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Enterprise beware: Rein in your roaming, or suffer the consequences

by Dan Rudich

April 10 2012

Dan Rudich is senior vice president rTEM Business Development at Tangoe


As ridiculous as it sounds, a $75,000 roaming bill is a very real possibility in the age of 4G. Smart organizations will take steps to make sure this never happens.

According to Forbes, Apple is poised to sell up to 66 million iPads this year, which is only a taste of how many mobile applications will exist now and will exist in the future. As technologies continue to include better processors, higher resolution screens and run on more advanced networks, tablets are becoming more functional than ever. However, networks are struggling to keep up with the consumer bandwidth demand. Carriers have started to push back by eliminating unlimited data usage plans but we have to wonder, who is really managing this growth?

The Risk of Roaming

Now that devices like the iPad are more powerful, they are taken more places and are often used abroad. The risk of roaming is becoming exponentially dangerous due to two variables; the proliferation of networks and the speed of these networks. 

There are very few places in the modern world where a decent cell phone signal is not accessible and where users are unable to start roaming for voice, SMS, and even data.  The speed of networks has also added another variable enterprises need to be aware of.  As the industry moves from 2G into 3G and now to 4G networks, network download speeds are changing from approximately three megabytes a second to 42 megabytes a second.  This incredible leap in speed has led to an influx of applications and mobile video.  Gartner projects that over five billion applications will be downloaded in 2012 alone. 

When it comes to the associated cost, enterprises should be seriously concerned.  For example, a mobile user has a one or six gigabyte data plan and if they exceed the limit they will begin incurring a charge of five cents per megabyte.  When they were on a 3G network, their per minute fee would be approximately $1.00.  With the move to a 4G network, in the same scenario, they can incur $15 per minute fee downloading data.

 Out of Plan Domestic Scenario  3G  4G
 Cost Per MB  $0.05/MB  $0.05/MB
 Real World Network Download Speed  2.9 MbPS  42 MbPS
 Per Minute Fee  $1.10  $15.75
 Average YouTube Vdeo (63MB)  $3.15  $3.15
 Average Netflix Video (2 GB)  $100.00  $100.00

This scenario is only compounded when you move into an international zone. When incurring international roaming charges, in most cases, users do not have a plan associated with it and they must pay for the data they use.  A typical roaming charge for data can be $50 per megabyte and in some areas it can even be $80 or $90 per megabyte.  What does that mean?  That means a user can now spend $15,000 in a minute on a 4G international roaming network.  And even if you’re on 3G, just while you’re roaming, if a user watches the average YouTube video, they can incur a charge of $3,000.  If they watch an entire Netflix video, they can receive an invoice for $85,000.  While this may seem ridiculous, it happens more often than you think. And it is only projected to get worse.  Cisco recently noted that mobile video will grow at a CAGR of 90 percent between 2011-2016.

 Out of Plan Domestic Scenario  3G  4G
 Cost Per MB  $50/MB  $50/MB
 Real World Network Download Speed  2.9 MbPS - 6.8MbPS  42 MbPS
 Per Minute Fee  $1,087.50 - $2,550.00  $15,750.00
 Average YouTube Vdeo (63MB)  $3,150.00  $3,150.00
 Average Netflix Video (2 GB)  $85,000.00 per hour  $85,000.00 per hour

The Social Dilemma

Further compounding these scenarios and their potential for risk is the explosive growth of mobility, the consumerization of IT, the recent Bring Your Own Device (BYOD) trend and voracious appetites for social media.  As we move toward faster networks, unlimited data plans are quickly being replaced with complex, tiered plans created by carriers in an effort to try to handle this exponential growth.  There will be over 650 million smart phone users globally in 2013 in an environment where it is easier to travel, data is easier to access, and the roaming cost are skyrocketing. 

It’s no wonder that reigning in roaming has become a top priority for many organizations. And as the ambiguity between work and home communications continues to grow with more devices in more hands, companies will need to take action now to avoid “Bill Shock.”

Dan Rudich is senior vice president rTEM Business Development at Tangoe
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