 | Issue: | Europe I 2009 |
| Article no.: | 10 | |
| Topic: | Thriving with roaming | |
| Author: | Allan Chan | |
| Title: | Executive Vice President | |
| Organisation: | Mobility Services Tata Communications | |
| PDF size: | 371KB |
About author
Allan Chan is the Executive Vice President, Mobility Services for Tata Communications, part of the Tata Group. Prior to his current role, Mr Chan served as the Vice President, Business Development, Mergers & Acquisitions for Teleglobe and, earlier, as Vice President of Global Traffic Operations and Customer Service. Before joining Teleglobe, Mr Chan was Director International Wholesale at Bell Canada. During his tenure with the company, Mr Chan held various positions within Bell Canada’s finance and corporate development organizations. In the past he also worked with Ontario Hydro and Dofasco. A graduate of the University of Toronto, Mr Chan received a bachelor’s degree in engineering. He also obtained his Master’s Degree in business administration from McMaster University in addition to being a registered Professional Engineer.
Article abstract
The recent European Union regulators’ caps on roaming charges within the EU was a setback for regional operators who depended upon revenues derived from high-priced voice and SMS roaming services. They need greatly increased roaming traffic to compensate for lower prices, but to do so they have to improve service and capture prepaid users. Operators are working to provide both prepaid and post-paid users with seamless, high-quality service and facilities virtually equal to the service and features they receive at home.
Full Article
In June 2007 European Union regulators enacted caps on the allowable wholesale and retail charges for EU-based subscribers roaming within the 27 member states. Regulators cited high costs and lack of predictable pricing for consumers as the reasons for involvement in setting voice roaming charges, and have suggested that they may, in the future, also examine pricing for data and SMS roaming. For mobile operators, who have seen the per-minute price of domestic calls fall – to a penny or less in some Asian markets – the much higher prices charged for voice, data and SMS roaming represent a crucial revenue stream. Roaming has also been a growth area especially welcome to operators serving competitive markets with high existing mobile penetration. European operators look towards two strategies for the continued strength of their mobile roaming stream: increased volume of roaming traffic resulting from lower prices, or extracting additional revenue from roamers traveling outside of the EU. However, both options face barriers. To drive increased roaming usage and to justify premium prices charged for roaming outside the EU, carriers are increasingly challenged to deliver a seamless user experience with high call quality. Volume growth trends Recent surveys of the international roaming market have tended to validate the size and importance of the roaming market opportunity. As international travel has increased, so too has the volume of international roamers – especially across Europe where EU initiatives have focused on encouraging the free flow of people and goods and in areas of Asia-Pacific. The latest reports from Informa suggest that the volume of international roamers will increase strongly into the future, with a projected 600 million roamers worldwide by the end of 2013. Moreover, roaming volumes are projected to increase around the world, not just within traditional roaming hot spots such as Europe and parts of Asia Pacific. With just 13 per cent of mobile users currently roaming, this service offers significant potential for growth even in a difficult economic climate. Pricing trends While the global roaming market tends to follow the volume of international travel, there are other significant factors driving the use of roaming. Traditionally, business users have been the main users of roaming services; they tend to be relatively price insensitive. However, as more consumers adopt mobile phones as their primary communications device, their mobile usage abroad has increased. Several efforts have been undertaken, besides regulatory approaches, to reduce the overall cost and increase the transparency of roaming charges for end users. According to Informa, carriers worldwide have introduced a variety of roaming pricing schemes, including pricing zones, per country, preferred network, per operator, paid-for discounts, domestic rates applied while roaming, data bundles, per-day rates and data charging by application. Corporations have undertaken efforts to negotiate roaming bundles to increase the predictability and decrease the overall costs associated with roaming employees. Many carriers are waiting to see if regulatory initiatives and pricing innovation increases roaming volumes sufficiently to significantly offset lowered rates. With 50 per cent of the operators surveyed in Western Europe reporting that roaming accounts for 10-20 per cent of their total revenue, and 25 per cent of Eastern European operators indicating that roaming is over a quarter of their total revenue, protecting this revenue stream is a key consideration. Focus on experience For many leading operators, delivering a premium user experience for roamers is a strategic investment path to drive roaming usage. Operators are focusing on delivering seamless operation, no matter where in the world customers use their phone. The problems that have traditionally plagued roaming users – dropped calls, dead zones, lack of Calling Line Identification (CLI) information, or difficulty accessing voicemail – have all been targeted for improvement by carriers looking to avoid churn in this highly profitable customer segment. Customers are also demanding more than voice roaming – SMS and data roaming are emerging as growth areas for carriers everywhere. Corporate users, in particular, want to be able to use the same range of functions on their smartphones, including voice, email and even VPN access, as they do in their home markets, to deliver on the promise of on-the-go productivity. While roaming charges may be falling in some markets, roaming remains a high-margin service with a significant positive impact on the bottom line. Investing to improve the roaming experience offers an opportunity to increase usage of roaming services, while also improving satisfaction among a high ARPU (average revenue per user) customer group. High voice quality Delivering consistently high voice quality while roaming remains a challenge for operators, who do not have the same control over the user connection as they do on their home network. Increased post-dial delay, dropped calls, and spotty coverage can all reduce the quality of the roaming experience, leading to lower levels of use. To maximize the user experience, operators often steer users to a particular network, either to deliver higher quality or to control costs by ensuring users remain on commercially preferred networks. However, operators who simply limit customer access to preferred networks may leave roamers with no network access in some regions. In particular, the United States, with varying degrees of coverage by the major carriers across regions, and India, with 23 ‘service circles’, each with a distinct pattern of carrier coverage, require heavily customized steering in order to optimize coverage for the user. Seamless operation Roaming users face a number of barriers to a truly seamless experience in the form of unpredictable behavior for common features. Missing CLI information can significantly reduce call answer rates, as users lack the ability to decide whether a particular call will justify premium roaming rates. Roaming users can also discover that features they take for granted, such as dialing from phone book entries or preprogrammed speed dialing, shortcuts for accessing voicemail, or short codes, such as those used to check minute balances, no longer work as accustomed. Together, these difficulties can provide a significant barrier for user-friendly roaming. Providers are implementing initiatives to create ‘virtual home environments’ that deliver a more seamless, user-friendly roaming experience. By choosing traffic architectures that can guarantee CLI delivery, as well as transparently append country codes to phone book entries and redirect common shortcuts to the appropriate numbers, operators can ensure that their customers’ mobile phones work abroad exactly as they do at home; although implementing these consistently across partner networks can be complex. Extending roaming services Operators hope to expand their traditional roaming base. Prepaid mobile users have not, traditionally, been able to roam in some markets, given the difficulties of dynamically updating prepaid subscriber balances on the host network. As prepaid subscribers already outnumber postpaid users globally, and as prepaid growth is likely to outpace postpaid over the next several years, enabling access to roaming for prepaid users will contribute significantly to the continued expansion of their roaming base. Building convergence As mobile operators examine ways to leverage the benefits of converged IP and voice communications, the challenge is to ensure that investments or network upgrades made now will continue to pay off in an IP-enabled future. A map of what to expect from an IP architecture is in the process of being fleshed out through the efforts of industry groups such as the IPIA, the i3 Forum and the IPSphere Forum. Operators expect to optimize their costs through network consolidation and the more efficient use of resources and the lower management overhead brought about by such efforts. Additionally, access to advanced, converged services, such as presence applications, offers the potential to develop differentiated services and new revenue streams. Management challenges Operators are adapting both to meet heightened user expectations and drive additional revenue and usage. At the same time they face the challenges of exchanging greater traffic volumes with a wider variety of operators. In an increasingly interconnected world, users are roaming farther afield for both business and pleasure. The rise of emerging markets such as the BRICs (Brazil, Russia, India and China) as regional anchors, as well as significant markets in their own rights, will only increase the range of destinations operators will be expected to cover with a seamless experience. To intelligently control the network and commercial management requirements associated with this expansion, operators will need to exchange rich information with many operator-partners. Services that will facilitate the fast and seamless exchange of this rich information will become increasingly important. Partnering As mobile network operators in Europe evolve their offerings to meet the challenges of a new regulatory environment, the right solution partnerships are becoming more crucial to deliver on the promise of a premium experience to drive increased mobile roaming usage. Managed successfully, richer services and more efficient architectures can combine to serve a widened base of mobile users, extending the roaming revenue stream successfully through a tough climate and into the future.
