Barry Marron, Director, Marketing

Barry Marron, Director, Marketing, Openet

This post is by Barry Marron, Director, Marketing, Openet

Last week, thousands of people from all over the world flocked to Sochi, Russia to observe and participate in the 2014 Winter Olympics. It is likely that everyone in attendance will want to make the most of their experience by streaming video of their favorite event or to call home and report back on the standings.

However, Thomas Gryta at the Wall Street Journal was quick to point out that most telecom companies neglected to drop roaming fees for their customer’s attending the Olympic Games, making it difficult for people to use their mobile devices. So how can operators hope to go for gold in customer satisfaction if a decent portion of their customers may suffer from bill shock once the Games are over?

Cutting roaming rates for special events such as the Olympics may be a (far-fetched) gesture of good will, but you will still get customers who switch off data roaming in favor of charging $10-a-day to their hotel rooms for Wi-Fi. The main reason why a vast majority of travelers switch off data roaming and opt to use Wi-Fi instead is the fear of uncontrolled charges; most simply, they don’t know how much it’s going to cost them to actually use their devices.

Rather than simply cutting roaming rates, operators should embrace cost transparency and clear, real-time communications as the solution. Many operators are helping customers overcome their fear of data roaming by offering clear, upfront usage offers. For example, operators could offer their traveling customers a data roaming pass for one week of data – up to 500MB, perhaps – for say $20. When the 500MB or the one week is used up, the customer would then get a notification in real-time that their data has been used up. They can then decide (again, in real-time) to buy a new pass or not.

The abolition of roaming fees by the European Union probably won’t be realised for several years, but in the meantime, operators all face the problem –  how to get people to start using data roaming. Education and clear communication will help remove the fear of unknown charges, something that is key to increasing data roaming usage and revenues.

There are some trends which show a change in consumer attitudes and behavior. For instance, one European mobile operator just announced a 70 per cent increase in the use of data roaming in the last year. The main reason for this staggering increase? The operator delivers options for customers to get on the mobile Internet while roaming in a simple, inexpensive and safe way – no hidden costs and complete transparency helped customers lose their fear of roaming costs. We only hope that more operators will soon take this approach to data roaming in order to go for customer satisfaction gold year-round.

Comments on: "Going for Customer Satisfaction Gold at Sochi 2014" (1)

  1. Unless carriers recognize the immutable horizontal, digital, competitive forces crashing over their vertically integrated and silo-ed business models they will underperform. Rapid growth of mobile and sector consolidation over the past 2 decades has masked the inefficiencies of both the vertically integrated service provider model and the lack of coordinated, rapid, roll-outs of new technology and services (both in the TDM and IP worlds). Furthermore, carriers must adopt pricing models which reflect marginal cost and the rapid obsolescence of capital and operating expenses at every layer and boundary point. The latter is what the article is suggesting but doesn’t come out and directly say.

    We only need to look at one-rate plans in the US, SMS interconnection and reduction of intercarrier settlements (and many, many more examples in the 1980s-90s) to understand how dramatic demand elasticity can be. In the 1980s-90s there were 3 principal waves of digitization in voice, data and wireless. In each case the cost per unit dropped in excess of 99% and pricing followed suit. The resulting demand elasticity, though, saw sector revenues always increase 5-20% annually and even incumbents grew; despite their protestations. Why are these principles forgotten?

    Demand elasticity comes in 3 forms: normal (as when something costs half as much it gets used 3+ times more), private to public (as when the top and bottom quintiles come back onto the public service provider networks, resulting in further scale), and last, but not least, application (as when 3rd parties conjure up new ways for traffic to flow and capacity to be consumed; all the while the carriers collect tolls). None of these elasticities were ever appreciated or understand ex poste, let along ex ante. And the latter elasticity has always proved the greatest.

    Time for service providers to go back to the recent history books!

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