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EU looking at roaming marketplace

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Legislation being passed through European courts could radically change the EU roaming market and see operators competing for the business of travellers and the creation of an EU-wide “roaming marketplace”.

The European Parliament and Danish Presidency of the Council of Ministers have provisionally agreed a deal to revamp the roaming services market, which will be voted on in May. Operators will have to allow customers to buy roaming services separately from alternative providers, from 1 July 2014. Roaming prices would be lowered into line with domestic prices by 2015.

Paul Lambert, analyst at Informa Telecoms and Media believes that the proposals, if voted into effect on May 10, will significantly increase the pressure on mobile operators to offer more competitive roaming rates to their customers.

“This, in turn, will reduce roaming revenues at a faster rate of decline than has been seen in recent years, potentially leading to more expensive mobile services for consumers in their home market,” he said.

Whilst consumer groups have welcomed the news, hailing the benefits of reduced rates for roaming, the creation of an EU-wide roaming marketplace also opens up an opportunity for operators, who have been missing out on revenue, due to customer apprehension towards roaming.

According to research based on insights from transactions processed by mobile communication solutions provider Syniverse with Informa Telecoms and Media, mobile operators around the world will miss out on more than $1.2bn in additional roaming revenues over 2012, due to the prevalence of “silent roamers”. “Silent roamers” are those international roamers who opt either to minimise or to discontinue their use of mobile services while abroad, generally due to fear of bill shock.

“These silent roamers are arriving in a foreign country, their phone is on – that’s how we know that they are there – they’re registering on the network, but they’re not using any services; neither voice or data,” explained John Wick, SVP Networks at Syniverse.

Wick suggests that another opportunity to encourage the take-up of roaming services could be in the provision of wifi services. The GSMA has recently announced a collaborative effort with the Wireless Broadband Alliance aimed at simplifying the process by which mobile devices connect to wifi networks. The joint initiative will see the SIM adopted as the principal means by which managed wifi networks identify mobile devices, paving the way for cross-network roaming agreements.

Wick said that Syniverse has been exploring the possibilities that wifi could offer to promote roaming usage, but stated that the problem with wifi hotspots is that they are not part of a managed environment.

“It’s a case of ‘best effort’. It’s easy to find a wifi signal and economically feasible, but 10,000 people could potentially be trying to connect to that network at the same time. Wifi is going to play a key part of the environment and servicing data, but what has to happen is the wifi footprint needs to brought to the same level as the 3G core networks.”

While on a 3G network, an operator can manage a customer’s experience, and guarantee that the customer has been assigned a certain slot in the 3G spectrum and that their experience is going to be of a certain standard, the same can’t be said for wifi hotspots.

Wick argues that the industry needs to create a solution to that takes all of the hotspots around the world and provide some layer of management to the wifi hotspots to provide users with the best experience available, and revealed that this is a solution that Syniverse is currently working on developing.

However, Thomas Wehmeier, principal analyst at Informa Telecoms & Media, warned that it is not clear that the widespread deployment of wifi outside of the home is going to deliver to operators the sustainable and profitable future their shareholders and investors demand.

“One of the principal conclusions I have made from my research is that many operators are seemingly “blindly” deploying wifi without a clear understanding of the overall impact of their investments on their business in the future, especially with regards to the effect on mobile data usage from their 3G and 4G networks,” he said.

While there is a huge opportunity in roaming being missed by operators that the new EU legislation and managed wifi services could help capitalise on, they should not lose focus on the fact that there is much more money to be made for every MB of data that goes over their 3G and 4G networks than they when that traffic goes over wifi. However, in the EU, a more competitive landscape for roaming services  could well benefit both consumers and operators, given that there is a $1.2bn revenue global opportunity that is not being grasped.

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