Wednesday, March 29, 2006

What good might come from the EU Roaming fight?

A number of others have posted comment and reported on the European Commissions stance on Roaming tarrifs. As someone who pays his own phone bill I am happy to see a fair market created for roaming. I also hope that rather than hold back innovation as the Networks and the GSMA have claimed that such regulation will do we can see a positive attitude taken by the networks.

Just as Y2K gave CIOs the power to ask Boards to sign off investment budgets perhaps we will see the more enlightenend mobile networks take to opportunity to fix the underlying issue in roaming, namely poor billing systems. If Messers Akhavan, Badrinath and Geitner could show some leadership and convince their Executives to sign off on a total one off replacement of ALL billing systems with a single system perhaps we could see mobile fulfill its potential. With a new billing systems what we will see is a resolution of the wholesale system that at the moment sees calls made to two people holidaying in Spain go all the way back to the home country before connecting just so the payment can be settled.

Now in the early days when few had phones and not many of those travelled with them the current system was created. Now with most having phones, and none of us wanting to be seperated from them we have a system that is in needed of replacement. However because the Networks have a long investment list thanks to the roll out of 3G the ability to replace a billing system is limited. Think of it as someone who has moved into a new house and needs to replace the central heating system, this is something that costs alot to do, causes vast unrest in replacing pipes etc. and in turns oif return on the investment is a very long payback. However if you live in the cold North of Europe does need doing.

If we get a new billing system into every International Network we can expect to see a spurt of innovation as the launch of new products and services would be fast and effective. We could also expect better inter networking services. I remember talking to the VP of Marketing for one large Network who told me that all new product launches had to include the hiring of a speadsheet jockey whoes role it was to reconcile the billing data so that everyone got charged for what the used and suppliers got paid for what they provided. Hence a new billing system should mean that such problems are removed and so we can expect more products faster.

Not only should the boards accept the investment, they also have the perfect scapegoat in Ms Reding. They can say to Investment Analysts "sorry that we have not invested in CAPEX as predicted but the new EU regulation means that we have had to pause and replace our Billing systems."

So we have an easy sell for once on investing in the Billing System rather than buying more faster network equipment that stands un-used because people cannot be charged to do so. Somehow I guess that as this is too logical we will not see this happen. However such an investment works for all other than the billing system vendors who are making ransom demands to maintain and ammend the present legacy systems. Perhaps I should start seeing if I can meet with the three wise men above and sell them some consulting services for the benefit of all in the Mobile ecosystem.


martin said...

I beg to disagree with the technical facts somewhat. Roaming prices and the way roaming is billed these days is not a result of current billing systems.

1) Billing is so complicated these days not because of the billing system but because a) every operator has a different idea of how to bill for services b) each operator has dozends and dozends of different billing models for their customers. And not to forget c) PrePaid billing which is again a whole different dimension. Asking operators to agree on one billing scheme and system is like all EU states agreeing tomorrow to give up their independence and form a common state. I just don't see that happening.

2) Roaming prices are not a result of individual roaming systems. There is no reason why the current billing architecture could not support the scheme suggested by the EU. Sure operators would have to adjust their systems to cope with it. But they do that anyway on a constant basis in order to offer yet another billing scheme flavor to the customer.

3) From a technical point of view it is true that a call between two French subscribers in Spain will always be routed to France and then back to Spain. However that has nothing to do with billing but with the way GSM/UMTS works. You dial a French number and the call is routed to the French home network of the called party regardless of where you are. Chaning this means chaning the whole fabric of how circuit swichted calls work. This is not going to change. This has nothing to do with billing! Just as a side note: If a French person with a French mobile in Spain calls a Spanish number then that call is not routed to France first as the number is a Spanish number. Thus the Spanish switching center can decide on it's own what to do. That's also the reason why such calls are sometimes not on your phone bill in the same month but only pops up one month later. So billing systems are very well able to cope with international roaming.

4) Routing a call to the home country and back in case the called party is abroad is not as expensive as it sounds. In competitive markets (such as Germany), international (fixed line) calls between European countries for the consumer cost less than 2 euro cents a minute. So even routing a call back and forth can be done for less than 4 euro cents a minute...

Having said all that I would like to note that from a consumer point of view I am all for the EU doing something against excessive roaming charges. But they shouldn't stop half way and look at roaming charges for data as well!!! In the end operators might win more than they loose as people would even consider using their phones when abroad instead of only making 30 seconds call back home to say "hi, all is well" and keeping their PDAs in the pocket instead of surfing the web.

Digital Evangelist said...

Martin the point I was trying to make was that when asked by the Regulator a number of networks claimed that the issue lay in the legacy wholesale billing engines used at present.

I was saying that in attempting to resolve the situation the CIO could thus argue that he needed a whole new system, in a similar way that pre Y2K IT directors were able to invest big time in ERP solutions. Not becuase the invest was justified on its own in terms of RIO but in terms that it stopped a possible train crash.

Thus if we are to resolve roaming be replacing legacy billing systems we can hope to see more product innovation rather than less. Which is not what the GSMA claimed would happen.

For what is worth I do not think the issue is in billing it is in pricing. And I also thing that the EU got cold feet and should have gone all the way and also added data into the regulation. But the law has yet to be written and so it might just change if enough lobby for it.