Market competition, not regulation, will force down data roaming fees

Market competition, not regulation, will force down data roaming fees

Summary: Government subsidies and policy changes cannot be depended on to drive down data roaming tariffs, says Asia-Pacific Network Information Centre, which adds that restrictive regulations can lead to Internet fragmentation.

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Government subsidies and policy changes cannot be depended on to force down data roaming tariffs, and overly restrictive regulations can lead to further fragmentation of the Internet. 

Paul Wilson, APNIC
"The wrong thing to do is to have regulations that protect industry revenues and are not beneficial to consumers," APNIC's Paul Wilson.

Paul Wilson, director-general of Asia-Pacific Network Information Centre (APNIC), underscored the need to continue developing the Internet as "a global, open network" and build bridges between policy makers and technologists. For instance, rather than introduce regulatory policies to force down data roaming tariffs, market competition would serve as a better solution, Wilson said in a phone interview. He pointed to T-Mobile's recent move to offer unlimited global data and texting at no extra charge, as an example. 

The executive heads the team at APNIC, a not-for-profit industry group which aims to promote "a global, open, stable, and secure Internet" serving the Asia-Pacific community. The director-general will be speaking at the organization's Internet Governance Forum in Bali next week, touching on key industry issues including policies, security, tariffs, and Internet interoperability. 

Speaking to ZDNet from Brisbane, Australia, where he is based, Wilson noted that data remaining charges were a substantial source of profits for mobile operators in terms of revenue versus expenses, making this a high-margins segment, similar to what SMS and texting services were. "It's less ideal for government bodies like the European Union (EU) to have to intervene because it's political and politically difficult [to manage]," he said. 

The EU had proposed a plan to drive down data roaming charges between member nations by July 2014, when citizens would no longer be charged international rates while traveling within the region. European operators would be given a choice to implement "roam like at home" plans to "enjoy lighter European regulation", such as avoiding retail price caps. 

"The best way to solve [data roaming tariff issues] is to have natural competition that forces [prices to come down]. T-Mobile is choosing to do that as a purely competitive measure...which will have an interesting impact on the market, and as a consumer myself, I think, a well-needed shakeup," Wilson said. 

In the same way, regulators including those in China, Vietnam, and Saudi Arabia that were considering plans to ban or enforce a charging system for messaging apps such as WhatsApp, would be ill-advised should they decide to do so, he said.

sim-roam-country
Companies like T-Mobile are showing transition is not impossible.

Many industries were experiencing technological changes and huge transitions, including incumbents with legacy business models and services that were being disrupted by new models, he added.

And yet, there are large service providers that are able to demonstrate they can still turn profits based on new service offerings, such as T-Mobile's voluntarily dropping its data roaming charges, he said. These market players did not need government subsidies or policy changes to do that, he noted.

In April, reports emerged that China's Ministry of Industry and IT was planning to enforce a charging system for WeChat, a popular free messaging mobile app. The move was said to be prompted by protests from major Chinese telecom operators over the erosion of their revenues from SMS, MMS and voice calls, and the added bandwidth resources WeChat was consuming on their networks. 

The Vietnamese government in August was also said to mulling plans to ban mobile messaging apps such as Viber, LINE, and WhatsApp, in a bid to protect the revenue of local telcos.  

"There are some hard decisions many companies need to make... The wrong thing to do is to have regulations that protect industry revenues and are not beneficial to consumers," Wilson said. "There are difficult decisions and transitions to be made on all sides, and there are companies like T-Mobile that are showing transition is not impossible."

Overly restrictive regulations can fragment Internet

In Asia, the biggest challenge is growth, and the region's cultural and economic diversity is also adding to the challenge. Wilson noted: "We have half of the world's population and we have a very rapidly accelerating Internet population, [where] Internet penetration is growing much faster here than anywhere else.

"Even from a technical point of view, we've got a tough job building out the Internet, keeping it stable, and avoiding fragmentation of the Internet. The goal is to form a single uniformed network...[but] there are many ways it can be fragmented," he said, referring to "breaks" in connection and communication between countries. Cultural and political differences, and the different schools of thoughts regarding how the Internet should be regulated, also can lead to further fragmentation.

China's real-name rule for microbloggers, for example, could drive its users underground if it proved overly restrictive. The Chinese government in 2011 passed a regulation requiring users of microblogging service, such as Weibo, to register their accounts with their real names. In April 2013, it extended the real-name registration directive to include prepaid mobile Internet cards and fixed-line phone services. 

Wilson said: "It would be interesting to see where [this real-name rule] goes... If you have a policy like that which may be too restrictive and may not easily allow people to join the Internet, fragmentation will happen where some other communication channels will end up being established."

These alternative "grey" markets will be created by users frustrated by the inability to register either due to delays in processing or the added bureaucracy. "That's the outcome of too much regulation. The developments happening around the edges may actually be more disturbing for the governments [than the lack of regulations]," he said.

He noted that while there are concerns that are purely national and specific to a country, and no other country should try to impose limits on what a nation decides to do, the online community wants to be able to make decisions based on accurate and accessible information. "We don't want fragmentation to happen [as a result of] governments that are concerned about protection that they start to impact the infrastructure of the Internet," he said, adding that some decisions can be difficulty to reverse in the long term.

Asked whether governments were doing enough to address issues that had surfaced following Edward Snowden's PRISM revelation, Wilson said governments need to realize the Internet is a set of national networks. An activity undertaken by an organization like the U.S. National Security Agency (NSA) will not simply impact the NSA or the U.S., but has global impact, he said. 

He called for "bridges" to be built to facilitate the exchange of viewpoints and support "shared understanding" in this "multi-stakeholder model", noting that traditional government mechanisms, such as regulations that apply to traditional telephony infrastructures, no longer apply in the fast-changing Internet network. 

"If you look at a problem or solution on the Internet, it never has any national boundaries. So if you start imposing nationalized boundaries, you have something that doesn't make sense or cause some damage which cuts up the infrastructure," he said.

"Building the political bridges is right now the most important aspect of the Internet, which is under a lot of scrutiny right now in terms of [how governments are] managing the risks."

Topics: Telcos, Mobility, IT Policies

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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3 comments
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  • that's BS!

    in EU the roaming and the subscription fees are a LOT less that in US.
    Guess who's more regulated!
    it comes down to pure greed.
    LlNUX Geek
    • BINGO

      It's more than just colluding and distracting and other engineered things to get around the purported "free market" principles (or even taxpayer-funded subsidy and other handouts that the working class sure as heck don't get), what you say adds into the fray just as much. It's baldfaced greed.
      HypnoToad72
  • LOL!!

    Based on existing parallels, the market competition will do NOTHING except create collusion to artificially inflate.

    Cable companies collude via districting.

    There is still no competition to college and students, wanting to improve their lives in good faith and not drunken gamblers, are suffering with undeserved amounts of student debt because college costs have gone up 500~900x since 1980 (depending on source.)

    Let's see the existing big companies let smaller competition flourish, and let the big companies' CEOs take a pay cut instead of workers - as pay cuts and service cost cuts both lead to competition drowning out and fewer people able to buy things to keep the economy going.

    Stop the downward spiral.

    Stop the bleeding.

    Stop the supply-side propaganda. There's a reason that people, including astute Republicans, called it "voodoo economics" as early as 1981.
    HypnoToad72