The problem with this, which I learned the hard way with my first startup, is that roaming costs are not high because of some horrible inefficiency in the telco's charging them, but because they all benefit from the status quo.
My first company was an ISP, and we thought the then current dial up prices (1995) were insane, and quickly worked out we could offer packages at 25% of the largest competitor and make a profit with only 1500 or so users. Problem was, the largest competitors could also make a profit at 25% of their then-current prices, and had large established user-bases. We were inexperienced enough in business to not worry too much about why their prices were to high - we assumed without thinking that their prices reflected their cost base. Instead it reflected their belief about the market at a time - they'd rather sell at that price with a ridiculous margin, than cut the price and grow the total size of the market.
We went in cocky about a big competitive advantage, and it took about 3 days after launch before the incumbent dropped prices to match ours, and while we kept growing, it obviously made things a lot harder.
This company might find the same in the mobile data market if they get any traction at all: Many of their competitors can drop the roaming charges massive pretty much over-night, have large warchests, and have roaming agreements in place that can quickly be re-negotiated if they and their partners start seeing this startup as a threat to their revenues. The massive benefit they can provide now, and the seeming headstart they have on their competitors can evaporate pretty much overnight.
In some countries (I'm thinking the UK) there's the additional issue of capacity. We looked at working with telcos on mobile data here for a previous venture and ran into the issue that data prices are high simply because they're near to capacity.
We were looking at a product which would increase paid for data usage across certain customer segments and several operators weren't interested simply because they didn't want usage to increase because they didn't have much surplus capacity.
Well, it makes sense from the point of view of the telcos, if I'm reading it correctly. In a very competitive market that can't really expand by much, such as this one, there exists a "perverse" incentive for all competitors to implicitly collude in a price point much above reasonable, since noone stands to win much by lowering prices, but all stand to lose. Until a bright, young startup comes and fucks it up.
The requirement of total competitivity in the market is needed for this to happen, so that no agent can win persistently through competitive advantage. Then, any lowering of prices is futile; it becomes a game of musical chairs, in which the telcos are constantly lowering prices until loss of profit, and costumers are just swapping between one and the others. So it's not done. Basic micro. Of course, if the market can tolerate growth, then you lower prices just enough to get the largest market share.
I guess this is yet another reminder that markets do not care for global optima, just for Nash equilibria. Right now, I'm thanking those individuals, specially R Telecomunicaciones, that disrupted the Spanish telecom market with a cavalier disregard for massive profits.
My first company was an ISP, and we thought the then current dial up prices (1995) were insane, and quickly worked out we could offer packages at 25% of the largest competitor and make a profit with only 1500 or so users. Problem was, the largest competitors could also make a profit at 25% of their then-current prices, and had large established user-bases. We were inexperienced enough in business to not worry too much about why their prices were to high - we assumed without thinking that their prices reflected their cost base. Instead it reflected their belief about the market at a time - they'd rather sell at that price with a ridiculous margin, than cut the price and grow the total size of the market.
We went in cocky about a big competitive advantage, and it took about 3 days after launch before the incumbent dropped prices to match ours, and while we kept growing, it obviously made things a lot harder.
This company might find the same in the mobile data market if they get any traction at all: Many of their competitors can drop the roaming charges massive pretty much over-night, have large warchests, and have roaming agreements in place that can quickly be re-negotiated if they and their partners start seeing this startup as a threat to their revenues. The massive benefit they can provide now, and the seeming headstart they have on their competitors can evaporate pretty much overnight.