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End of the roaming empire
Sunday, January 11, 2009 By Adrian Weckler
For the last decade, governments, regulator s, courts and tribunals have tried to force mobile phone operators to reduce their roaming rates. Where they have failed, one small Cork-based company could be about to succeed. Pat Phelan’s Max Roam product is about to hit the big time in company boardrooms around Europe and the US.

His product, a mobile phone Sim card, slashes the cost of roaming by up to 70 per cent. It does so by assigning local landline numbers to a mobile phone: up to 50 per Sim card. It can be used in any unlocked mobile phone in almost any country in the world.

Last year, the European Commission stepped in to cap roaming charges at 59 cent per minute across the EU. But roaming still remains a very profitable business for operators: while less than 5 per cent of their overall industry revenue, it represents close to a third of operators’ profits. It is not hard to unlock a phone, according to Phelan.

‘‘Operators will provide you with an unlocking code once you’ve spent a certain amount with them,” said Phelan, who also owns the Cork-based Cubic Telecom. ‘‘There are hundreds of shops which will do it for you anyway for about €15. Besides, the price of buying an unlocked phone has come down a lot. Nokia is selling an unlocked phone now [the 1202] for €25.”

Watch out, though: mobile operators are not a cabal to be taken on lightly. Neither is the apathy of the bill-paying public. Irish consumers are famous for just sticking with what they have, rather than looking about for a better deal.

‘‘There is no doubt that this is an issue,” said Phelan. ‘‘But if you look at what’s happening in this climate, especially in big companies, that’s changing completely now. We’re talking to very large corporates which have decided that it is worth changing their corporate policies. One company we’re talking to is spending €30,000 a month on roaming fees.”

What Max Roam does is to re-route a mobile call over the internet. Rather than travel along two carriers’ networks, the call goes from one carrier to the web and then from the web back to the foreign carrier’s network. Doing this saves a large international roaming connection fee between the two carriers. Instead, the fee is the same as an in-country connection.

The Sim card can be assigned up to 50 landline numbers. These numbers can be based in any of 52 countries. The Sim card also works as a means of cutting the cost of landline calls. Because the Sim card has a landline number assigned to it, if another landline calls it, the call is free (as is the practice now in Ireland with Eircom and landline operators). Other factors will make Phelan’s product attractive to bean-counters in corporate Ireland. Chief among them is the nature of modern phones. There are few models on the market that do not connect online or download things. That leads to very high bills.

‘‘It’s a particular problem for companies, be cause the phones they give their staff now are all data-intensive,” said Phelan. ‘‘Much of the big roaming bills people see now are data. For example, if I travel to the US, my charge per megabyte of data on our service is $2.But on the big operators, it’s closer to $20 per megabyte.”

The service does, however, have its limitations. The main one is that it cannot be used for an existing mobile number - a separately created number is required. However, Phelan does not see this as the barrier it once was.

‘‘Irish people are increasingly using a second mobile phone for business,” he said. ‘‘So it makes perfect sense now to get a second number. Why not one that will cost you a lot less?”

The other limitation is that it only works with unlocked mobile phones. While unlocking a phone is a simple and relatively cheap exercise, most phones in Ireland are locked by operators. While unlocking them is increasingly common, it is mainly a habit practised by those under 30, who are less likely to be travelling abroad frequently. It is also not the traditional practice of large corporate firms, from whom the operators make the most money on roaming.”

Finally, because the Sim card needs local numbers in the destination country to be pre-assigned, there is a - small - hassle factor in getting organised, or ‘opting in’ before you leave.

Being this organised does not come naturally to Irish phone users: operators such as Vodafone rely on such inertia to charge higher roaming fees, as its ‘passport’ system of lower roaming costs requires a preorganised opt-in element.

Although operators now offer roaming plans to modify the premiums, these are awkward and need to be closely monitored, said Phelan.

‘‘Aside from the cost, the main problem with trying to manage roaming plans is that you’re often switched from carrier to carrier without knowing it when abroad,” he said. ‘‘It’s very user-unfriendly.” The biggest growth area for Max Roam is in adding extra local numbers.

‘‘In the US especially, companies are often barred from calling foreign numbers,” said Phelan. ‘‘With one of these Sim cards, they can call your Irish phone by calling a local US number.”

According to Phelan, the company is on a fast-growth track. ‘‘We now have users in 93 countries,” he said. ‘‘Seventy per cent of our business is outside Ireland, especially the US.”

For many, this will be a welcome option. Income levies, job insecurity and pay freezes are forcing us to look a bit harder and longer to find cheaper ways of funding our lives. MaxRoam’s time may well have come.

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