Forbes – 5 Reasons Three UK Just Changed the Global Wireless Market
Written for Forbes, find the original article here.
Forget Europe, it’s done. The problem is the United States. What I’m talking about is roaming. That frustrating and, at times, terrifying occasion when you step off a plane into another country and debate just how many of your back teeth you’d like removed for switching on data on your phone.
Everyone has a roaming horror story and has read shock headlines about$22,000 bills. But the European Union’s enforcement of flat rate calling and data rates is well underway and calls have been made to scrap all roaming between EU countries by 2016. There will be plenty of arguments before then but, by and large, it’s sorted.
The US is another matter. T-Mobile US recently scrapped 2G roaming fees in over 100 countries, but 3G and 4G were off the table. In the UK a Vodafone VOD -0.08% pre-pay customer visiting the US will still have to shell out £5 for the first 25MB of data and £3 per megabyte thereafter. Making a call is £1.35p a minute, receiving a call is £1 per minute and a single text is 36p. This isn’t to vilify Vodafone… O2 and EE are even more expensive, but this might all be about to change thanks to Three.
Today Three, the UK’s smallest network (7.8m customers versus Vodafone’s 19.4m, O2’s 22.5m and EE’s 25.2m), announced the US has been added to its ‘Feel at Home’ service. Feel at Home means your allowances in the UK apply in the US, including all you can eat data for customers on those packages. Here are five reasons this could be a game changer in wireless:
1. It forces rivals to change.
Nice as it is that Three customers will no longer face roaming changes in the US, the big picture is rivals EE, O2 and Vodafone will need to follow suit. Why? Because these networks have the lion’s share of business customers in the UK and in these economically pressed times it won’t take corporations long to figure out they can make substantial savings by switching regular transatlantic employees to Three.
2. It begins a virtuous circle
Hugh Davies, corporate affairs director at Three, told me today that the wholesale rates secured with US telcos to enable this deal to happen works both ways and those networks can now negotiate the same agreements with Three. This isn’t about improving the roaming experience for customers on one network, but about opening the door to improving the customer experience across all networks in all countries.
3. It sets a precedent
Until now the best roaming deals have been between countries either close together or part of the same sector, such as the European Union or UK commonwealth. The Three deal breaks this mold and pushes for a more global approach to telecoms.
4. It puts IP calls under the spotlight
According to Davies, a key factor in the US deal for Three is that most 3G calls (via some switching) and all 4G calls are IP based. This means they happen over data networks and are Internet based, much like Skype’s free Skype-to-Skype calls which undermine a network’s ability to continue charging extortionate prices for them. This isn’t new, but networks were not openly talking about it until now.
5. It says 2G isn’t good enough
T-Mobile US received a lot of praise for abolishing roaming charges in over 100 countries last month, but that is only for 2G access. With 4G now upon us 2G isn’t remotely good enough for the majority of things we now do with our smartphones, tablets and laptops. T-Mobile is to be commended, but the Three announcement puts 3G and 4G international roaming front and centre of the debate. It can be done.
The small print
Any deal has small print and Three’s abolition of US roaming costs is no exception. Here are the caveats:
- The deal is only with T-Mobile US and AT&T T -1.01% so Three users are locked to those networks automatically upon arrival
- Step outside your bundle and rates are higher than in the UK, though less than roaming in Europe with calls charged at 20p per minute, texts 7p and data 10p per megabyte
- Tethering is not allowed, regardless of whether you have a tethering package in the UK
- Three can rescind the deal for customers who spend more than a month in a Feel at Home country or visit it more than 3x per year. Davies stresses this will only apply to customers exploiting their data plans and will result in a phone call to discuss the issue and no unilateral disconnections.
Other countries where Feel at Home is in operation are Austria, Australia, Denmark, Hong Kong, Indonesia, Italy, Macau, the Republic of Ireland, Sri Lanka and Sweden. Three follows EU directives for rates in the rest of the Europe.
As you might expect, the scheme is proving popular. Three claims it has seen a 1000x increase in data usage by its customers in Australia since Feel at Home was launched in that market three months ago.
Of course there is also a cynical side to today’s announcement which is that it is being used to cover up Three’s late UK entry into the 4G market which was pegged for December. Three did confirm today the 4G rollout has begun, but it will be very gradual until 2014. That said tackling US roaming is indisputably more significant long term. With a bit of luck it just might be the start of things to come.
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