Questions & Answers

In the wake of Iceland’s Eyjafjallajoekull volcano eruption, mobile phone and dongle users that were stranded by the ash clouds are now being stung for whopping great data bills that they didn’t expect. This is not just a consumer phenomenon; in a recent Mobile Business survey, 75% of our readers said they were not confident to use mobile data while roaming.

Despite new legislation, are mobile operators doing enough to protect mobile data users from bill shock, which if anything seems to have got worse rather than better since mobile broadband made its mark? Do mobile operators actually care about end users and high bills, or are they happy to have a few burnt in order to put the majority off using their mobile’s and dongle’s abroad, clogging up the networks?

Steven van Zanen, Acision head of mobile broadband:

It will be interesting to see how well the EU roaming legislation introduced last year will hold up in the wake of such an unprecedented litmus test, which was the volcanic ash.

The first key stage of this legislation was rolled out in July 2009 and saw the implementation of caps on the cost of messaging, web browsing and making voice calls while within the EU zone, as well as the introduction of per second billing after the first 30 seconds of a voice call. A key function of these new rules was to ensure far greater transparency for mobile users on the actual costs of using their phones overseas.

However, it is yet to be seen whether the legislation has achieved this goal and mobile subscribers certainly have a long way to go in terms of getting to grips with roaming.

In line with Mobile Business’ recent research, in 2009 Acision’s research with Toluna found a staggering lack of awareness of roaming charges through its research; with nearly two thirds of consumers stating that they were completely unaware of the costs associated with using their mobile phone abroad. This means that the majority of users are reluctant to use mobile internet abroad because they fear bill shock.

Steven van Zanen, Acision head of mobile broadband

If you provide users with full control these people to use the service and, the door is open to structural and long term revenues and customer loyalty. While this gap in understanding may not have been completely breached just yet, this will also be the first real test of whether the caps placed on costs are having a positive impact on customers’ monthly mobile usage spend in practice. It will also highlight the difficulty of achieving full transparency when the current legislation is only applicable to calls and data usage within the EU, despite many passengers being stranded in far-flung places across the globe.

Operators still face considerable challenges in this area, though. First of all, most current bill shock capabilities are based on usage thresholds such as Megabytes. Consumers and regulators require controls that operate directly at the financial level, not some sort of derived measure. The ability to do this signifies a step change for operators and touches capability in deeply entrenched and complex billing and charging systems. Connecting these to a bill shock capability will not be an easy task for operators to achieve.

Also, operators need to view the bill shock capability in the wider context of customer dialogue. Communicating with customers on their bill is just one of the topics that operators need to have meaningful conversations. Many aspects of the consumer experience, such as congestion levels at certain cell sites, specific marketing offers or other relevant information provide ways to raise the quality of experience for consumers.

These require areas of substantial investment, but also opportunity, where operators are able to improve the quality of experience by support a sustained dialogue with their consumers. There still is a long way to go, however, and operators need to find ways to prioritise these investments.

We are now seeing the next phase of the legislation rolled out, where it is mandatory to offer a spending limit or cut off functionality to subscribers. Even if the subscriber has not requested a specific limit, they will be assigned a default one of €50 per month when roaming.

However, rather than simply being cut off when they hit their limit, they will get a warning message when they have reached 80% of the limit so they have the option to extend it before being cut off. No doubt those travellers returning to ‘bill shock’ will be among the first to sign up.

But what the volcano disruption clearly shows the mobile industry is that the success of the legislation relies heavily on achieving a very fine balance between consumers’ increasing need to be always connected via their mobile device, and their wish to stay in control of the amount they pay for this.

Bill shock is not in the interest of the mobile operator or the end user. If confronted with bill shock, end users will be reluctant to use their service abroad, which will hurt revenues. Also, negative PR around extreme bill shock hurts the operator and it will cost a whole lot more to turn this negative market perception around.

This is a clear cut example of penny-wise, pound-foolish. It is in both the operators’ and end users’ interests that the service offering and related costs are transparent, and that the customer is in full control over what they are spending. This will maximise customer confidence and loyalty and as a result, bolster long term revenues.

Keith Horsted, GTeq channel development director:

How do you extend the word no to fill the page? Slightly cynical I know, but the reality may be significantly different to the caring corporate persona that the networks would have us believe.

The onus has always been on the user to pay their bills, regardless of how extortionate they may be. Most roaming rates are fairly well understood for voice as we can measure the duration easily. However, very few of us, including me, have a data counter strapped to their wrists and therefore have no idea of how much data we use, or could use.

It is not in a mobile network’s financial interest to advise their customer of their bills in advance, and to be fair, there may be a delay in the network receiving the information from certain international networks that do not use the Camel protocol (real time billing information).

It could be argued that most networks will expect and accept the odd ‘casualty’ compared with the vast majority of customers who accept the charges. This strategy then allows them the ability to appear magnanimous when the press discover an individual case; they will still make a profit.

Keith Horsted, GTeq channel development director:

It should not be beyond the wit of man or the technical ability of the networks to send a text when predefined spend limits have been reacted, even if they are indicative, so as to why don’t they do it, I refer to my previous statement; it’s not in their interest to do so and until now, with the new EU cut off point legislation, the status quo has been changed, but it has taken force to make the operators play fair.

Dr. Ekkehard Stadie, Simon-Kucher & Partners’ partner:

Obviously, mobile operators are not interested in having unsatisfied customers, caused by bill shocks while using data service domestically or internationally.

The negative word of mouth comments on bill shock experiences clearly exceeds the positive revenue effect operators can achieve, as negative experiences are communicated a lot more, and much faster, than positives. Customer perception is seriously affected by bill shock, and operators sometimes even choose to reimburse clients’ bills to avoid negative publicity.

Operators use multiple ways to make the costs of data usage transparent to their customers. For instance, some operators inform their customers via SMS of current data usage prices when entering a foreign country. This provides customers with certainty of potential costs. Of course, it’s harder for the customer to predict his data usage then to measure the duration of a phone call. But operators can strengthen customer’s awareness on their consumption by equipping them with ballpark figures for different services (e.g., check email, download music).

Dr. Ekkehard Stadie, Simon-Kucher & Partners’ partner

Vodafone offers an option called Passport, which allows customers abroad to buy flat-rates on a daily basis so they don’t have to fear bill shocks. Of course, as in every other industry, customers need to inform themselves about potential costs, too.

Now, the EU sees the necessity to cap data roaming prices, as it did with SMS. It’s most likely that, two years from now, operators will have included data roaming in their common bill plans.