Truly Global Roaming – the Death of Wireless Carriers (we hope)

Wireless carriers are the company everyone loves to hate. No one denies that they bring an invaluable service. However, their legendarily awful customer service; lock-ins and contracts; early termination fees; obtuse bills; and obscene roaming charges force us all to wish there was a better way.

I believe that current trends will create new forms of wireless carriers that are likely to spell the death of the old ones, unless they find the ability to innovate and cannibalize their own market. Of course, their track record is not exactly enticing.

  • Short-term: In the short-term, there is room for a carrier that will provide global free roaming, unlimited data, no contracts (= no subsidized phones), and excellent customer service. A company like this will have to draw its executives from the Internet sector, one where change is a given and customer service is a right, not a privilege granted by the company. This carrier will operate as Virtual Mobile Network Operator (VMNO), lease bandwidth in multiple countries (initially US and UK), will sell plans at a price that is below current standard plans but without the phone subsidy, and thus no commitment. Customers will be able to purchase a direct in-dial phone number in any country where the carrier operates (or even those where it does not), all of which will ring the mobile phone wherever the customer is. When the customer dials out, it will show the local number as caller ID. All calls will be local. If the customer dials a UK number, it deducts minutes from his/her 1,200 minute plan, but not long-distance charges; if the customer lives in the US but is in the UK, each minute is deducted from his/her 1,200 minute plan, but no roaming charges. With current VoIP technology and the ability to buy tower capacity as a VMNO in multiple countries, this carrier is viable right now. It will need to market directly to mobile (pun intended) traveling customers, such as executives, pilots, and consultants, and will need to price out correctly. Nonetheless, with sufficient capital, this is achievable at this very moment. The primary challenges are: sufficient capital to form the company; successfully leasing tower capacity from companies whose business model you are trying to disrupt; and a large enough initial market to sustain the company through growth.
  • Long-term: In the long-term, 4G is coming. Whether LTE or WiMax, within a few years all mobile services in modern developed countries will be 4G. In the 4G world, voice and data are not 2 distinct mobile services; voice will only be VoIP, running over 4G data. In that world, your voice carrier could be your mobile carrier, or it might be Vonage, Skype, or some other, new mobile VoIP company. If you get off the plan at Heathrow, London, your voice is not roaming; it is just connected to the Internet and giving you voice. In many ways, this simplifies matters. Given the mindset of wireless carriers, it is to be expected that they will block all VoIP except those that they sell, at contracts, lock-in and premium. Again, we can expect data roaming charges to more than offset any lost voice roaming. However, for our mobile carrier disruptor, this world is even easier. Our upstart disruptor can focus solely on leasing data bandwidth, and leave it open to the Internet. Because it is data, much of the cost of roaming disappears. No longer does a call need to route through the local carrier, back to the home country, and then back again. As soon as you are online locally, you are online globally.

If someone could raise sufficient capital (several million dollars just as seed), hire the right executives, customer service people (love to see the ones from Tony Hsieh’s Zappos), engineers and dealmakers, this could start right now.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
This entry was posted in business. Bookmark the permalink.