Costly roaming rates are a sore point for many Canadian mobile-phone users. Roam Mobility Inc. says it has a better way.
Roaming rates have become a hot-button issue with consumers hit with high charges for using their phones when travelling outside the country. Roam Mobility and other new players in the Canadian wireless industry see an opportunity to capitalize on the consumer angst.
The Vancouver-based upstart, marketing itself as a “rogue” mobile company, is aggressively ramping up its rollout of cellphones, SIM cards and other devices to entice Canadians looking for cheaper alternatives to high roaming rates the major wireless companies charge when customers travel to the United States with their smartphones in tow.
“We’re not telling you to switch from Rogers, Telus and Bell – we’re just asking you to stop using them when you cross the border,” says Roam Mobility’s chief executive officer Emir Aboulhosn.
Some 18 million Canadians cross the U.S. border each year with many complaining of “bill shock” after using their wireless devices during those trips. Roam estimates that Canadians spend $800-million a year on international roaming fees, with roughly $450-million spent on U.S. roaming alone.
Roam Mobility launched its service in January, competing with the major carriers by offering Canadian travellers unlimited talk and text plans from $3 a day, including free calls to Canada. Its data rates start as low as 2 cents a megabyte.
With the summer travel season just around the corner, Roam is in expansion mode. It will announce on Tuesday a new partnership with Allegiant Air to sell its products during flights starting June 1. Allegiant is a U.S. airline that services border airports such as Niagara Falls, N.Y., and offers discounted fares to popular U.S. destinations.
Roam’s products are already available at a number of Canadian and U.S. airports and at major land border duty-free shops. They will also be sold at Future Shop starting next month. Its product line includes a cellphone for talk and text; SIM cards that can be used in a consumer’s own unlocked phone; and personal “hotspot” devices that provide a high-speed data connection for up to five wireless devices (like smartphones, tablet computers or laptops) at the same time.
Although roaming rates charged by major carriers like Rogers Communications Inc., BCE Inc. and Telus Corp. have fallen in recent years, the issue still chafes. As a result, consumers are increasingly disabling data or shutting off their phones entirely when they travel abroad. That trend is already taking a bite out of data revenues at Rogers. During its last two quarters, the company reported reductions in data roaming revenue, despite introducing new “value packages” that were meant to encourage additional use.
“We have this internal joke in the office which we call the Starbucks tourist, and it’s that person who basically runs around while they are on their trip hopping from Starbucks to Starbucks, and using a free Wi-Fi connection so they can basically make calls,” Mr. Aboulhosn said. “What you’re saving in roaming charges, you are probably making up for it in lattes.”
Other wireless players see opportunity in roaming. Public Mobile, for instance, released a Super Bowl advertisement that uses tongue-in-cheek comedy to illustrate the “roam rage” Canadians experience when receiving their bills. According to its website, Public Mobile offers 15-cent-a-minute U.S. roaming for voice versus fees as high as $1.45 a minute for major carriers.
Roam has already attracted close to 20,000 customers and is on track to hit the 100,000-subscriber mark in the second quarter of 2013. Even though the vast majority of its customers are people who travel to the U.S. in short spurts, Mr. Aboulhosn says Roam can afford to be aggressive with its pricing because its capital expenditures and overhead costs are relatively low.
As a “mobile virtual network operator,” the company does not own spectrum or cellphone towers. Instead, Roam has signed a resale agreement with T-Mobile USA Inc. to provide its customers local rates for talk, text and data while riding on that big U.S. carrier’s 4G (fourth-generation) wireless network.
It plans to strike similar deals to provide its services to Canadian tourists in Mexico by the end of this year, while aiming for European and Asian MVNO agreements further down the road.