Introduction

Here’s a meeting no one wants to have: sitting down to explain to your manager that on a recent business trip you downloaded the latest blockbuster film, and it cost the company £3,600 in data roaming fees. Or that you skyped your partner for ten minutes a day for a week at an overseas conference, which cost your employer more than £1,000.

This kind of unexpected telecoms expense has a name: bill shock. It can result from either data roaming costs or voice call charges. The user is generally unaware of the costs they are incurring, until the bill arrives with an unpleasant surprise. What are the main factors that contribute to bill shock, and how can they be overcome?

Why we're increasingly
data-hungry

The way that people use technology is changing, and that has an impact on cost. Corporate procurement is increasingly turning away from Blackberry devices towards smartphones. There is simply much more you can do with a smartphone: a traditional Blackberry had poor internet access and was generally only used for voice services and to access emails.

In contrast, smartphones can be used to browse the web, stream music or video, access work applications and hold video conferences. 4G technology is becoming more widespread, boosting data consumption even more. A smartphone is not just a business tool, it’s a device that connects us to a whole world of online interaction and entertainment. This is why bill shock is becoming more prevalent, in step with our changing data consumption habits.

How data and voice usage
easily adds up

We are used to using our phones without really thinking about the cost. Employees are often not told about what it will cost their employer if they use a work device abroad. However, costs can easily add up, even if they initially sound reasonable. The cost of making a call at £1 a minute does not sound too bad, unless you think of someone making several hour-long calls each day for a week or more.

The cost of data usage can be even harder to judge than voice services. You might be told that data costs £3 per MB, but how many MB will it take to check your emails, make a video call and check a few favourite websites? Many people think of services such as Skype or iPlayer as free, so they simply do not think of the associated data cost. In some of the worse corporate deals we’ve seen, businesses have been charged £210 for a 10-minute Skype video-to-video call while outside the EU, while downloading a feature film has set them back £3,600.

Impact of EU regulation on
roaming charges

Until the UK is formally out of the EU, its many regulations, including those that govern telecoms, still stand. As such, we will continue to enjoy the significant reductions brought about by the June 2017 regulations regarding the cost of roaming within Europe. This is good news, but the devil is in the detail: some telecoms companies simply add an opt-out clause to their contracts invalidating the regulations, potentially leaving their customers with a poorer deal.

The EU regulation change has taken place alongside a hike in non-EU data roaming charges. It is debatable whether this is a coincidence or a deliberate strategy by telecoms companies to protect their revenues as profits fall in the EU. It used to be that a charge of £3-£4 per MB was a poor deal for roaming outside the EU; a charge of £6 is not unusual. What you save in Europe, you might pay back through travel in other continents.

Strategies for avoiding
bill shock

There is no magic bullet for avoiding bill shock, but there are a number of measures you might consider to mitigate the costs. One of the easiest is employee education. Let workers know what the cost of data usage and voice calls will be while they are abroad and they are likely to be much more mindful about the costs they are incurring on your behalf. Tell someone it will cost £30-£60 to download a song on iTunes abroad and they are more likely to wait until they get home. Alternatively, they could simply plan ahead and download media before the trip to avoid high costs.

For some companies, it might be appropriate to adopt a more restrictive policy by banning data roaming or limiting it to certain people and defined purposes. The cost of managing this policy and possible impacts on productivity should be balanced against the savings.

Tariff negotiations

It is also possible to negotiate with your telecoms provider to ensure that you pay the lowest possible price for services overseas. This should be included within the overall procurement process for your total service package. Suppliers often use smoke and mirrors to disguise the reality of which tariffs offer best value, so carry out a careful analysis of any offers you receive.

It is possible to purchase group shared bundles, which means you buy a block of data that can be used by one person or several, according to your needs. This can work out as a cost-effective solution, provided that you understand your data needs well enough to right-size the data block. Buying an oversized data block will prove wasteful, as you will not use what you have paid for.

Using a data bolt-on
or passport option

Another possible solution is to purchase individual bundles, often called bolt-ons or passports. These can be applied automatically, or through an internal application system. These products simply provide employees with data roaming and overseas voice services on a case-by-case basis, either indefinitely or day-by-day.

The passport system uses a set price for a certain amount of data roaming, voice calls, or both. This may or may not deliver good value depending on how the price is set and the precise requirements of your organisation. The advantage of this system is that you have greater control of who uses data and voice services, and transparency about what this costs.

The downside of this system is that it can potentially result in significant administrative work. Whoever manages the system, perhaps a facilities or IT team, need to keep track of who is using the passport account and when they are travelling to and from a destination. In the real world, people often neglect to mention when a trip is extended, or can only provide last-minute notice that they will be abroad.

When the system does not work well, there is definite scope for wastage to be incurred. For example, there have been instances where bolt-ons have been added onto a smartphone account for an employee at a rate of £100 or £300 per month, and payment continued for months after that person left the company or ceased to travel abroad regularly. While a well-managed system can deliver savings, it does not take much for this mechanism to get out of kilter. As such the automatic application can prove easier and more effective but only if the right price is obtained at contract negotiation.

Capping:
Beware unintended consequences

Some businesses like to agree with their providers that users will have their usage capped at a certain point, or that they will be sent a notification message if usage goes beyond a certain level. This can help with self-regulation. This can be set either when a defined amount of data has been used, or a pre-set price point reached.

Capping can either cut off a service after the pre-set point, or throttle it back so that the speed is much slower. This may sound like a good idea, but again there are unintended consequences to consider: sometimes there is a valid reason for using a lot of data. A CEO negotiating an important deal in the Middle East or a manager addressing a crisis with a supplier in China will need to use their devices for information and connecting with colleagues. Cutting off their service at a crucial time could have a dramatic impact.

The importance of finding a
reliable vendor

Finding a reliable, high-quality telecoms provider with attractive and transparent pricing structures will help you to avoid bill shock. Forming this positive partnership is much easier if you are equipped with key information: do you understand your usage? Can you anticipate what might change in your usage patterns in future? Is your current tariff competitive?

It is important to understand the detail of any contract you enter into, rather than judging it on surface values. Data roaming and overseas voice services is just one area in which there are potential improvements to be made in how you pay for and control your telecoms expenditure. Some telecoms vendors provide much better value than others, but it is only through detailed analysis that the true picture emerges.

Could you secure a better deal for your telecoms services? Why not ask The Network Collective to help?

Disclaimer

Other than matters relating to The Network Collective, this research is based on current public information that we consider reliable. Opinions expressed may change without notice and may differ from views set out in other documents created by The Network Collective. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made.

This research does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice.

No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Network Collective Limited © 2018

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