 | Issue: | Latin America II 1999 |
| Article no.: | 7 | |
| Topic: | The Wireless Frontier | |
| Author: | Joseph Cunningham | |
| Title: | Technology Director | |
| Organisation: | Logica Aldiscon, Ireland | |
| PDF size: | 36KB |
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Article abstract
The Latin American wireless telephony market is still confounding analysts with its dramatic growth rates but operators face critical challenges in the years ahead if they are to capitalise on their initial success. In this environment the Logica Aldiscon Roaming Inter-working Gateway offers operators a means to build service, revenue and competitiveness on their existing technological platforms. It is designed to provide an inter-working capability between a network based on one protocol standard and another based on an incompatible protocol.
Full Article
The Latin American wireless telephony market is still confounding analysts with its dramatic growth rates but operators face critical challenges in the years ahead if they are to capitalise on their initial success. Market analysts and futurologists have for some time been making predictions of global wireless telephony traffic exceeding that of fixed line traffic within a matter of years. Pointing to remote and inaccessible areas, the developing world and other markets where wireless telephony makes economic as well as sound business sense they held that technological advances would mean that wireless would become the mode of choice for voice communications for a large segment of the consumer base. Given the history of fixed line telephony this analysis has stood up to scrutiny. In the early days of fixed line in the industrialised world governments stepped in with tight regulatory environments and state monopolies to ensure that the telephone network was extended to all areas; rural and urban, remote and near, densely and sparsely populated. The relative wealth of the industrialised markets in which this occurred allowed for the development of ubiquitous fixed line networks with the operators, usually in monopoly positions, still turning a profit. Natural Advantage for Cellular Operators The situation facing emerging economies is radically different. Having had insufficient wealth to develop the ubiquitous networks taken for granted in Europe and North America, coupled with tight regulatory frameworks and stifling monopolies, the penetration of fixed line telephony in these economies remained stubbornly low. And with the move towards deregulation on a global basis the fixed line operators in these countries have found themselves not only in competition with other fixed line operators but also head-to-head with wireless operators. Latin America is a striking example of the advance in wireless telephony at the expense of fixed line. Quite apart from historical economic factors, geography and topography has a major influence on this market. In the western segment in countries such as Chile, the Andes create almost insurmountable obstacles for fixed line operators in terms of expanding networks while to the east the vast size of Brazil and poor infrastructure in countries such as Paraguay and Uruguay pose similar problems. In the case of Bolivia the cost of installation of a fixed line has been estimated at US$1,500 as opposed to just US$150 for a cellular line. This has given the cellular operators a natural advantage in many countries and has created a situation where cellular is almost running neck and neck with fixed line for new subscribers in the Southern Cone countries of Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay. During 1998 fixed line carriers in these countries added 5.2 million new subscribers while wireless attracted 4.7 million. This brought total cellular and personal communications services subscribers to 19.5 million at the end of 1998 – up from just 12.2 million a year earlier. And this 12.2 million figure had itself shown a growth of 91 % over the 1996 level. Key Factors of Growth The dramatic growth rates of the past two years have been attributed to three key factors: · increasing competition; · introduction of Calling Party Pays (CPP); and, · increased availability of prepaid cellular services. CPP has been a major driver of growth in countries such as Chile and Argentina. Prior to its introduction subscribers had to pay not only to make calls but also to receive them due to the fact that the numbering system for cellular phones in Latin America does not alert the caller to the fact that they are dialling a wireless subscriber. CPP alerts the caller to this fact and that they will be charged a higher rate for the call. This means that cellular subscribers are more likely to answer calls and make their cellular numbers widely available. It also makes it more likely that people will subscribe to the service in the first place. Prepaid service has helped drive growth through making cellular accessible to the mass market of low-income subscribers who cannot necessarily afford the relatively high cost of fixed line connection and are attracted to the fact that they have no monthly subscriptions to pay and with CPP can receive inbound calls free. However, it is increased competition which is the principal driver of the market. With new carriers entering the market, incumbents are pushing down rates in an effort to both retain existing subscribers and build their customer bases. Carriers are digitising their networks, cutting tariffs and ramping up their range of services. Up until now, basic voice telephony has been the main service offering from Latin American carriers and the level of customer service has been limited. These factors are leading to a simultaneous decline in revenue per subscriber as well as increasing costs of service provision as the range of services on offer is expanded at little or no cost to subscribers in an effort by carriers to differentiate themselves from competitors. With the cost of radio frequency spectrum becoming increasingly more expensive as competition heats up among multinational entrants to capture a slice of the fast growing market, the key challenge facing operators in Latin America is to develop new revenue generating service offerings which will deliver a return on investment as well as offsetting declining revenue per customer. Roaming Inter-Working Gateway Roaming revenue represents quite a high percentage of revenues for networks in North America and Europe. For many operators in Latin America this is not the case due to technological limitations. In many instances it is simply not possible for networks to accept visiting roamers thus adding to earnings, nor indeed is it possible for them to set up roaming agreements with other networks – cutting out valuable revenue streams. With the majority of Latin American networks using either Code Division Multiple Access (CDMA) or Time Division Multiple Access (TDMA) and being based on ANSI-41, network to network roaming and roaming between countries is rendered extremely difficult due to technological differences. This is now made possible through Logica Aldiscon’s Roaming Interworking Gateway (RIG) which provides the network elements required to allow two-way connectivity between different network types. RIG offers significant benefits to network operators. Competitive position is enhanced by inter-working with other international operators. Roaming revenue is increased from existing customers especially in the high-end corporate market while roaming revenue is increased from visitors to the network. In addition, the value added service offered by RIG not only reduces churn rates on existing customers but assists in attracting new customers. The benefits to customers are obvious. They have the freedom of a single telephone number providing a transparent service wherever they are in the world. All charges are billed to their home operator in their home currency and it also offers simplicity in terms of uniform dialling procedures throughout the world. Benefits of Roaming Technology Logica Aldiscon are specialists in supplying market ready, revenue generating service solutions for wireless networks. Across all network technologies, Logica Aldiscon’ s experience and product innovation are unmatched. The company has installed and manages more than 250 mission critical systems worldwide and is widely acknowledged as a pioneer and leading innovator of short messaging systems. In Latin America alone the company has quite a number of IS-41 live systems giving an in-depth, on the ground knowledge of the ANSI-41 market. Local support for Latin America is offered through a regional office in Brazil. In many ways the Logica Aldiscon RIG could have been developed specifically for the Latin American market. The demand for new services from operators is increasing rapidly. It is designed to provide an inter-working capability between a network based on one protocol standard and another network based on an incompatible protocol. Initially deployed four years ago with GTE and T-Mobil to provide the world’s first two-way GSM-AMPS roaming service, a good number of GSM, IS-41, and Satellite Networks now benefit from Logica Aldiscon’ s inter-working roaming technology. Such functionality is ideal for the needs of operators and customers in the Latin American market. All major protocols are supported by the RIG product. These include GSM phases 1, 2 and 2+, GSM 900/1800 (ITU SS7), GSM 1900 (ITU/ANSI Hybrid SS7), ANSI 41 Rev D and IS-41 Rev A, B and C, and support for roaming with Japanese Personal Digital Communications (PDC) networks. Two-way roaming for both inter- and intra-protocol roaming is supported, allowing roaming to and from South American networks from all North American Networks and to and from Global system for Mobile Communications (GSM) networks to South American networks. In this way all of the favoured wireless and cellular protocols throughout the world are supported. Installing the RIG on an existing network in Latin America is a relatively simple and highly cost efficient process. The RIG is based on components of Logica Aldiscon’s highly available, scalable architecture and is supported on general-purpose UNIX systems. In many ways it is similar to installing technology already in use on the networks. While the business case for installing RIG on a network is made through the enhanced level of customer service offered as well as the generation of additional revenues through subscriber and visitor roaming, there are further benefits which can be added as the service availability expands. For example, the RIG can support translation between equivalent services such as call forwarding, call hold, call wait, multi-party, call barring and short messaging across networks. This means that a customer with access to these services on their home network can access them on other networks where available while roaming. Again this enhances customer service and can increase roaming revenue. Conclusion While analysts agree that wireless and cellular telephony in Latin America will not continue its growth rates of the past two years, growth will remain rapid and the requirement for new services to maintain competitiveness and increase revenues will increase. In this environment the Logica Aldiscon Roaming Interworking Gateway offers operators a means to build service, revenue and competitiveness on their existing technological platforms.
