Vodafone rings in a roaming rethink

Vodafone’s move to implement a $5 a day flat global roaming fee for its customers should generate plenty of goodwill, but does it go far enough?

Vodafone Hutchinson Australia may have its hands full when it comes to rehabilitating its network but the mobile operator hasn’t wasted any time is taking the lead  when it comes to global roaming.

Vodafone’s move to implement a $5 a day flat fee for its customers to use their existing call, text and data inclusions while travelling in the UK, US and New Zealand will certainly generate its share of bonhomie but does it go far enough?

Probably not, but it’s still sound strategy when it comes to attracting new consumers. Vodafone’s “Roam Like Home” offer will be available in new plans, to be unveiled in August, and the resultant consumer interest could potentially be translated to higher revenues.

More importantly, it will let Vodafone to earn some extra brownie points as an operator that has finally decided to take some tangible action against the global roaming rip off.

The Australian Communications Consumer Action Network (ACCAN) is certainly glad to see some movement on the roaming front but as ACCAN spokesman Asher Moses points out this is really just the tip of the iceberg.

“Vodafone customers are rightly baffled when they go overseas and discover Vodafone has a presence, but they can’t use their own plans. $5 a day is a start but we would have expected Vodafone Australia to get a better deal for their customers and really take advantage of being part of the largest mobile network in the world,’ Moses said in a statement.

It’s a pertinent point, because the idea of Vodafone Australia leveraging the global presence of one of its parents has always been on the cards. Vodafone Group, which owns 50 per cent of Vodafone Australia, owns the largest mobile network in the world and sooner or later this enormous resource was always going to play a part in Vodafone Australia boss Bill Morrow’s turnaround plan.   

Which brings us back to the revenue generation potential of Vodafone’s roaming initiative. While $5 a day is a whole sight better than the exorbitant charges customers have had to bear, it still begs the question as to why there is a charge to begin with in the first place, especially for using a Vodafone network in the UK and New Zealand.

Tony Simmons, founder and independent analyst of The Full Circle Group, says given that there are no interconnection costs involved (in UK and NZ) Vodafone is still making money through its $5 a day flat fee.  

“If it’s Telstra or Optus you can understand it because they don’t have a global network, but with Vodafone, given its network, they are interconnecting with themselves so you would imagine they know their costs,” Simmons says.

“Presumably, there is some global accounting going on so is it that difficult work out how to offset cost of one region with another?”

Simmons adds that essentially Vodafone customers will pay $5 extra per day to use existing call and data inclusions, so they are not getting anything more than what they haven’t paid for just the right to use it on the same network in another jurisdiction.

It’s also important to remember that there will be excess charges if a customer goes over the limits set in their plan. According to Vodafone Australia, if customers do go over their cap on the new plans it will only be for data

Fortunately, those going over the cap can also buy a data pack (at Australian prices, say $10 for 1GB) or pay excess rates, again at Australian prices, which are 10 cents a MB. 

It would be churlish to dismiss Vodafone’s initiative as pure PR guff, because the operator deserves credit for its efforts to mitigate the venomous sting of global roaming, while making a buck out of it as well.

Morrow’s tenure so far has been characterised by a penitent tone, which is understandable when you consider the enormity of the brand damage suffered by Vodafone Hutchinson Australia under his predecessor.

But Morrow isn’t alone in trying to make amends the telco industry on the whole has been trying to paint a picture that it has had enough of ripping off customers.

According to independent telco analyst Chris Coughlan, a lot of this new found contrition has come as a result of the Telecommunications Consumer Protection (TCP) code.

“The code takes away a lot of the ability of the telcos to confuse customers, so they have all swung back the other way and are all in an effort to lift their Net Promoter Score (NPS),” Coughlan says.

Achieving that requires them to provide greater transparency and there are very view issues that could do with more transparency that global roaming.

As ACCAN points out, global roaming charges are still far too high and there is still no clarity on what the real cost of providing the service should be.

“According to a 2008 KPMG report roamed calls should only cost 10 to 20 per cent more than non-roamed calls. Yet, telco profit margins for global roaming are up to 400 per cent higher than what they make off local calls,” ACCAN spokesman Asher Moses said.

It’s unlikely that the opacity will be dispersed anytime soon but at least the telcos are being forced out of their comfort zone.