|Europe I 2012
|Mobile and the business consumer
|Communications Management Association (CMA).
Carolyn Kimber is the Chairman of the Communications Management Association (CMA). CMA is an association of business users of communications goods and services from both the private and public sectors.
Multinational companies based in and/or operating across the EUare unhappy with the current state of international mobile services.International buyers of mobile services have to deal with a patchwork of national operators offering different pricing schemes, service offerings and service level agreements. Multinational corporations want operators to provide them with a single contract for their global operations in all the countries where they operate.
Most multinational corporations (MNCs) based in, or operating across, EU Member States are unhappy with the current state of international mobile services.
What is needed, in an ideal world, is a truly international mobile operator – one who owns the network, offers consistent service, is able to set homogenous tariffs and who makes no charge for roaming. In other words, a singular supplier for a single digital market. But no such operator exists today. Today’s international service offerings are, in effect, simply virtual arrangements to help customers deal with national operating companies and their service and support structures. Whilst such arrangements do align some contractual terms and conditions, and help customers gain a better view on their global mobile spend, they do not represent the true, competitive, one-stop-shop which MNCs seek.
In the absence of such a one-stop shop, existing suppliers must take a global view of MNCs, acknowledging their international scope and the global markets in which they operate. They should offer a single contract, a single ordering point, a single delivery point, a single support contact centre and a single billing centre for the maximum number of countries worldwide. In other words, a form of ‘regional contract harmonisation’.
This article focuses on some of the requirements of MNCs. It assesses the current operator position and proposes some changes which would make this market a success for both supplier and customer. The article is based on a position paper by the International Telecoms User Group (INTUG) to which CMA contributed. CMA is a founder member of INTUG.
Lack of appropriate services
Multinational companies based in and/or operating across the EU are vocal in their assertions that international mobile operators are not providing appropriate services for them. They report efforts to consolidate and integrate operations and contracts across multiple countries which they have been forced to abandon as ineffective and uncompetitive.
International buyers of mobile services have to deal with a patchwork of national operators offering different pricing schemes, service offerings and service level agreements.
MNCs would like global contracts including national and international contracts and tariff plans, volume discounts, data and voice services with competitive service agreements, seamless international service, a central administration tool, central billing and helpdesk, and an international VPN and above all, one-stop-shopping with a full international scope.
Fixedmobile convergence (FMC) has also been neglected by the suppliers and MNCs would welcome with open arms some form of a bundled ‘all you can eat’ tariff option that would incentivise carriers to support increased mobility in terms of FMC, call routing, trunking and service access. Also welcome would be regulatory compliance solutions allowing call direction between fixed and mobile networks. Traffic aggregation between WiFi, 3G and 4G ‘hot spots’ would be helpful, given the paucity of mobile coverage in all Member States.
MNCs want to be able to order SIM cards for other countries, manage mobile costs in branch offices abroad and standardise services across borders. At the same time MNCs want to deploy SIM or device-based security systems to support evolving business solutions, such as near field communication (NFC) payments, without carrier restrictions or issues resulting from market positioning by device manufacturers.
To create the Digital Single Market that Commissioner Kroes so fervently espouses, there is an urgent need for mobile operators, regulators and customers to adopt a new approach. The technology is changing as fast as user needs are evolving and MNCs are demanding better service quality as video services proliferate and the use of the mobile device becomes the primary, secure work tool allowing dramatic reductions in network costs and user support processes.
There is a lack of understanding by operators of the needs of MNCs. Business market segmentation is based simply on the number of subscriptions, but MNCs are more than a collection of SIM cards and smartphones. Service providers do not see MNCs as a high margin opportunity. Nor do they see the additional bandwidth, security or service needs required to expand the MNC business sector. Even the biggest MNCs are merely seen as ‘big enterprises’ and just another major national account. Service providers therefore compete for the business of the largest companies in each country, but defensively, seeking to maintain high volume revenues.
This produces a market paradox. MNCs tend to focus on and complain about exorbitant roaming or international charges, and believe they are seen as major profit centres by the operators. Operators, on the other hand, see a customer who runs professional procurements and has volume discounts that almost wipe out all their profits. Therefore, whilst operators might agree that roaming/international pricing is not rational, they don’t feel they are earning enough from their MNC customers to justify a changed approach.
But if they were to recognise MNCs as having a unique set of cross-border needs – both administratively and in terms of services – and one that ranged from quite small customers to the very largest, they could construct unique and differentiating offers for the sector. They would then be in a better position to generate reasonable margins in the long term, whilst at the same time rationalising their pricing models for roaming and international services.
Transnational contracts should be offered
MNCs want operators to provide them with a single contract for their global operations in all the countries where they operate. Rather than a collection of different national offerings, there should be one common service concept deployed across the entire footprint.
The contract should include service level agreements in each country, managed by one global team with a single point of contact. It follows that service providers should align their own organisational structures to be consistent with those of their customers.
This has proved to be the most effective approach in other international ICT contract arrangements. One solution might be the establishment of a single entity with its own P&L covering in-scope countries, with authority over all resources required to deliver on MNC requirements. A lack of cooperation is often experienced if the deal is not ‘signed up to’ by each country. One-stop shopping can only work partially in such circumstances, and each element of a contract needs to be underpinned by supporting contracts at national level. In other words; a framework contract, supplemented by local sub-contracts.
The pricing structure should be consistent for all in-scope countries. The definitions of billable items and the specific elements in each billable category should be the same for all in-scope countries. There does not, however, need to be a single uniform price for each category across all countries, since each country has its own, unique, competitive price structure, due to differing costs of operations, original licence costs and regulatory history. Voice mail retrieval tariffs should, however, be homogenous across all countries.
MNCs require the most competitive pricing in each country market; e.g. domestic ‘mobile to mobile’ should be defined in the same way in all countries, including terms such as minimum billable time and billing increment. That sort of common definition would still leave room for local price differences.
Roaming charges should be reasonable
CMA is at one with the Commission’s view that the real costs of roaming are very, very low. Cost analysis from the Body of European Regulators for Electronic Communications (BEREC) reveals a huge disparity between wholesale costs and prices and massive mark up between wholesale and retail prices.
However, despite reductions in some parts of the world, notably within Europe recently, service providers continue to charge excessively for international roaming, especially for mobile data. Whilst there is increased usage, charges remain a deterrent and there is widespread action to prevent what would be efficient business processes from being implemented or used, simply due to the enormous cost risk involved for mobile data roaming. This puts Europe in particular at a huge disadvantage compared with the USA as companies are forced to retain legacy processes at national level, suppressing innovation and economic growth. Many organisations simply refuse to issue smartphones or block roaming due to cost exposure.
If prices are aligned with real costs, MNCs will use services as business activity dictates, paying fairly for the value received.
Economies of scale
Whilst the ability to enter mobile markets is a welcome sign of competition, MNCs would also benefit from more cross-border consolidation. In the USA, there used to be a mix of different mobile operators in different parts of the country and there were problems with roaming charges and inconsistent service offerings. This market has now consolidated largely to four nationwide operators in a business market the same size as the EU. Each operator has nationwide coverage and single offers with no roaming charges. This has been good for businesses in the USA, who are in a position to negotiate across the country with all their weight, and to get ‘one stop shopping’ as well.
Such economies of scale should be available to MNCs in other regions and continents, especially in Europe, where the existence of the EU trade bloc should make the possibility easier. But competitive, seamless, consistent offers across multiple countries will not result from regulation focused on national consumer markets.
MNC needs must be addressed as a specific requirement within a regulatory lexicon that is aimed at enhancing business efficiency. In the EU, that lead has to come from Brussels.
There is no reason why international service providers have to continue to define their MNC offerings based on the ‘lowest common denominator’ of what they can get someco-marketing partner to agree to in a country where they have no presence. Were they to embrace the needs of the MNC, all parties stand to benefit.