Tele2's +46 Application

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Customer Case Study

EXECUTIVE SUMMARY

Customer Name: Tele2

Industry: Telecommunications

Location: Sweden

Number of Customers: 3.8 million

BUSINESS CHALLENGE/OPPORTUNITY

● Customers’ reluctance to use mobile phones when abroad to avoid heavy roaming charges

● Stay relevant and grow revenue from innovative mobile value-added services

NETWORK SOLUTION

● Tele2’s +46 VoIP app lets Swedish users call home cheaply, over Wi-Fi, from anywhere in world

BUSINESS RESULTS

● Improvement in customer loyalty with long-term revenue benefits

Tele2’s +46 Application

VoIP Over Wi-Fi

Overview

Tele2 launched the +46 VoIP application to enable its Swedish

customers to make and receive calls while travelling without incurring

roaming charges, for the price of a normal mobile voice call. Forty-six

is the country code for Sweden. The service requires a Tele2

subscription, a Wi-Fi connection, and the app.

Service Innovation

Tele2 launched the +46 VoIP app in July 2012 to enable its Swedish

customers to make and receive calls while travelling without incurring

roaming charges. The app is available for free on both the Android

and iOS platforms. But only customers with a Tele2 Sweden number

can activate it.

Customers using the app rely on Internet access via Wi-Fi to make

and receive calls when they are outside Sweden. The application is

different from other over the top (OTT) voice over IP (VoIP) applications because the called or calling party does

not have to have the application. Instead, calls made to the roaming user’s Tele2 number are answered on the

application for free. Roamers can make a call from the app to any phone number, paying only what they would

have paid if they were making the same call from their phone in Sweden.

“We are the first company to offer our customers a VoIP app. Unlike

similar services, you use your regular cell phone number, and you call

the same call as in Sweden.” — Samuel Skott, Head of Tele2 Private, Tele2


The +46 application deviates from today’s norm where operators impose a significant mark-up on roaming services

and use it as a high-margin service to support lower margin domestic services. Tele2 is using the application to

reinforce its reputation as a market disruptor. Not only is this strategy in line with the European Union’s push to

force down roaming prices within the region, it also enhances the customer loyalty. It addresses customer concern

over high roaming charges when using their phones abroad. Even though the application was not heavily marketed

by Tele2, much of the response on Swedish forums has been complimentary about the offer.

While the +46 application remains important for roaming outside the EU, its benefit for roaming inside the EU has

gone down because of recent changes to the EU’s regulatory framework.

The European Commission proposed new rules in September 2013 as part of the “Connected Continent” package

that reviews the whole regulatory framework for telecoms:

● The objective is to allow citizens to “roam like at home”, making use of their phones in the same way as

they do in their own countries.

● Under the proposals, the price for receiving calls is likely to be zero as of July 2014.

● There will also be rules and incentives to encourage operators to reach “zero roaming” prices.

As such, the +46 application can be seen as a prelude to the eventual removal of roaming charges within the EU.

Opportunities

Tele2 sees an opportunity to differentiate itself in the Swedish market by championing low-cost roaming solutions

for its customers. Since Tele2, like other telcos, already misses out from roaming revenues (see challenges below),

it can afford to launch the +46 app without worrying too much about overall revenue reduction from its own product.

Accordingly, Tele2 has opted to accept the potential loss of roaming revenues that it would have incurred from

customers. But it is using the +46 application to derive some positive benefit from what is in effect already a lost

cause.

Challenges

Telcos miss out from roaming revenues because customers avoid using their phones while abroad. According to

Magnus Larsson, the head of Comviq, Tele2 Sweden’s sub-brand, “Our statistics show that seven out of ten

Swedes turn their data roaming off completely while travelling. They're afraid of using their phones abroad”.

Ovum forecasts that Sweden’s mobile operators will lose US$230 million in 2014 to OTT Voice services. This

includes use of OTT voice services within the country, and more importantly, use of OTT voice services while

roaming outside the country.

“Tele2 has a very clear-sighted and customer-focused approach. We

believe that the ‘+46’ service marks the beginning of a new era in which

cellular operators will use voice over WiFi as a standard access and

natural complement to calls over 2G, 3G, and 4G/LTE.” — Lars Edman, CEO, OptiMobile AB


Figure 1. Revenues Lost by Swedish Mobile Operators to Customers’ Use of OTT Voice Both within and Outside Sweden (Including Roaming)

Strategic Partnerships

Tele2’s partnerships for this innovative service include:

● The +46 app uses technology supplied by OptiMobile, a Sweden-based provider of converged

communication solutions.

● Tele2 has leveraged the mobile application ecosystems of Apple and Google to deliver custom solutions in

the market.

● Normally, operators have roaming agreements with operators in other countries to facilitate roaming for

traveling customers. These agreements are often reciprocal deals and are usually more lucrative for

operators in destinations that receive large numbers of tourists or business travellers. However, by

leveraging the application ecosystem, Tele2 is moving some of this roaming traffic away from the network of

its roaming partners. Instead, it is transferring the traffic onto the Internet via Wi-Fi networks. Tele2 is relying

on the growing availability of (often free) Wi-Fi hotspots around the world. The +46 application specifically

mentions Wi-Fi access at hotels because this is the likely location from where travellers will want to make

and receive calls.

Monetization

The +46 application is free for customers to download on both the iPhone and Android platforms. However, the

application costs SEK 49 (US$7.50), a one-off lump sum to activate. This price is added to the customer’s bill. The

application was initially offered for free for about 12 months after launch.

“Really awesome solution! This is eagerly awaited. Great tribute to

Tele2 for this initiative” Source: Customer review on the www.swedroid.se forum.


Success Metrics

More important than the short-term revenue generation, the service is meant to improve customer loyalty at Tele2,

which in turn leads to longer-term revenue benefits. At the same time, providing customers with its own brand of

low-cost roaming service will help prevent Tele2 customers from using OTT rivals. This tactic will help Tele2 to

differentiate itself against its competitors and help it to gain an advantage in the Swedish telecom market.

Also, +46 application helps to strengthen Tele2’s reputation as a market disruptor and a customer champion. The

application has also helped Tele2 better understand what their customers need while roaming. For example, in

December 2013, Tele2’s Swedish sub-brand, Comviq launched “Fastpris EU”, the first ever flat-rate price plan that

covers the whole of the European Union.

For More Information

To find out more about Tele2’s +46 service, go to

http://www.tele2.se/mobilabonnemang/plus46.html.

Printed in USA C36-731160-00 03/14

http://www.tele2.se/mobilabonnemang/plus46.html

Tele2's +46 Application

Technology

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