a flat domestic
subscription? For instance, the operator 'Free' in France offers for EUR 19.90/month unlimited domestic
calls, fixed and mobile, including fixed line calls to 100 countries. Overall, call volume can be expected to
increase – and so revenues and incomes to the operator may climb rather than be throttled when
visiting another country. Certainly 'Free' is pursuing this strategy successfully.

Technology advances are also making free and low cost roaming possible – especially IP-based voice
using data connectivity (VoIP). For instance, IP voice for a Wi-Fi connected handset is offered at low
prices (down to free) from anywhere in the world to its home country by the Norwegian MNO, Network
Norway, which is part of the Tele2 Group. Its Mobile IP service for both mobile and fixed line
terminations in Norway uses a downloaded IP app. IP voice over LTE (VoLTE) can only expand this trend.

9 http://www.techweekeurope.co.uk/news/t-mobile-usa-roaming-129287
10 Financial Times, Lex Column, The wages of SIM, 8 November 2013.

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