Friday, 12 July 2013

Mobile (data) Roaming; does it makes sense?

Some celcos provide roaming plans for internet access.  What do you make of it?

This post discusses mobile data roaming in the context of the internet era and suggests that the traditional telco business model is a misnomer when applied on internet access.  This blog discusses the emerging business models for those using the internet for business.  Internet ‘laws’ are applied to roaming to analyse its application in this post.

With mobile phones, you can subscribe to a local service when abroad to make calls but what about receiving calls, with the number your family and business associates are familiar with?  Roaming solves that.  With internet access, you can subscribe to a local service when travelling and you can still receive your email, your WhatsApp messages to the id everyone knows of.  Roaming is not required. 

Roaming is a telco/celco model, it doesn’t make sense with the data (internet) model. The telco model is a local model (mostly), the internet model is by nature global.  Remember the early days of the internet when everyone talked about the borderless world?  We now see one of the business ramifications.  By ‘local’ I mean the traditional telco categorising a local component and then other components (eg. international) in their business model, differentiating it with the fundamentally borderless internet.  The distance-based costing and partner-based (roaming) pricing used by telcos for voice seems out of place with internet services.  Without the local model, the concept of roaming seems a misnomer since roaming needs two locations; the home country and a foreign country.

Let me further clarify this local-global divide.

When you want to access a website, do you first ask yourself if you really need to if it is located in another country like what you would do with phone calls?  Would you access a website less like you would send less sms to a friend who is vacationing overseas because there’s a higher cost?  If you were looking to rent data centre space for an online service, would you not consider one in a foreign locale (cheaper perhaps) even when your users are from your country of origin?  Would you even think of that if it is for a voicemail (say dating site) service?

Another example is when a company buys connectivity.  When you order a leased line, distance is a cost factor besides bandwidth.  But when you buy broadband, you only pay for the bandwidth you want.

With the internet, there is no such thing as a local-global divide.  Unlike telco switches, there are no customs officers waiting to levy a charge when a voice packet arrives at a different telco’s switch so that that packet can pass through.  An internet packet simply recognises the user (Gmail address, Whatsapp id) and delivers it without fuss.

So the telco model is a local model in that it prices for a local service and then adds fees for components outside it.  Unlike paying voice calls in terms of local, national, international and roaming rates, you do not pay a different rate to send a message internationally with the internet model.  Well, you don’t even pay but that’s another twist of the differing business model but I hope the point between local-global divide is made. 

Because internet access doesn’t differentiate between the local or international component ie. borderless, the concept of data roaming is odd.

Roaming is another relic in the internet economy we’ve just entered.  At best, this is short term.  There’s a bigger issue.  A friend who just returned from Seoul said “There is good quality public wifi everywhere so I used Viber for making phone calls and WhatsApp for messaging”.  He didn’t subscribe for data roaming, he didn’t pay his local celco anything.  I think that’s a glimpse of the future of the industry!  But there’s some way to go for this to be replicated globally.  Perhaps telcos/celcos should put on their long term strategic planning cap on the data (internet) business, not voice, by first delving into the mechanics of the internet economy.

The benefit I see of data roaming is simply convenience if you are willing to pay for it.  The convenience is that when you travel you don’t have to bother with looking for and registering for data services.  But they shouldn’t call this roaming.  And they should really lower the prices.

©Chen Thet Ngian, (2012, 2013).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chen Thet Ngian and with appropriate and specific direction to the original content.