Startup telco targets U.S. roaming charges for Canadian travellers

A new service offered by startup Roam Mobility that seeks to reduce mobile charges Canadians incur when travelling to the U.S. is part of an emerging global trend to combat roaming fees, analysts say. In a press release Thursday, Roam said it had reached an agreement with U.S. operator T-Mobile USA Inc. that will allow the Canadian company to offer local rates for talk, text and data plans to Canadians travelling into the U.S. The new service is set to launch on Jan. 16 and will offer unlimited prepaid plans starting at a rate of $2 per day for periods spanning from one to 30 days. The company added in the release that data plans would also be made available in 500 MB, 1 GB, 2 GB and 5 GB increments, with rates starting at two cents per megabyte. In an interview with The Wire Report on Friday, Emir Aboulhosn, Roam’s CEO, said travellers could access the service through a Roam Mobility SIM card placed in an unlocked GSM phone, or by purchasing a basic $30 Roam cell phone. He noted that the prepaid service does not charge customers extra for placing long distance calls, or for receiving incoming calls while in T-Mobile’s U.S. operating territory. Aboulhosn said the company developed the new service after realizing that a “vast majority” of Canada’s incumbent telcos roaming revenues came from charges incurred by travellers in the U.S. “We knew that the fees compared to what a local was paying were exorbitant,” he said. “What we wanted to do was essentially build the same type of service that Americans are getting and then export it to Canadians before they cross the border.” Duncan Stewart, director of research for technology, media and telecom at Deloitte Canada, said in an interview that Roam’s launch follows similar efforts by telcos in other countries to reduce roaming charges their subscribers incur. “One of the things that we are seeing is that the roaming costs worldwide are in fact coming down,” he said. In some countries, he noted, national regulators have also taken steps to force carriers to reduce roaming charges when they haven’t moved to do so on their own. “We’ve seen some of that occurring in the European Union over the past two years,” Stewart said. “But there are very significant cuts in roaming rates from country to country in the EU.” Stewart said that in some European countries where one carrier cut its roaming rates, others often followed slowly. “One carrier might have cut its roaming rates and others wouldn’t follow,” he said. “ within a usually relatively short period of time when roaming rates do begin to fall, they fall within a 24 to 36 month period.” Roberta Fox, head of Fox Group Consulting, said that she expects Canada’s incumbent telecom companies to follow Roam’s move. She said in an interview that incumbents will come up with a similar version of the prepaid service. “It’s just going to be a case of who does it first and when,” Fox said. “The new guys come out with things and then the incumbents copy it.” She added other industry players are going to have to react. “So it’s driving innovation and lower costs,” she added. As a general global trend, Stewart said he expects SMS messaging and roaming charges to continue to shrink as a percentage of consumers’ monthly mobile bills. But he added that the basic cost of a cellular system and data charges are unlikely to decrease. “In the future, we’ll probably spend less on roaming but more on data,” he noted. In an Organisation for Economic Co-operation and Development (OECD) report released last May, the OECD said Canada’s telcos charged the highest rates among those in 34 member countries for 1 MB of data usage when subscribers were roaming in another country. Aboulhosn said his company also recognizes the importance of mobile data delivery. He highlighted what he called the company’s “flagship product,” a portable wireless hotspot device called the Liberty, which will cost about $100 up front and will fit “in your back pocket,” he said. He did not specify how much it would cost to use the device in either Canada or the U.S. “That device connects any of your five ,” he said. “So your iPads, your iPhones, your notebooks and everything—up to five devices simultaneously on a high speed connection while you are in the U.S.” Aboulhosn said Roam’s U.S. services will be fast and reliable because of its partnership with T-Mobile, a national provider of wireless service reaching 293 million Americans. He said the company provides a “Tier 1” level service because it gets first access to the network, unlike customer roaming on another telco’s network, whose access is based on available network capacity at any given point in time. For now, he added, Roam’s services can be purchased on the company’s website. But consumers will also start seeing their products and services for sale at various border and airport retailers in the next few months, he noted. “We make it very convenient because it doesn’t require you to call in and get set up or anything,” he said. “It’s honestly that simple.” dgrenier@thewirereport.ca

Startup telco targets U.S. roaming charges for Canadian travellers

News | January 6, 2012

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