The thought of Apple becoming an MVNO and offering its customers IP voice and messaging services as a cheap alternative to conventional voice and SMS is one that keeps many mobile operator CEOs awake at night.
It is not just the loss of voice and SMS revenues that alarms operators. It is the risk that the operator would lose so much of its retail business. Network operators would become invisible to many of their (previous) customers.
To reduce the risk of this happening mobile operators in Europe are keeping the cost of wholesale mobile data high enough to deter any MVNOs from offering a service that is attractive to heavy data users. Wholesale prices tend not to be regulated so it is pretty easy for operators to set a pricing structure that would prevent, for example, an MVNO from setting a high retail price for SMS and voice services and a competitive price for data.
But what if regulators did start setting price caps for data wholesale tariffs? Might this be enough to encourage the likes of Apple and Google to enter the MVNO business?
This is precisely what the European Union is in the process of doing for roaming services. And if new players such as Google or Apple enter the roaming data business, as Informa Telecoms & Media believes they will, might this not give them the appetite – and a backdoor into – the national mobile data market?
New EU roaming proposals
In late March the European Parliament, Council and Commission agreed to new wholesale and retail price caps for roaming services for the period July 2012 to June 2017.
The glide path for data roaming will see the maximum price of wholesale data fall to €0.05 ($0.06) per megabyte by July 2014 compared with a retail price cap of €0.20 per megabyte.
These prices are interesting on two levels. First, the difference between the wholesale and retail price caps means that there is a significant opportunity for new players to compete in the data roaming market so long as they can build enough volumes to justify the investment in setting up a roaming MVNO.
Secondly, the price of €0.05 per roaming megabyte is, according to research by Informa Telecoms & Media, about the same price that many mobile operators are offering MVNOs for national data services.
The new EU roaming regulations – which will be ratified within the next few weeks – are designed to help both existing “national” MVNOs and future “roaming-only” MVNOs compete with operators in providing roaming services to end users. In the same way that national MVNOs buy national voice and SMS services at a discount of around 50% on retail prices, they will now be allowed to buy roaming services at a discount of 50-70% on the retail price cap.