Original URL: http://www.theregister.co.uk/2006/03/20/teliasonera_joins_freemove/
TeliaSonera joins Freemove Alliance
But is it enough to rescue the group?
Posted in Mobile, 20th March 2006 09:31 GMT
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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.
A similar structure is available for data services including GPRS and BlackBerry (where available) and soon to include 3G. However, the alliance has yet to offer lower costs for users roaming on its networks, as Vodafone has for business travelers, nor has it come up with a consistent access and sign-on interface across all territories, as the Wi-Fi aggregators and Vodafone Passport offer.
This shows the problems of achieving political and technical harmony between many partners with different network approaches, although Freemove says the next step will be to extend fixed price or inclusive deals to voice and data calls and to smaller companies or even individuals. This can be expected in late 2006 provided the operators remain in agreement. The group also promotes its 'Virtual Home Environment', which enables customers to access to voicemail and customer service — through the same dialling procedure — when travelling to another country.
But the group really needs to reduce pricing rather than just simplify it. Based on public pricing, Vodafone has substantially cheaper data roaming tariffs than Freemove members Orange and T-Mobile. Vodafone charges £5.80 per megabyte for GPRS roaming on its German network, against a charge to Orange customers in Germany of £10 per megabyte and for TMobile UK, £7.50.
This year it plans to launch a 'dashboard' or graphical user interface, as Vodafone Passport has, to give IT managers visibility on cellular usage patterns and costs of employees travelling across all the Freemove networks – but again, it is lagging behind both the world’s largest cellco and Starmap in this respect.
Other alliances
A key question is how far members of the alliances will share services with which they have developed differentiation. In many cases, this will be a means to scale up such a service and attract larger partners, such as integrators. Orange UK’s Extended Connected Service, offered with EDS, is likely to be extended to other Freemove partners, for instance, though this could take two years.
Another potential advantage could be deals with the members’ fixed line parents or siblings, to support converged managed services and roaming. Equant, part of France Telecom, is examining possible involvement in Freemove. However, many of these developments, while interesting in terms of roaming services, are ill defined, will take one to two years to come to fruition, and are dependent on the politics of the operators.
And in the meantime, the alliance could fall apart. The members are slow to come to agreement and have not even integrated their billing systems yet, nor added Wi-Fi support. There are clear conflicts of interest in areas where a multinational customer might have a choice of two or more Freemove members as the primary provider (T-Mobile and Orange in the UK, for instance). And Freemove has been slow to sign up partners to provide roaming in key non-European territories, a situation made worse by the loss of Telefonica and the operator with the largest Latin American presence.
Talk that Asian giants like DoCoMo could join the group has come to nothing – and indeed, given its alliances with Starmap members like O2 through the licensing of its iMode content platform, that particular international giant might be more inclined to join the smaller operator grouping, and make it into a more realistic counterweight for Freemove and Vodafone (especially if Telefonica decides to join alongside its new O2 unit).
Meanwhile, T-Mobile has not fully incorporated roaming with its US arm into the Freemove mix, and Orange is pursuing its own US partnership with Cingular, which is not open to other Freemove members. With memories of the ill-fated Concert venture between BT and AT&T hard to erase, it is all too possible that Freemove members will realise that international telecoms ventures are hard to make work – and then find they can better pursue the desired corporate customers outside the group, with their own allies, and free from the politics of making common cause with one another's major rivals.
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