Vodafone roaming promotion offers a tricky challenge to business users

Courtesy of Vodafone, another crack has just appeared in the high cost of pan-European roaming. Headlines last week in the U.K. trumpeted three months' worth of low-cost roaming (often labeled "free" roaming) from Vodafone, lasting from the beginning of June to the end of August.

Before jumping on this, corporate telecom managers should understand exactly what Vodafone is and isn't offering, while still celebrating this follow-on to the European Union's newly ratified caps on mobile roaming.

Here's the background. Vodafone has for some time offered a program called Passport in the UK and other European countries. Passport provides substantially lower per-minute charges for outbound roaming outside your home country to a set of additional countries, mostly in Europe but also including certain Vodafone networks and partners in other countries, such as Australia and New Zealand. In particular, calls received while roaming do not incur a per-minute charge at all. In return, Passport levies a significant per-call surcharge for all roaming calls, but the combination can be very economical compared to Europe's historically high roaming charges.

What has changed for June to August is that Vodafone UK is waiving the per-call surcharge of GBP 0.75, resulting in far lower effective rates for roaming outbound calls, and free roaming incoming calls.

Vodafone is scoring a bunch of publicity for this move, but it's not a unique move. Other UK carriers have been offering consumer plans with free incoming roaming calls for over a year. And Vodafone has generally not pushed Passport to its large UK corporate customers; it has typically been a consumer and small business offering in the UK (although in other European countries Passport does tend to be part of Vodafone's large business customer offering). For the short average call durations that business users often present, the GBP 0.75 per call surcharge has resulted in higher overall costs than the negotiated per-minute international roaming costs that large UK corporate customers could achieve.

The intriguing result of this move by Vodafone is that for June, July and August standard consumer customers are likely to have lower European roaming costs than their cousins in large enterprise deals, despite business users typically being the highest users of mobile services while roaming internationally. So what can Vodafone's corporate customers do about it, and what additional items should you be thinking about? Here are TC2's preliminary thoughts:

-- If you are a Vodafone UK customer, demand that your account manager explain how he or she is going to obtain the low-cost roaming solution for your users that Vodafone is offering to its consumer customers. Your Vodafone account manager will likely have a long list of reasons why a consumer tariff cannot be offered to a business customer, or will tell you that the only way you can take advantage of it is to sacrifice other hard-won pricing concessions in your contract. Don't accept that premise -- the only important issue is that business users should not have to pay more for European roaming than individual consumers.

-- If your UK wireless carrier is not Vodafone, this move from Vodafone should be very strongly leveraged in any pricing discussions with your incumbent supplier.

-- Like any temporary promotion (which is what this move really is), Vodafone no doubt will be happy to have your users sign up for Passport, get used to it, and start generating surcharges in September. So be careful not to fall into a trap of moving to the consumer plan without being able to move back. Three months of reduced costs could be followed by increased costs later in the year.

-- Note that Passport doesn't extend to the U.S., Canada or many other potential travel destinations for your users, so this won't reduce the high roaming costs that you're vulnerable to in those locations. Furthermore, if Vodafone were to agree to simply switch you lock, stock and barrel from your negotiated roaming rates to standard consumer rates for all roaming calls, then although your costs in "Passport countries" would go down -- at least for three months -- your costs when roaming in other countries would increase. Understanding the net position, based on your users' roaming usage profiles, is crucial. "Know your traffic," as we like to say at TC2.

-- Note that text and multimedia messages qualify for the promotion, but data connectivity to the Internet does not.

The bottom line is that this is a fascinating move from Vodafone, and one that will really stir up the UK wireless market in a very beneficial way for customers, both consumers and corporations.

Clearly the real hope is that Vodafone UK's move is not an isolated one -- that it represents an impetus among the many national mobile carriers and alliances in Europe to keep competing aggressively under the new regulatory policies there. Will others follow? We'll let you know if they do!