Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Freelance Technology Journalist Kate O’Flaherty explores how EU-wide regulation allowing free roaming is adding costs for MVNOs. How can they convert this into new revenue streams?

The ‘roam like at home’ regulation has been a boon for European consumers, who can now use their phones without extra charges when visiting EU countries. But it poses challenges for MVNOs, which must pay wholesale rates in order for their customers to roam. Making things worse, MVNOs can’t claw back this cash through reciprocal charges like the mobile operators do, because they don’t receive any inbound roaming traffic.

MVNOs can charge customers for roaming in locations outside the EU. However, they cannot rely on this alone as a revenue stream: MVNOs would be competing with mobile operators such as Three UK, which are offering free roaming in countries including the US and Australia, as well as the EU.

But there are also opportunities for nimble MVNOs to take advantage of roaming to differentiate and target new markets. It requires a unique offering including other value-added services. For example, a user could receive a real-time SMS offering a subscription to a roaming plan based on the location they are visiting, suggests Mikaël Schachne, VP Mobility Solutions at BICS. “This can drive user satisfaction – and with customers signing up to more roaming plans and bundles, MVNOs can enjoy better revenue streams and reduce churn.”

In order to avoid paying wholesale roaming rates, James Gray, Director at Graystone Strategy suggests retail MVNOs can innovate by trying to route traffic over Wi-Fi. “IPass for example sells subscriptions to Wi-Fi hotspots so people can roam.”

He points out that many consumers are already “going Wi-Fi first” when abroad and using services such as Apple’s FaceTime. “If you have access to the Wi-Fi network, all those opportunities are there.”

Some MVNOs are already reducing operating costs by offloading cellular traffic to Wi-Fi for their international roaming subscribers, says Simon Renouf, Head of Product at iPass. “Since the wholesale cost of Wi-Fi data from roaming partners is often lower than that of cellular, MVNOs can boost profitability if they can get more subscribers using this technology abroad,” he explains.

According to Hamish White, CEO at Mobilise Consulting, MVNOs can partner with a ‘roaming broker’ offering better rates than the underlying mobile network operator. “This can be facilitated by a dual international mobile subscriber identity (IMSI) solution,” he explains.

For example, some firms offer data offload solutions allowing MVNOs to reduce wholesale data costs while improving connectivity. Depending on the MVNO agreement, services including inflight Wi-Fi can be added to a basic roaming offering.

Business to business roaming

At the same time, internet of things (IoT) is a roaming opportunity for business to business (b2b) focused MVNOs: They can buy wholesale packages from carriers such as BICS – which has negotiated its own roaming agreements – and offer global IoT solutions to connected car manufacturers, for example.

According to Schachne, BICS is seeing a rise in M2M use cases and IoT requirements from various enterprises. “This is where MVNOs can play, providing a customised application, for example climbing the ladder of vertical integration with a specific software solution or service for enterprise or IoT needs.”

He points out that most IoT use cases involve roaming. “Most of the time, when a device is manufactured in one place in the world, it is then shipped to another country.”

John Wick, Senior Vice President and General Manager, Service Provider Group at Syniverse, agrees there is a major opportunity for MVNOs playing in the IoT space. But he points out the importance of wholesale agreements to ensure they can roam as widely as possible.

It is a relatively new market, but some MVNOs are already embracing the IoT opportunity. Schachne cites the example of a new BICS MVNO customer in Asia – which is starting from scratch as a data focused internet connectivity provider, acting as a full MVNO taking control of the platforms and solutions. This involves setting up a new roaming footprint. “BICS is establishing them from day one across the subscriber base,” he explains.

Another BICS MVNO customer is Hanhaa, which is offering an IoT tracking solution for parcel delivery. “They have their own device tracking the shipment and temperature, pressure and shock happening to these parcels. They act as an MVNO, using our solution for global connectivity,” Schachne explains.

Meanwhile, Michael Dargue, Principal at Cartesian, cites the example of Truphone – which offers a single platform for IoT deployments spanning multiple countries – as an innovative service. “They have a lot of the building blocks to offer IoT with multi-country services and also the ability to fit a Sim to a device when they don’t know where it will be shipped afterwards.”

Overcoming hurdles

The possibilities are vast, but roaming use needs to be closely monitored to detect fraud and high spender cases, says Benjamin Grimm Head of Carrier Relations at Mobilcom-Debitel. This is a serious issue for a ‘light MVNO’ without real time access to network functionalities, he says.

MVNOs will also need to prepare for 2019, when there will be additional regulation on intra-EU calls – at least capping the maximum price to be charged to customers, says Grimm. “As an MVNO, we need to think about how to compensate lost revenues, and how to avoid a high wholesale cost for those calls.”

Grimm says regulators need to keep in mind that MVNOs have different economics than mobile operators. He thinks current regulation often “forgot” MVNOs. “This needs to be changed for the future: MVNOs have to speak up and to make sure their interests are known by national and international regulators.”

There are also many opportunities to innovate once issues are overcome. But for now, what do MVNOs need to do? According to Dargue, MVNOs should be cautious about what they offer: “Offering flat rates and all you can eat data is very risky to do nowadays: It’s a very high wholesale cost.”

He says a traffic structure that helps MVNOs to monetise their offering including data usage “is important”.

At the same time, he advises MVNOs to track what subscribers are doing, to help inform future services. “Having analytics and internal dashboard capabilities to track usage, revenue and costs in near real time ensures you are heading in the right direction.”

Join the industry leaders at the MVNOs Europe 2018, taking place in London 6 -7 November, for the unmissable opportunity to learn and share your expertise to reinforce your place within the European MVNO market.