Roaming charges: "Outsourcers" afraid of becoming redundant

Today's Financial Times picks up again the subject of roaming charges (access to FT.Com is limited). Previous posts on this blog: June 13, May 10, and March 20.

Reading the introduction to the article, one asks oneself: "What is the problem here?":

Moves by the European Commission to cut roaming charges will have a big effect on consumers but do little for Europe’s biggest users of roaming service, its multinational corporations.

But these "moves" by Communications Commissioner Viviane Reding have already seen their first successes, as five of the biggest European Mobile Telephone Companies announced, that they are cutting their roaming tariffs by 45% in 2008.
- Of course: It is too little, too late and it complicates the market, for individual consumers who have no way to know, for which one(s) of the mobile telephone providers in a foreign countries they would have to choose in order to have some benefit of the tariff cuts.
And, as we explained earlier, it is another penalisation of the smaller providers (located mostly in smaller countries) and their clients. (This last subject has been adopted by my preferred MEP Max van den Berg, who cites the example of Dutch KPN.)

The FT continues:

But Ms Reding’s battle seems to be ignoring business users, who represent 75 per cent of roamers, according to consultancy AT Kearney.

“Roaming typically makes up 30 to 40 per cent of a multinational’s mobile spend, though it represents just 10-12 per cent of its call volume,” says Nigel Springhall, general manager of Mobile Partners at BT Global Services, BT’s outsourcing unit. For some, the burden can be far greater. One consulting firm reported that roaming accounts for nearly 70 per cent of its total mobile budget.

“Cheaper roaming costs remain enterprise users’ prime concern. This would come in the form of better tailored voice tariffs – for example global and multi-country tariffs – and a consistent service in all countries where the multinational is present,” says Richard Ireland, Ernst & Young’s UK head of telecommunications.

But, whom are we listening to, here? Not the Big international Businesses themselves, but "consultants", mediators and the consultancy firm of Ernst & Young.

We discovered easily, why those people are protesting against the Commission's efforts to simplify and unite the market. The answer is: they will lose their jobs.

For, why should big international companies, who have already obtained reduced roaming "bulk" tariffs from internationally operating providers amounting to about 30%, have objections against a further reduction, up to 45%? As the BT-spokesman says:

“We think this will result in a 10-15 per cent reduction on the bill for companies,” says Mr Springhall.

Here comes the heart of the matter:

Some large enterprises are turning to outsourcers to manage these matters. For instance, Unilever outsourced management of 30,000 mobile phones in more than 70 countries to BT Global Services, as part of a communications outsourcing deal.

Mr Swift at BT says a quarter of outsourcing tenders ask for mobile service management, which tends to represent 15 per cent of the contract value.

"Outsourcers".

The artificially compartmentalised market (along national borders, ever changeing and absolutely impenetrable individual tariff structures, etc.) creates an opening for mediators, consultancy firms, who specialise in making deals between business corporations and providers, taking a visible part of 15% of the contract value for "mobile service management", and some more, invisible, percentages from fees that providers hand out to them.

A transparent European mobile roaming market would make their services redundant. Corporations wouldn't need them any more.

However, the "outsourcers" cannot say so openly. They succeeded into making believe a Financial Times journalist, that their commissioners are angry at the European Commission.

If I were a corporate topmanager, I would free myself instantly from my "outsourcers", now that they are harming my public relations and are pleading against lower and uniform rates that are to my benefit!

Source:
FT.com / Technology - Roaming charges: Business calls for cut in tariffs

380m EU mobile phone owners claim roaming freedom abroad

Source: FinancialTimes.com / Europe / Brussels briefing - EU simplifies plan to scrap mobile roaming costs

Two weeks ago, after Vodafone (see post in this blog), some more European Mobile Phone Companies agreed to cut "volunarily" their roaming charges for clients using their phones abroad. At the same moment they attacked the EU Commission's plans to impose a "cap" on roaming charges, saying that they were unnecessary, now, that "the market demonstrates that it can govern itself". The companies are hoping that we have a short memory. For, what happened? (FT, 12.6.06, by Sarah Laitner in Brussels :)

Viviane Reding, EU telecoms commissioner, pledged in February to outlaw roaming fees, the add-on costs consumers pay to make and receive calls on their regular mobile phones while in other EU countries.

She argues that Europe’s 380m mobile phone owners are charged unjustifiably high costs to use their handsets while abroad, and her plan has won consumer backing.

But the industry, facing a slowdown in the growth of European revenues, has vigorously fought the proposed bar on roaming fees, which analysts estimate account for 10 to 15 per cent of operators’ profits. In an effort to undermine the case for legislation, companies such as Vodafone and Orange have pledged to slash the costs, and the suggested tweaks to the proposal will be closely monitored by the industry.

Well, they will be closely monitored by consumers' organisations and 'At Home in Europe', too!

For, like during the struggle with the banks of the Eurozone, who wanted to continue to charge change fees for transborder payments from one euro-country to another (!), the private telephone companies are not, as they say, championing "free market" ideas, but, on the contrary, fighting for maintaining an artificial and redundant compartmentalisation of the markets, just to keep some artificial extra benefits! Here is, why.

Mobile telephone traffic works, like the internet, as a network of networks, where data are sent from one point to another, without any human intervention. Everything is steered by computers. At this moment, the software is so far developed, that errors have become extremely rare. When you are calling, you are paying for the investments in hard- and software and for the use you make of sender-receiver capacities. Fundamentally, the distance between the caller and the called plays but a subordinate role in the total real costs of a call. National borders between networks in different countries play no role at all any more. Just like in the case of the banks' "change" rates between the eurozone countries.

So, who is trying to impose "artificial" charges here? Not the EU Commission! Their idea was originally, to forbid all extra roaming charges. Now, the FT announces a study into a "simplification" of this point of view. How? (FT:)

At the heart of the changes are fresh plans to introduce a cap on the wholesale fees companies charge each other to use their networks.

This will be calculated on an average of certain rates in the union’s 25 member states. Retail charges for consumers can be up to 30 per cent more than this wholesale cost.

Ms Reding had initially proposed that, while abroad, consumers were charged the same price they paid to use their phones in their home countries. Operators argued this move would lead consumers to register with mobile phone groups abroad to benefit from lower fees.

So, is this what you call a "simplification" of the original idea? I have a simpler idea of what simplification means: I cannot imagine a simpler idea than the initial idea, i.e.: abolition of all extra roaming charges!

And, maybe my mind is too simple too, to understand, why champions of free markets can be against freedom for consumers "to register with mobile phone groups abroad to benefit from lower fees". I have always learned, that freedom for buyers to buy at the lowest price offered on the market for the same product, was not less than the "engine" of innovative markets!

And it is worse still: As most of the operators ARE already working in different countries, why should Vodafone be afraid when I register, not in Belgium, where I am charged with "roaming", the moment I am 100 KM away from my office, but for instance, with their company in France (SFR) or with Vodafone DE (Germany) or with Vodafone-Britain? I am still their client. I make the same calls. Only, they can charge less "roaming extras". Is the freedom of one European market only a freedom for providers, and not for consumers?

The FT again:

One industry analyst said on Monday night that the changes gave companies more scope to recover costs in particularly competitive markets. He said: “This is good news for the operators. Overall they will benefit from this.”

Yes, I am sure they will. THEY will. It will help to keep alive small local oparators, who benefit from the compartmentalisation of the European market along national borders. Who else will benefit from such a half-measure? And, stagnation will be the result:

However an industry representative argued: “The Commission seems to be back-pedalling. But it is putting in place something even more prescriptive. If this comes into place there will be no incentive for any operator in Europe to innovate.”

Well, that is simple enough for me, to understand. And I am curious, to read the "economic analysis" that points to another outcome:

A Commission official said on Monday night: “We have fine-tuned our proposal to make sure that this regulation is based on a sound economic analysis.”

We will continue to watch!

Hitchens, Haditha and Viet Nam

From: Legal Alien in New York blog

While the murdering of 24 innocent Iraqi civilians by a frustrated Marines Platoon in November 2005, and its failed cover-up, is combated in Washington in the fist place with massive spin ("Weapons of Mass Distraction" as Michael Shaw of Bagnews calls it, and you'll find my post about it here), the Weekly Standard and Christopher Hitchens are having a try at a more demagogic style.

How? Guess once: It is all the fault of the "liberals".

Hitchens in Slate, Monday June 5, 2006:

Why Haditha isn't My Lai.

He explains the differences between Vietnam-1973 and Iraq-2005:

[I]n My Lai the United States was fighting the Vietcong. A recent article about the captured diary of a slain female Vietnamese militant (now a best seller in Vietnam) makes it plain that we were vainly attempting to defeat a peoples' army with a high morale and exalted standards.

Most Americans, and most other people, did not have to wait 33 years to discover, that the South Vietnamese Liberation Army was a people's army. But Hitchens needs a "recent" article about the "captured" diary of a "slain female Vietnamese militant" to learn us, that the whole Vietnam war was a "vain" attempt. Welcome to reality, Christopher! Yes, the whole American Vietnam campaign was a Vanity Affair.

And, between brackets, why has Hitchens suddenly seen the light? Is it,

• because of the "diary" (Anne Frank), or
  
• because of the "female" (Anne Frank again, and Ayaan Hirsi come to mind) , or
  
• because of the "slain" (Anne Frank anew, for dead people are more credible; and, slain by whom? Some rampaging marines again?), or
  
• is it because of the "bestseller" status of the diary?
  

- Anyhow, suddenly the South Vietnamese rebels (against an elected South Vietnamese government!) get a consecration of holiness from Hitchie.

Why? Listen:

I, for one, will not have them [the South Vietnamese "Vietcong", HR] insulted by any comparison to the forces of Zarqawi, the Fedayeen Saddam, and the criminal underworld now arrayed against us.

Hitchens needs a rosy image of the Vietcong, in order to mix up the Iraqi popular resistance against the US occupation and the US-controlled government, with extremist and racist Zarqawi and nostaligics of Saddam. Both are, if we may believe serious observers, but tiny fringes within the resistance. But this is, what colonial powers always do, when confronted with popular resistance: They complain that they are unjustly attacked by "criminals", "terrorists" and "underworld". That is, what Johnson and Nixon would have wanted the world opinion to believe about the Vietcong during the sixties and the seventies.

Hitchens: The American military in Iraq are not like the former British...:

... unwanted colonial occupiers in Burma, [no:] the coalition forces are—until further notice—the guests of Iraq's first-ever elected government and the executors of a U.N.-mandated plan for the salvage and reconstruction of the country.

Back to Vietnam in the sixties/seventies. What were the Americans and their partners then? There was a "first-ever elected South-Vietnamese democratic government", that had "invited" the US. The Vietcong were "stooges" and "criminals".

Will we have to wait another 33 years, before Hitchens or his successors will discover, that most popular resistance in Iraq comes from people "with a high morale and exalted standards", and that the "democratically elected government" does not represent much more than itself?

How many "female militants" have to be "slain" and their diaries "captured"?

• As usual, Sonic's "Hitchens Watch" deals with most other lies and anomalies in this Hitchens article. See: "Justifying Slaughter".