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Thursday, June 22, 2006

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.


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: / Technology - Roaming charges: Business calls for cut in tariffs

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