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TeliaSonera joins Freemove Alliance

But is it enough to rescue the group?

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Comment Finnish operator TeliaSonera has made a number of moves recently to compensate for its small home customer base by forming a web of roaming alliances abroad.

First came Wi-Fi oriented partnerships with NTT DoCoMo of Japan and others, with TeliaSonera the first European operator to trial WLan/cellular convergence using Unlicensed Mobile Access (UMA) technology. Now the company has joined the Freemove Alliance of large European cellcos – Telecom Italia, Orange and T-Mobile - which seeks to challenge Vodafone in corporate accounts by pooling resources for international roaming and services.

The addition of TeliaSonera, with its 19m mobile customers, mainly in Scandinavia and the Baltics, to Freemove’s 230m-strong base does not really compensate for the imminent departure of Telefonica, an EU-imposed condition of its acquisition of O2. The EU was concerned that, assuming O2 joined its new parent in Freemove, there would be anti-competitive implications in some markets, notably the UK, where three of the five 3G operators would be in Freemove.

While TeliaSonera will bring its increasing expansion in Russia and former Soviet states to the international footprint of the alliance, Telefonica had 88m mobile users worldwide and dominance of the Latin America sector, increasingly important to Freemove’s business traveller customer base. Indeed, with the departure of the Spanish giant and the move by Orange to form other alliances, notably with the US' Cingular, there are question marks over whether Freemove will survive at all.

Freemove performance so far

Like most attempts at grand telecoms alliances, Freemove has so far under-delivered on its promises. Its aim – like that of Starmap, an O2-led consortium of tier two cellcos, which could now be bolstered by the addition of Telefonica – is to provide coordinated services across borders for multinational businesses and corporate travellers. These services were touted as simpler and more uniform roaming tariffs across all the territories covered by members (primarily Europe, the US and, when Telefonica was still involved, Latin America); enhanced customer service with a single point of contact; and in future, more ambitious offerings such as cross-border managed mobility services or international service level agreements.

Member services are sold to corporate customers on an alliance level, rather than on a country by country basis, so that a multinational can negotiate a single deal covering their employees in all the countries where they operate (provided there is a Freemove member present in that country). In addition, the partners would use their combined weight to buy handsets and other products more cheaply and, in theory, pass on these savings to their premium customers. All this was designed to win additional business in the most sought after base in the saturating Europeanspace, the mobile enterprise, and to present a united front to Vodafone, which had taken an earlier start in leveraging its readymade international footprint to gain business market share, with offerings such as the simplified roaming tariff and access mechanisms of its Passport platform.

Roaming costs

But Freemove has failed to deliver what international companies place as their top priority when choosing a mobile provider – lower roaming tariffs, with uniformity across territories. It does offer significant simplification for companies used to negotiating a separate deal in each territory, but is lagging well behind Vodafone in this respect.

FreeMove’s roaming scheme is available for multinational corporations in the UK, France, Spain, Italy, Germany, The Netherlands, Belgium and Switzerland and splits the world into a handful of geographical zones, each with a consistent call rate for calls made and received when users are roaming abroad, and for international calls made from their home countries.

The smart choice: opportunity from uncertainty

Next page: Other alliances

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