The Australian domestic market for mobile services is dominated by the three MNOs: Telstra, Optus and Vodafone.
There are a number of other mobile service providers in the Australian market who provide services using the network of one of the three MNOs mentioned above. These providers are referred to as Mobile Virtual Network Operators (MVNOs), and these service providers range from established companies offering a variety of telecommunications services with hundreds of thousands of customers, to small companies with hundreds of customers.
There are at least 50 companies who are MVNOs, not all of which offer the option of international mobile roaming to their customers. However, the ACMA is unable to ascertain exact number of MVNOs who offer IMR services, and in formulating and considering its regulatory options has relied heavily on submissions from three of them (M2 Communications, AAPT and Spintel) as well as industry bodies such as the Australian Mobile Telecommunications Association (AMTA) and Communications Alliance (CA). The majority of MVNOs concentrate on low cost pre-paid services.
Some MVNOs also act as aggregators or wholesalers, in that they receive services from a MNO and resell all or part of these services to another MVNO.
The best available estimate for MVNO subscriber numbers is 1.5 million, compared to 30.1 million subscribers to MNO services3. This puts the total estimated size of the mobile telecommunications market in Australia at 31.6 million subscribers, of which 4.75% are customers of MVNOs. However, an alternative and more recent estimate of the market share of MVNOs is at around 14%.4
In recent years there has been a growing adoption of smart phones in the Australian market. With this change in handset use, mobile data use in Australia has grown significantly in recent years. In the domestic market5:
Mobile phone use is now near-ubiquitous , with mobile services totalling 30.2 million in June 2012.
Mobile phone handset internet subscriptions increased by 21.5% over the 12 months to June 2012, totalling 16.19 million. This figure includes tablet users with a SIM (i.e. those who might use IMR, as without a SIM IMR is not possible).
Mobile handset internet use increased from 3,695 terabytes downloaded in 2010-11 to 6,610 terabytes downloaded in 2011-12, an increase of 78.69% (one terabyte is equal to one million megabytes).
32% of Australians (aged 14 years and over) used the internet via their mobile phone during June 2012, up from 21% in June 2011.
Mobile internet use by Small to Medium Enterprises is also increasing, with 63% using smartphones and 29% using tablet devices in the year to June 2012.
Problem
The discussion in this section focuses on describing the nature and extent of the problem in terms of lack of consumer awareness on using IMR in Australia. The focus is on the nature of bill shock, especially in relation to data, consumer complaints, as well as existing voluntary measures by industry to provide additional consumer information on roaming and the availability of alternatives to roaming. The evidence presented suggests that information provided to consumers now is significantly different to the information, or lack of, that was voluntarily provided by industry in the past. This has been most evident over the past twelve months.
The major problem the Direction aims to combat is ‘Bill Shock’, which refers to both unexpected charges and unexpectedly high charges on mobile devices when Australians travel overseas. It is the differences between the charging of domestic mobile use versus international use. Mobile providers advise the ACMA that charges relating to data usage are the major source of this problem. The rise in mobile phone usage, in particular internet connected mobile devices, has contributed to the billing issues relating to mobile phone usage. In addition, growth in number of Australians travelling overseas is also likely to have a role.
Data accounts for around 72 per cent of mobile usage by overseas travellers. The rate at which data is charged is significantly higher when using IMR. For example, the charges for data are at least 10 times higher than domestic rates for a customer roaming in New Zealand.
Complaints made to the Telecommunications Industry Ombudsman (TIO) in relation to IMR are currently trending downwards. In part, this is likely the result of MNOs introducing measures to combat Bill Shock in recent years. The MNOs are now to varying degrees compliant with much of the minimum requirements under the Minister’s direction.
It is also important to note that consumers already have the choice of a range of alternatives to IMR, some of which allow them to retain their usual mobile phone number.
International Mobile Roaming Market in Australia
The global mobile market to the end of 2011 consisted of 5,891 million subscriptions6. This compares with the Australian mobile market of 30.2 million subscriptions as at mid 20127. Australian Network Providers, given their relatively small size in comparison to the global market, tend to be price takers for wholesale IMR services rather than price makers, although the Singtel and Vodafone entities are multinational operations.
Growth in international travel by Australians has been significant in the past ten years, with short-term international departures from Australia increasing from 3.5 million in 2002 to 8.2 million in 20128. The destination with the largest number of short-term international departures was New Zealand, which also has the largest number of short-term Australian arrivals.
This growth in international travel has led to a growth in the IMR market. A continuation of growth in international travel by Australians would present further opportunities for participation in the IMR market.
The three major providers have indicated that there are a high number of individual agreements that allow customers to roam onto International networks; Telstra estimates it has over xx individual agreements with overseas networks, with Optus estimating over xx agreements. There is little scope for Australian suppliers to reduce IMR charges outside bilateral international agreements. Despite the parent companies of Vodafone (Vodafone and Hutchison) and Optus (Singtel) having a significant international presence, this does not appear to translate to lower roaming prices relative to Telstra.
