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perspective JUNE 2014 
The Future of 
Mobile Roaming 
Helping mobile 
operators 
remain 
competitive 
Colin Brooks, Etienne Piciocchi, Aditya Kandath, Isabelle Paradis and Steve Heap 
in the evolving 
landscape 
in partnership with
The Future of Mobile Roaming 
Helping mobile operators 
remain competitive 
in the evolving landscape 
Published by 
Value Partners Management Consulting Ltd 
Kings Buildings, 7th Floor, 
16 Smith Square, London SW1P 3HQ, UK 
In partnership with 
Hot Telecom 
June 2014 
Written and edited by: 
Colin Brooks, Etienne Piciocchi, Aditya Kandath, 
Isabelle Paradis and Steve Heap 
If you would like an electronic copy 
or more information on the issues 
raised in the report please contact: 
colinj.brooks@valuepartners.com 
etienne.piciocchi@valuepartners.com 
If you would like to subscribe 
or to be removed from our mailing list 
please write to: 
subscription@valuepartners.com 
valuepartners.com 
Copyright 
© Value Partners Management Consulting Limited 
All rights reserved
CONTENTS 
perspective the future of mobile roaming 
in partnership with 
introduction 5 
What is roaming ? 6 
Current state of the roaming market 7 
Disruptions to the roaming market 9 
Opportunities for operators 13 
CONCLUSION 15 
How Value Partners and HOT TELECOM can help 16 
auth ors 18 
About hot telecoM 19 
About Value Partners 20
Roaming has been a high margin 
business for mobile operators. 
However, the high rates have led 
many travellers to become silent 
roamers, leaving a large untapped 
market. 
4 – 5
perspective the future of mobile roaming 
in partnership with 
introduction 
On the 3rd of April 2014, the members 
of the European Parliament voted in 
overwhelming majority to remove roam-ing 
fees completely in the European 
Union (EU) by December 2015. 
The vote was a result of 5 years of regu-latory 
price caps and changing attitudes 
towards the high cost of roaming. 
With the removal of the roaming rates 
altogether the mobile operators in 
Europe are predicted to lose 2% of their 
annual revenue, representing about 
€1.65bn ($2.29bn).1 
This news acts as a reminder that both 
regulatory developments and massive 
technology changes are creating a 
major impact on the roaming activity 
of consumers and roaming revenue of 
operators, and that real opportunities 
are available to increase revenue in this 
space. 
Roaming fees have been a steady 
source of income for mobile operators. 
However, as a result of high roaming 
charge rates, many travellers are silent 
roamers (i.e. do not use their phone at 
all when abroad) and many others are 
very careful in how they use their serv-ice 
while travelling. As a result, opera-tors 
have left a latent market untapped. 
In 2013, it was estimated that 70% to 
80% of all roamers (depending on the 
region) were silent mobile data roamers. 
This latent demand equates to a loss of 
10,500 TB/year in mobile roaming data 
traffic in 2013, and represents a missed 
revenue opportunity of over $3.0 billion2 
in inter-operator payments alone. 
In addition, mobile subscribers who do 
use mobile data roaming, significantly 
curb their data usage when abroad, 
again due to the high price of data 
roaming packages. If all current roamers 
had a similar data usage pattern as they 
do when at home (with the introduction 
of all-you-can-eat data roaming plans 
for example), the current data roaming 
usage would increase 500 fold. 
On the voice side, a similar situation is 
occurring. It is estimated that around 
50% of roamers do not use mobile voice 
services while roaming, which equates 
to a loss of 16 billion potential interna-tional 
minutes and US$0.6 billion3 in 
termination rates revenue. 
Consistently high roaming fees com-bined 
with the growth of smartphones 
and tablets, the rising dependence on 
social media and the ease of access to 
the internet is prompting mobile users 
to seek alternative services when roam-ing 
such as WiFi, local sim cards, as well 
as alternate roaming service providers. 
These combined pressures on mobile 
operators’ international business and 
the advent of LTE, with the potential of 
exponential traffic growth that it could 
bring, are making it more urgent for 
mobile operators to change their busi-ness 
model and introduce new services 
and packages to take advantage of the 
upcoming explosion in data roaming 
traffic and services. 
1 European commission estimates 
- This estimation is based on 
the assumption of the following 
domestic prices: mobile calls 
0.103 €/min; SMS, 0.02 €/SMS; 
data 0.01 €/MB. 
2 HOT TELECOM estimates. 
3 HOT TELECOM estimates.
What is roaming ? 
International roaming is a service that 
allows customers of a mobile operator in 
one country to obtain services from an 
operator in another country using the same 
handset, systems and approaches that 
they use at home, facilitated by a common 
technology and a wholesale inter-operator 
tariff, the IOT, which is a bilateral agree-ment 
6 – 7 
between operators that defines the 
pricing under which they provide services 
for their respective roaming customers.4 
Roaming was originally established for 
voice calls, but expanded to messaging 
and data roaming in the 2000s. 
Authentication and approval 
The starting point for roaming is an au-thentication 
and approval step whereby 
the visited network recognises the phone, 
signals back to the home network, and 
receives approval to allow different catego-ries 
of roaming – from emergency calls only 
through voice, messaging and full data ac-cess. 
The visited network assigns a tempo-rary 
roaming number to the customer. 
Voice roaming 
When a roaming customer makes a voice 
call, the visited network is responsible for 
establishing the call using its own network 
and wholesale supplier relationships. Details 
of the call are passed back to the home 
network for billing and inter-carrier settle-ment. 
Calls made to that roaming customer 
are first routed to the home network, which 
confirms that the customer is, in fact, 
roaming, and originates a second call to the 
temporary number that has been assigned 
to them in the visited network. Finally, the 
home network bills the customer at the 
contracted roaming rate for any calls made 
(or received) while roaming. These can also 
include calls routed to voicemail. 
Messaging roaming 
Unlike the voice case, a message sent by 
a customer while roaming is sent back 
through international signalling net-works 
to the home network for delivery 
using their supplier arrangements. This 
occurs even if the message is being sent 
to someone in the visited country. This 
outgoing text is billed to the customer 
at the retail roaming rate. Incoming text 
messages to a roaming customer are 
generally not billed to that customer. 
Data roaming 
In a similar way to text messaging, data 
roaming – providing internet access - is 
currently returned, via a GRX (GPRS 
Roaming exchange) or IPX (Internet 
Protocol Exchange), back to the home 
network for processing and routing to 
the required server or website. In a data 
roaming environment, three parties are 
therefore normally involved from both a 
technical and commercial perspective: 
the visited network providing radio ac-cess 
and initial data transport, the GRX/ 
IPX operator and the home network 
handling the data and its routing into 
the public internet. While not signifi-cantly 
impacting the cost of the service, 
this does result in the ‘tromboning’ of 
the IP packets often back to servers 
in the visited network to provide local 
web-based information. The retail cost 
to the end customer has traditionally 
been high, and charged per MB of data 
transferred to the handset. Wholesale 
settlement between the operators is 
based on the inter-operator contract 
(IOT) and then the GRX/IPX generally 
charges both networks based on port 
usage. 
4 International Roaming 
Agreement OECD, 2013
Current state 
of the roaming market 
perspective the future of mobile roaming 
in partnership with 
Historically roaming charges and fees 
have been a very high margin business 
for mobile operators. However high 
roaming prices have dis-incentivised 
customers, tarnished the reputations of 
mobile operators, and resulted in a la-tent 
market left untapped by operators. 
Consumer’s usage is dis-incentivised 
The high prices that mobile operators 
have traditionally charged have been 
deterring users from even turning on 
the phone when roaming. Data roam-ing 
costs represented the highest cost 
to consumers when using their device 
abroad and the lack of transparency 
on how much data typical activities 
consume has made most people very 
wary of any usage. Around the world, 
most roamers are silent and use WiFi or 
other bypass methods (local SIMs that 
provide access to the visited network at 
local rates) when abroad. 
A study done by the European Commis-sion 
on roaming in the EU found that: 
• 47% of customers never use mobile 
internet in another EU country 
• Only 1 in 10 customers use emails in 
the same way abroad as they do at 
home 
• Around 70% of mobile users switch 
off their data connection when roam-ing 
The industry’s reputation is being 
tarnished 
The prices are reflecting badly on the 
industry and mistrust toward mobile 
operators is spreading. Regulatory 
intervention has further weakened the 
industry’s position, restricting them 
to imposed structures. In addition, 
the marketing of some smaller mobile 
operators (e.g. T-Mobile in the USA) 
have ridiculed the high roaming charges 
of their competitors as a way to gain 
market share. 
Mobile operators may be missing 
out on a latent market 
Industry analysts and regulators esti-mate 
that due to prevalent silent roam-ing, 
telecoms companies are missing 
out on a significant latent market. 
The European Commission estimated 
that in the EU 94% of travellers limit 
their use of mobile phones in some way 
or other because of current pricing 
strategies. 
This latent market is already partially 
addressed by substitutes such as WiFi 
offloading. However, with the estab-lishment 
of commercial LTE roaming 
agreements and appropriate pricing 
structure, customers would be able to 
obtain the same high capacity service 
even while roaming and continue their 
normal usage behaviour wherever they 
are located.
Exhibit 1 
European Commission regulated wholesale rates evolution (euro per unit) 
wholesale price caps JULY 2011 july 2013 july 2013 july 2014 
data (per mb) 50 cents 30 cents 20 cents 10 cents 
voice (per minute) 18 cents 14 cents 10 cents 6 cents 
sms (per sms) 4 cents 3 cents 3 cents 2 cents 
Exhibit 2 
Cap on retail roaming charges in the European Union 2012 –2014 in Euro Cents 
Source: European Commission, Value Partners analysis 
8 – 9 
DATA 
(PER MB) 
VOICE CALLS MADE 
(PER MINUTE) 
VOICE CALLS RECEIVED 
(PER MINUTE) 
2012 2013 2014 
SMS 
(PER MESSAGE) 
70 
29 
8 9 
45 
24 
7 8 
20 19 
5 6
Disruptions 
to the roaming market 
perspective the future of mobile roaming 
in partnership with 
The situation in the roaming market is 
changing due to regulatory changes, 
technology developments and the 
arrival of substitutes. These evolutions 
threaten the profitable roaming busi-ness 
of mobile operators. 
Regulatory environment 
The worldwide mobile telecommunica-tions 
industry is a key enabler to global 
economic growth and hence regulators 
in many countries have acted to lower 
pricing when it is judged to be exces-sive 
and in order to stimulate increased 
competition. 
European Union 
The European Commission has been at 
the forefront, introducing regulations 
that set maximum prices for both retail 
and wholesale roaming services and 
also increase competitive pressures 
by permitting users to choose alterna-tive 
roaming providers and to directly 
access the services of the operator in 
a visited network via a direct relation-ship, 
without changing the SIM card 
or smartphone. The European Commis-sion 
has regulated the wholesale (as per 
Exhibit 1) and retail price caps. 
Furthermore, the European Commis-sion, 
voted to completely remove 
roaming charges within the EU starting 
in December 2015, stating that mobile 
users will pay the same rate as they 
would if using their phone in their home 
network. 
The roaming charges in the European 
Union have been constantly reduc-ing 
from the introduction of roaming 
caps for the last few years (Exhibit 2). 
Despite this, the European Commission 
has still been concerned about the loss 
of business across the community as a 
result of high roaming rates and hence 
recently voted in the European Parlia-ment 
to remove roaming charges. 
Worldwide 
Other countries are taking similar 
actions, while a group of more protec-tive 
countries are looking to charge 
or restrict access to applications that 
could allow the bypass of the services 
of the mobile operators – e.g. Skype, 
WhatsApp etc. 
Similarly, given the increasing impor-tance 
of data services, the Gulf Cooper-ation 
Council is now looking at roaming 
charges with a view to developing an 
appropriate price cap5. Roaming is also 
a concern in Australia, New Zealand, 
Asia Pacific and Latin America with all 
three regions making moves towards 
increasing price transparency.6 
5 International Roaming 
Agreement OECD, 2013 
6 Wiki consult workshop on 
Regulatory and Economic 
Aspects of Roaming, 2013 
Recent regulatory and 
technology changes in the 
market are also forcing mobile 
operators to re-evaluate their 
business model.
Technology developments and 
challenges 
Penetration of smartphones and tablets 
The world of mobility has seen two 
upheavals in the space of a just a few 
years. The first was the launch of the 
iPhone and then the iPad, followed 
closely by the wide range of Android 
based smartphones and tablets. 
These powerful devices with high resolu-tion 
screens and cameras have given 
consumers access to content, applica-tions, 
videos and entertainment wher-ever 
they are, and in most developed 
countries, have rapidly taken the lion’s 
share of the market. 
Deployment of LTE networks 
In parallel, the mobile industry has 
been finalising and launching LTE in the 
radio network, paving the way for much 
higher speed downloads and the poten-tial 
for quality segregation of services all 
the way from the source to the handset. 
The rapid rollout of the new networks, 
coupled with the smartphone’s abil-ity 
to seamlessly choose a local WiFi 
network when available, has resulted 
in an increase in data usage – without 
consumers being aware of the scale of 
that usage. Some networks launched 
LTE with “all you can eat” data plans, 
further reducing consumer interest in 
monitoring their LTE usage or even car-ing 
whether they are on LTE as distinct 
from a local WiFi network. 
10 – 11 
Roaming on LTE is not yet deployed 
at scale, and the current perception 
(and reality in many cases) of high data 
roaming charges means that roaming 
consumers have significantly altered 
their home behaviour when travelling, 
seeking out WiFi hotspots and restrict-ing 
any 3G activity to a minimum. The 
combination of growth in data usage 
domestically but lack of appetite to 
data roam whilst traveling abroad 
indicates a growing latent demand and 
potential loss of consumer utility. 
Other developments 
New applications that provide video 
conferencing to the smartphone, bridg-ing 
different standards together, are 
being deployed, consumption of video 
entertainment via the smartphone and 
cutting the “cord” to traditional TV 
are all occurring and the expectation 
that this behaviour will continue when 
travelling will be hard to stop. 
As we have seen, regulators are ap-plying 
pressure at both retail and 
wholesale price levels, but competitive 
pressure between operators is also 
creating change – for example with the 
offer from T-Mobile US to drop roaming 
charges altogether for data and mes-saging 
in a range of countries. 
Finally, service integration of automatic 
WiFi authentication and connection 
to distant networks when in a roam-ing 
country will also enable this same 
seamless environment that consumers 
see at home, but without some of the 
network costs currently incurred. All of 
these pricing and technology changes 
will result in a significant expansion of 
usage in a roaming environment.
perspective the future of mobile roaming 
in partnership with 
Roaming alternatives 
The transient roaming market, consist-ing 
of substitute services which allow 
travellers to avoid roaming fees, is 
estimated to be worth US$17bn7. 
There are several substitutes for con-sumers, 
ranging from simply connecting 
to the local WiFi network to Crow-dRoaming, 
an application which allows 
subscribers to use other members’ 
unlimited or unused data in their mobile 
package when travelling outside their 
own network. These alternatives have 
the potential to place a downward pres-sure 
on international roaming revenue 
and, more significantly, develop an 
international roaming market no longer 
dominated by domestic operators. 
The impact of substitutes on interna-tional 
roaming is evolving continuously 
with developing technologies. 
The ability of these substitutes to re-place 
demand for international roaming 
is dependent on how ‘perfect’ these 
substitutes are8 and currently many so-lutions 
are only for the technically savvy. 
As accessibility and coverage dominate 
consumer decisions, the desire for con-tinued 
access when travelling can only 
increase, growing this already large and 
relatively untapped market 
International roaming alternatives 
can be broadly divided into two main 
categories; SIM-based technologies and 
Network-based technologies. 
SIM-based technologies 
• Local SIM cards: an attractive option 
for placing local calls abroad. A user 
obtains a different number and the 
phone must be unlocked. 
• Dual SIM cards: Most relevant if the 
user is a frequent visitor to one coun-try. 
Users must subscribe to a second 
service and the phone must support 
dual SIM cards. 
• Global SIM cards: Multi-IMSI technol-ogy 
offering worldwide connectivity 
at local rates. This will also cover 
‘Global MVNOs’9: Companies that 
have obtained access to the local 
mobile and fixed networks in several 
countries at local wholesale prices 
and can connect to local mobile net-work 
operators. They usually provide 
local numbers to clients in each of 
the visited countries. 
Examples of companies operat-ing 
in this arena include Gentay (UK 
based), HolidayPhone (Europe focus), 
FlexiRoam (USA, Canada, Australia and 
South-East Asia offering) and Roam-line 
(global). Among these Interfone 
(global) offers a chip-based solution. 
The chip must be installed on top of 
the existing SIM card. Every time an 
international number is dialled, the call 
handling is directed through Interfone’s 
server so a local charge is incurred. 
Another example is TravelSIM (Austral-ia), 
which supplies customers a prepaid 
SIM with a single number valid for 190 
countries. The user receives free calls 
in 115 countries. Users can divert calls 
to their home mobile number to the 
TravelSIM service so they also receive 
these calls, for a charge. 
7 Syniverse Transient roamer 
potential was based on expert 
insights into average roaming 
volumes, end-user roaming 
habits, and third-party travel and 
roaming reports (2012 end-user 
spending estimates $8.7bn spent 
on hotel WiFi, $3.9bn on paid 
WiFi hotspots, $225m on in-flight 
WiFi, and $4.8bn on local SIMs). 
8 GSR 2012 Discussion Paper 
9 International Mobile Roaming 
Services ITU report
BackChat Mobile (Australia) offers a 
similar service. Regionally, alternatives 
are particularly active at targeting users 
in Europe, Australia and the US, where 
outgoing travel is high and international 
roaming well-publicised as expensive. 
The inherent global nature of the tel-ecoms 
12 – 13 
industry means no one opera-tor 
is unaffected by these substitutes, 
although it is the domestic provider 
of international roaming in Europe or 
Australia that stands to lose the most. 
In response to this loss, operators are 
offering more competitive roaming 
packages. For example Vodafone Eu-rotraveller 
allows users to use their UK 
contract allowance in Europe for £3 per 
day. Operators also offer the option to 
buy data allowances for a daily rate (e.g. 
£6.67 for 100MB). EE offers customers 
voice, SMS or data packages e.g. £35 
for 200MB for 30 days roaming data 
in Europe (voice and SMS are monthly 
contract packages). No frills mobile 
operator Frogmobile (Europe) offers 
users prepaid 24 hour or 7 day roam-ing 
data passes, a service activated for 
all prepaid subscribers. Users send an 
SMS to activate the pass (unlimited data 
costs €15 for 1 week). 
Network-based technologies 
• Local WiFi: by definition not a truly 
mobile substitute. Usage of WiFi 
combined with IP telephony boosts 
the usefulness of this substitution. 
• Alternative data roaming providers 
and local break-out: From July 2014 
EU regulations will give users the 
option to sign up to an alternative 
roaming provider separate from their 
domestic provider. This will allow a 
company in the visited country to 
offer data roaming services, separate 
from any arrangement with the home 
operator. 
• Sharing applications: CrowdRoaming 
(Europe) is an application that allows 
users with unlimited data access 
at home to automatically access 
locals’ WiFi hotspots when travelling 
abroad. In return, when these travel-lers 
get back home, they themselves 
open their mobile WiFi hotspot to 
visiting users. Cell Buddy (targeting 
medium-sized corporations) enables 
users to purchase a SIM card in the 
marketplace (carriers, MVNOs and 
resellers put their SIMs up for sale). 
The SIM is then downloaded to their 
phone without the need to switch 
SIMs. When abroad this SIM will 
act as a local SIM and no roaming 
charges are incurred. 
The breadth of alternatives to interna-tional 
roaming is wide and continues to 
expand. There may be some develop-ments 
that restrict the choices for con-sumers 
such as sponsored data, which 
provides free access to the services of 
just one company or content provider 
as they pay for wireless broadband to 
give a user access to their services. 
Overall, the industry is in a nascent 
stage; however, this does not reduce 
the significance of activity in this new 
alternatives market and the potential 
to capture consumer demand, thereby 
shifting a growth market away from 
traditional operators.
Opportunities 
for operators 
perspective the future of mobile roaming 
in partnership with 
Faced with declining roaming revenues, 
some mobile operators have started 
reacting by increasing their domestic 
pricing plans or increasing the cost of 
roaming outside the area of regulation 
(particularly in the EU once roaming 
charges in the EU are removed). 
This might not be the best strategy. 
Instead operators should adopt new 
pricing roaming structures, and develop 
alternative sources of revenues by capi-talising 
on this significant latent demand 
for services. 
Change/adopt new roaming pricing 
structures 
Mobile operators should restructure 
their roaming pricing plans in order 
to address the latent demand. Some 
mobile operators have already started 
doing so: 
• A number of operators waive roam-ing 
charges as an add on incentive 
for its subscribers like 3 and Orange 
Spain and T-Mobile US 
• Other operators like Orange in 
France offer waiving of roaming 
charges for its subscribers if they 
spend over a certain limit 
• In Germany, E-Plus, owned by Dutch 
group KPN NV, lets customers pur-chase 
a no-roaming-fee plan for a flat 
rate of €3 a month. Vodafone PLC 
has a similar deal 
• In many cases, budget operators 
such as Sweden’s Comviq, VikingCo 
NV’s Mobile Vikings and Iliad SA’s 
Free of France are leading the no-fee 
push, forcing larger rivals like Orange 
to follow suit in a market already 
caught up in price wars 
• Comviq, the low-cost brand of 
Sweden’s Tele2 AB, offers Swedish 
subscribers unlimited calls, messag-ing, 
and one gigabyte of data traffic 
in all EU countries, for €55 a month. 
Comviq thinks it can make up 
revenue on additional usage, once 
customers stop worrying about 
roaming fees. 
Faced with declining roaming 
revenues, rather than simply 
increasing the prices of 
their other services, mobile 
operators should adopt new 
pricing roaming structures, 
and develop alternative 
sources of revenues by 
capitalising on this significant 
latent demand for services.
Develop alternative sources of revenue 
• Some mobile operators might be 
interested in setting up roaming hubs 
or networks (IPX) to provide high 
quality access to their networks for a 
fee. The operators that are part of a 
commercial group are perhaps in the 
best position to do this. IPX hubbing 
makes the process of supporting 
roaming for multiple IP-based ser-vices 
14 – 15 
much simpler and cheaper. 
• Technical evolutions such as LTE and 
Voice over LTE (VoLTE) can support 
local access to services rather than 
the tromboning approach described 
earlier. This reduction in costs by 
using local breakouts can enabled 
higher usage packages at lower cost. 
• Enabling global access to WiFi net-works 
using authentication controlled 
by the home mobile network can 
ease access to high speed connec-tions 
when travelling and maintain 
control and revenue for the mobile 
operator. 
• LTE roaming usage growth is ex-pected 
to drive a range of different 
services like data usage monitor, 
premium data connectivity quality, 
Rich Communications Suite (RCS)/ 
messaging, video streaming, HD 
voice, video calling, social networking 
and location-based services. This will 
increase value of low ARPU custom-ers, 
combat high value customer loss, 
raise commitment level of customers 
and capitalise on apps. 
• Real Time Intelligence/Big Data is 
another avenue where Wholesalers 
can offer tools which allow MNOs to 
access retail oriented and actionable 
information, using the wholesale raw 
data coming from Signalling and 
Roaming (GTP, info from Data clear-ing 
House DCH). These tools can help 
to stimulate retail usage by helping 
customer sub-segmentation 
• Some large service providers (e.g. 
Facebook) have suggested that some 
elements of internet access should 
be provided to all their customers 
and may be willing to sponsor that 
access in some way. Similarly, large 
providers of online content, e.g. Net-flix, 
may be willing to pay for guar-anteed 
high quality access to mobile 
smartphones to permit video viewing 
both at home and when traveling. 
Such deals could provide an interest-ing 
and valuable additional revenue 
stream to mobile operators and IPXs 
interconnecting them.
perspective the future of mobile roaming 
in partnership with 
CONCLUSION 
Mobile operators face many challenges 
in the next few years with accelerat-ing 
technology changes, regulatory 
activities and changing user behaviour 
all impacting the way their services are 
used and their financial health. At worst, 
a do-nothing scenario in addressing 
these changes will inevitably move them 
down the value chain towards wireless 
transport providers. 
The mobile industry has one massive 
advantage compared to many other ap-plication 
providers – the ability to use a 
globally recognised addressing scheme 
– the telephone number – and to seam-lessly 
use those services wherever the 
customer happens to be. Traditional 
roaming pricing has discouraged the ad-vantage 
in the minds of many consum-ers 
and they have sought alternatives to 
meet their needs. 
Refocusing efforts on creating eas-ily 
used and simply priced services 
that persuade the customer that their 
mobile service is the default service 
wherever they are could pay dividends 
in generating incremental revenue and 
customer satisfaction, while remov-ing 
the need for regulatory action on 
pricing in the future. In addition, mobile 
operators could also seek to develop 
alternate revenue generating services 
and adapt to the changing landscape.
How Value Partners 
and HOT TELECOM can help 
With our extensive experience in this 
sector, Value Partners and HOT TELE-COM 
believe we can help mobile opera-tors 
develop the right strategy in order 
to position themselves successfully in 
the future roaming market. 
Our expertise is also greatly supple-mented 
16 – 17 
by the fact that we have access 
to roaming statistics and data world-wide 
that will be essential to conduct 
meaningful analyses and develop effec-tive 
strategies for mobile operators. 
Potential voice and data roaming 
revenue and traffic forecasts 
• Our team of experts can help mobile 
operators, carriers and regulators 
define potential roaming revenue and 
traffic, taking into consideration the 
latent demand and the growth of the 
demand over the next 5 years 
• The model derives its input from 
interviews with mobile operators in 
different regions, discussions with 
industry experts, regulators and mo-bile 
data hubs as well as market data 
developed during past projects 
• Forecasts are developed by region 
and technology (2G/3G and LTE). 
Roaming elasticity analysis 
• Our team of experts can help you 
understand the performance of past 
roaming propositions by mobile 
operators around the world 
• Our assessment of the pricing elastic-ity 
is presented using cases studies 
as well as an elasticity models 
• Typical case studies include pro-files 
of mobile operators (company 
overview, services offered, number 
of subscribers, technology used), 
pricing package offered (structure, 
timeline), and impact of pricing pack-age/ 
structure on traffic evolution. 
The elasticity model includes, for 
example, variation of demand gener-ated 
by the variation in price, and 
the review of the optimal pricing to 
maximise revenue 
• This data is provided by region 
• A qualitative evaluation of the differ-ence 
in demand elasticity for 2G/3G 
and LTE can also be analysed.
perspective the future of mobile roaming 
in partnership with 
Competitor analysis and identification 
of disruptive offerings 
• Our team of experts can generate a 
detailed analysis of the competitive 
landscape highlighting examples of 
innovative organisations in the data 
roaming market, showcasing their 
business models and performance 
• The analysis is framed around several 
areas of innovation and opportu-nity 
in the roaming market, drawing 
examples from each (including local 
SIM cards, global SIM cards and 
Apps). 
LTE roaming strategy 
• Our team of experts can support 
you in developing your LTE roaming 
strategy, whether in terms of roaming 
hubs, partners and pricing to ensure 
optimal quality and return on invest-ment 
• Our knowledge of the Interna-tional 
carrier segment enables us to 
provide an up-to-date view of who 
is offering what, when it comes to 
roaming support, and what solution 
and provider would best meet your 
objectives 
• This type of project can also include 
workshops on IPX and how it can 
help you offer the best customer 
experience to your LTE subscribers 
when roaming while optimising your 
revenue. 
With extensive experience in 
this sector, Value Partners and 
Hot Telecom can help mobile 
operators develop the right 
strategy in order to position 
themselves successfully in the 
future roaming market.
18 – 19 
AUTHORS 
colin Brooks 
Managing Partner, London Office 
colinj.brooks@valuepartners.com 
Isabelle Paradis 
President, Hot Telecom 
paradis@hottelecoms.com 
Etienne Piciocchi 
Engagement Manager, London Office 
etienne.piciocchi@valuepartners.com 
Steve Heap 
CTO, Hot Telecom 
steveheap@hottelecoms.com 
Aditya Kandath 
Business Analyst, London Office 
aditya.kandath@valuepartners.com
perspective the future of mobile roaming 
in partnership with 
About 
HOT TELECOM 
Hot Telecom is a leading telecommu-nication 
research company provid-ing 
premier quality telecom research 
and services to the International 
telecom community. Hot Telecom’s 
team is composed of International 
telecom experts based in America, 
Europe and Asia, giving it a unique 
insight into the global telecom 
market. 
In over 11 years, Hot Telecom has 
served 200+ of the industry’s lead-ing 
operators, consulting firms and 
governments globally, providing 
them with telecom analysis and 
reports, training and consulting 
services across a wide range of 
subject areas. 
We have extensive and unrivalled 
international experience working on 
data roaming from both a technical 
and commercial perspective. 
Our projects include: 
• Development of a comprehensive 
model of international voice, 
messaging and data traffic and 
revenue - This has been extended 
with a detailed regional analysis 
of roaming of those services 
coupled with assessments of the 
impact of changing technology, 
particularly LTE, on the roaming 
volumes and revenue 
• Detailed financial analysis to 
support an actionable plan for a 
major voice wholesale company 
– Our client was looking to 
expand into the support of mobile 
international interconnect and 
roaming services 
• Detailed report on carrier and 
mobile operator IP migration, 
advanced service launch and IPX 
deployment plans - we developed 
the report from comprehensive 
interviews with key players and a 
global survey of the industry 
For more information on the issues 
raised in this note please contact 
the authors. 
Find all the contact details on 
hottelecom.com
Copyright © Value Partners 
Management Consulting Limited 
All rights reserved 
About 
Value Partners 
Value Partners is a leading interna-tional 
strategy consultancy focused 
on the converging industries of 
telecommunication, media and infor-mation 
technology. 
Founded in Milan in 1993, Value 
Partners’ rapid growth testifies the 
value it has created for clients over 
time. Today it draws on 25 partners 
and 250 professionals from 23 na-tions, 
working out of offices in Milan, 
London, Istanbul, Dubai, São Paulo, 
Buenos Aires, Beijing, Shanghai, 
Hong Kong and Singapore. 
Value Partners has built a portfo-lio 
of more than 350 international 
clients – from the original 10 in 1993 
– with a worldwide revenue mix. 
Our clients include the world’s lead-ing 
operators, vendors, financiers, 
policy makers and regulators. 
We work across corporate and 
commercial strategy, economic and 
financial advisory support, licensing, 
regulation, rights management, 
organisational change and opera-tional 
improvement. 
In particular, we have deep expertise 
in carrying out projects related 
to data roaming and regulation. 
Some of our projects include 
the business model evaluation 
in the roaming market, evaluation 
and development of a new 
business model for the Multinational 
Companies (MNCs) segment, 
and the assessment of roaming 
market - we supported a mobile 
roaming start-up client in gaining 
investment for a multiple-number 
based roaming solution. 
For more information on the issues 
raised in this note please contact 
the authors. 
Find all the contact details on 
valuepartners.com 
Milan 
London 
Istanbul 
Dubai 
São Paulo 
Buenos Aires 
Beijing 
Shanghai 
Hong Kong 
Singapore

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The Future of Mobile Roaming Helping mobile operators remain competitive in the evolving landscape

  • 1. perspective JUNE 2014 The Future of Mobile Roaming Helping mobile operators remain competitive Colin Brooks, Etienne Piciocchi, Aditya Kandath, Isabelle Paradis and Steve Heap in the evolving landscape in partnership with
  • 2. The Future of Mobile Roaming Helping mobile operators remain competitive in the evolving landscape Published by Value Partners Management Consulting Ltd Kings Buildings, 7th Floor, 16 Smith Square, London SW1P 3HQ, UK In partnership with Hot Telecom June 2014 Written and edited by: Colin Brooks, Etienne Piciocchi, Aditya Kandath, Isabelle Paradis and Steve Heap If you would like an electronic copy or more information on the issues raised in the report please contact: colinj.brooks@valuepartners.com etienne.piciocchi@valuepartners.com If you would like to subscribe or to be removed from our mailing list please write to: subscription@valuepartners.com valuepartners.com Copyright © Value Partners Management Consulting Limited All rights reserved
  • 3. CONTENTS perspective the future of mobile roaming in partnership with introduction 5 What is roaming ? 6 Current state of the roaming market 7 Disruptions to the roaming market 9 Opportunities for operators 13 CONCLUSION 15 How Value Partners and HOT TELECOM can help 16 auth ors 18 About hot telecoM 19 About Value Partners 20
  • 4. Roaming has been a high margin business for mobile operators. However, the high rates have led many travellers to become silent roamers, leaving a large untapped market. 4 – 5
  • 5. perspective the future of mobile roaming in partnership with introduction On the 3rd of April 2014, the members of the European Parliament voted in overwhelming majority to remove roam-ing fees completely in the European Union (EU) by December 2015. The vote was a result of 5 years of regu-latory price caps and changing attitudes towards the high cost of roaming. With the removal of the roaming rates altogether the mobile operators in Europe are predicted to lose 2% of their annual revenue, representing about €1.65bn ($2.29bn).1 This news acts as a reminder that both regulatory developments and massive technology changes are creating a major impact on the roaming activity of consumers and roaming revenue of operators, and that real opportunities are available to increase revenue in this space. Roaming fees have been a steady source of income for mobile operators. However, as a result of high roaming charge rates, many travellers are silent roamers (i.e. do not use their phone at all when abroad) and many others are very careful in how they use their serv-ice while travelling. As a result, opera-tors have left a latent market untapped. In 2013, it was estimated that 70% to 80% of all roamers (depending on the region) were silent mobile data roamers. This latent demand equates to a loss of 10,500 TB/year in mobile roaming data traffic in 2013, and represents a missed revenue opportunity of over $3.0 billion2 in inter-operator payments alone. In addition, mobile subscribers who do use mobile data roaming, significantly curb their data usage when abroad, again due to the high price of data roaming packages. If all current roamers had a similar data usage pattern as they do when at home (with the introduction of all-you-can-eat data roaming plans for example), the current data roaming usage would increase 500 fold. On the voice side, a similar situation is occurring. It is estimated that around 50% of roamers do not use mobile voice services while roaming, which equates to a loss of 16 billion potential interna-tional minutes and US$0.6 billion3 in termination rates revenue. Consistently high roaming fees com-bined with the growth of smartphones and tablets, the rising dependence on social media and the ease of access to the internet is prompting mobile users to seek alternative services when roam-ing such as WiFi, local sim cards, as well as alternate roaming service providers. These combined pressures on mobile operators’ international business and the advent of LTE, with the potential of exponential traffic growth that it could bring, are making it more urgent for mobile operators to change their busi-ness model and introduce new services and packages to take advantage of the upcoming explosion in data roaming traffic and services. 1 European commission estimates - This estimation is based on the assumption of the following domestic prices: mobile calls 0.103 €/min; SMS, 0.02 €/SMS; data 0.01 €/MB. 2 HOT TELECOM estimates. 3 HOT TELECOM estimates.
  • 6. What is roaming ? International roaming is a service that allows customers of a mobile operator in one country to obtain services from an operator in another country using the same handset, systems and approaches that they use at home, facilitated by a common technology and a wholesale inter-operator tariff, the IOT, which is a bilateral agree-ment 6 – 7 between operators that defines the pricing under which they provide services for their respective roaming customers.4 Roaming was originally established for voice calls, but expanded to messaging and data roaming in the 2000s. Authentication and approval The starting point for roaming is an au-thentication and approval step whereby the visited network recognises the phone, signals back to the home network, and receives approval to allow different catego-ries of roaming – from emergency calls only through voice, messaging and full data ac-cess. The visited network assigns a tempo-rary roaming number to the customer. Voice roaming When a roaming customer makes a voice call, the visited network is responsible for establishing the call using its own network and wholesale supplier relationships. Details of the call are passed back to the home network for billing and inter-carrier settle-ment. Calls made to that roaming customer are first routed to the home network, which confirms that the customer is, in fact, roaming, and originates a second call to the temporary number that has been assigned to them in the visited network. Finally, the home network bills the customer at the contracted roaming rate for any calls made (or received) while roaming. These can also include calls routed to voicemail. Messaging roaming Unlike the voice case, a message sent by a customer while roaming is sent back through international signalling net-works to the home network for delivery using their supplier arrangements. This occurs even if the message is being sent to someone in the visited country. This outgoing text is billed to the customer at the retail roaming rate. Incoming text messages to a roaming customer are generally not billed to that customer. Data roaming In a similar way to text messaging, data roaming – providing internet access - is currently returned, via a GRX (GPRS Roaming exchange) or IPX (Internet Protocol Exchange), back to the home network for processing and routing to the required server or website. In a data roaming environment, three parties are therefore normally involved from both a technical and commercial perspective: the visited network providing radio ac-cess and initial data transport, the GRX/ IPX operator and the home network handling the data and its routing into the public internet. While not signifi-cantly impacting the cost of the service, this does result in the ‘tromboning’ of the IP packets often back to servers in the visited network to provide local web-based information. The retail cost to the end customer has traditionally been high, and charged per MB of data transferred to the handset. Wholesale settlement between the operators is based on the inter-operator contract (IOT) and then the GRX/IPX generally charges both networks based on port usage. 4 International Roaming Agreement OECD, 2013
  • 7. Current state of the roaming market perspective the future of mobile roaming in partnership with Historically roaming charges and fees have been a very high margin business for mobile operators. However high roaming prices have dis-incentivised customers, tarnished the reputations of mobile operators, and resulted in a la-tent market left untapped by operators. Consumer’s usage is dis-incentivised The high prices that mobile operators have traditionally charged have been deterring users from even turning on the phone when roaming. Data roam-ing costs represented the highest cost to consumers when using their device abroad and the lack of transparency on how much data typical activities consume has made most people very wary of any usage. Around the world, most roamers are silent and use WiFi or other bypass methods (local SIMs that provide access to the visited network at local rates) when abroad. A study done by the European Commis-sion on roaming in the EU found that: • 47% of customers never use mobile internet in another EU country • Only 1 in 10 customers use emails in the same way abroad as they do at home • Around 70% of mobile users switch off their data connection when roam-ing The industry’s reputation is being tarnished The prices are reflecting badly on the industry and mistrust toward mobile operators is spreading. Regulatory intervention has further weakened the industry’s position, restricting them to imposed structures. In addition, the marketing of some smaller mobile operators (e.g. T-Mobile in the USA) have ridiculed the high roaming charges of their competitors as a way to gain market share. Mobile operators may be missing out on a latent market Industry analysts and regulators esti-mate that due to prevalent silent roam-ing, telecoms companies are missing out on a significant latent market. The European Commission estimated that in the EU 94% of travellers limit their use of mobile phones in some way or other because of current pricing strategies. This latent market is already partially addressed by substitutes such as WiFi offloading. However, with the estab-lishment of commercial LTE roaming agreements and appropriate pricing structure, customers would be able to obtain the same high capacity service even while roaming and continue their normal usage behaviour wherever they are located.
  • 8. Exhibit 1 European Commission regulated wholesale rates evolution (euro per unit) wholesale price caps JULY 2011 july 2013 july 2013 july 2014 data (per mb) 50 cents 30 cents 20 cents 10 cents voice (per minute) 18 cents 14 cents 10 cents 6 cents sms (per sms) 4 cents 3 cents 3 cents 2 cents Exhibit 2 Cap on retail roaming charges in the European Union 2012 –2014 in Euro Cents Source: European Commission, Value Partners analysis 8 – 9 DATA (PER MB) VOICE CALLS MADE (PER MINUTE) VOICE CALLS RECEIVED (PER MINUTE) 2012 2013 2014 SMS (PER MESSAGE) 70 29 8 9 45 24 7 8 20 19 5 6
  • 9. Disruptions to the roaming market perspective the future of mobile roaming in partnership with The situation in the roaming market is changing due to regulatory changes, technology developments and the arrival of substitutes. These evolutions threaten the profitable roaming busi-ness of mobile operators. Regulatory environment The worldwide mobile telecommunica-tions industry is a key enabler to global economic growth and hence regulators in many countries have acted to lower pricing when it is judged to be exces-sive and in order to stimulate increased competition. European Union The European Commission has been at the forefront, introducing regulations that set maximum prices for both retail and wholesale roaming services and also increase competitive pressures by permitting users to choose alterna-tive roaming providers and to directly access the services of the operator in a visited network via a direct relation-ship, without changing the SIM card or smartphone. The European Commis-sion has regulated the wholesale (as per Exhibit 1) and retail price caps. Furthermore, the European Commis-sion, voted to completely remove roaming charges within the EU starting in December 2015, stating that mobile users will pay the same rate as they would if using their phone in their home network. The roaming charges in the European Union have been constantly reduc-ing from the introduction of roaming caps for the last few years (Exhibit 2). Despite this, the European Commission has still been concerned about the loss of business across the community as a result of high roaming rates and hence recently voted in the European Parlia-ment to remove roaming charges. Worldwide Other countries are taking similar actions, while a group of more protec-tive countries are looking to charge or restrict access to applications that could allow the bypass of the services of the mobile operators – e.g. Skype, WhatsApp etc. Similarly, given the increasing impor-tance of data services, the Gulf Cooper-ation Council is now looking at roaming charges with a view to developing an appropriate price cap5. Roaming is also a concern in Australia, New Zealand, Asia Pacific and Latin America with all three regions making moves towards increasing price transparency.6 5 International Roaming Agreement OECD, 2013 6 Wiki consult workshop on Regulatory and Economic Aspects of Roaming, 2013 Recent regulatory and technology changes in the market are also forcing mobile operators to re-evaluate their business model.
  • 10. Technology developments and challenges Penetration of smartphones and tablets The world of mobility has seen two upheavals in the space of a just a few years. The first was the launch of the iPhone and then the iPad, followed closely by the wide range of Android based smartphones and tablets. These powerful devices with high resolu-tion screens and cameras have given consumers access to content, applica-tions, videos and entertainment wher-ever they are, and in most developed countries, have rapidly taken the lion’s share of the market. Deployment of LTE networks In parallel, the mobile industry has been finalising and launching LTE in the radio network, paving the way for much higher speed downloads and the poten-tial for quality segregation of services all the way from the source to the handset. The rapid rollout of the new networks, coupled with the smartphone’s abil-ity to seamlessly choose a local WiFi network when available, has resulted in an increase in data usage – without consumers being aware of the scale of that usage. Some networks launched LTE with “all you can eat” data plans, further reducing consumer interest in monitoring their LTE usage or even car-ing whether they are on LTE as distinct from a local WiFi network. 10 – 11 Roaming on LTE is not yet deployed at scale, and the current perception (and reality in many cases) of high data roaming charges means that roaming consumers have significantly altered their home behaviour when travelling, seeking out WiFi hotspots and restrict-ing any 3G activity to a minimum. The combination of growth in data usage domestically but lack of appetite to data roam whilst traveling abroad indicates a growing latent demand and potential loss of consumer utility. Other developments New applications that provide video conferencing to the smartphone, bridg-ing different standards together, are being deployed, consumption of video entertainment via the smartphone and cutting the “cord” to traditional TV are all occurring and the expectation that this behaviour will continue when travelling will be hard to stop. As we have seen, regulators are ap-plying pressure at both retail and wholesale price levels, but competitive pressure between operators is also creating change – for example with the offer from T-Mobile US to drop roaming charges altogether for data and mes-saging in a range of countries. Finally, service integration of automatic WiFi authentication and connection to distant networks when in a roam-ing country will also enable this same seamless environment that consumers see at home, but without some of the network costs currently incurred. All of these pricing and technology changes will result in a significant expansion of usage in a roaming environment.
  • 11. perspective the future of mobile roaming in partnership with Roaming alternatives The transient roaming market, consist-ing of substitute services which allow travellers to avoid roaming fees, is estimated to be worth US$17bn7. There are several substitutes for con-sumers, ranging from simply connecting to the local WiFi network to Crow-dRoaming, an application which allows subscribers to use other members’ unlimited or unused data in their mobile package when travelling outside their own network. These alternatives have the potential to place a downward pres-sure on international roaming revenue and, more significantly, develop an international roaming market no longer dominated by domestic operators. The impact of substitutes on interna-tional roaming is evolving continuously with developing technologies. The ability of these substitutes to re-place demand for international roaming is dependent on how ‘perfect’ these substitutes are8 and currently many so-lutions are only for the technically savvy. As accessibility and coverage dominate consumer decisions, the desire for con-tinued access when travelling can only increase, growing this already large and relatively untapped market International roaming alternatives can be broadly divided into two main categories; SIM-based technologies and Network-based technologies. SIM-based technologies • Local SIM cards: an attractive option for placing local calls abroad. A user obtains a different number and the phone must be unlocked. • Dual SIM cards: Most relevant if the user is a frequent visitor to one coun-try. Users must subscribe to a second service and the phone must support dual SIM cards. • Global SIM cards: Multi-IMSI technol-ogy offering worldwide connectivity at local rates. This will also cover ‘Global MVNOs’9: Companies that have obtained access to the local mobile and fixed networks in several countries at local wholesale prices and can connect to local mobile net-work operators. They usually provide local numbers to clients in each of the visited countries. Examples of companies operat-ing in this arena include Gentay (UK based), HolidayPhone (Europe focus), FlexiRoam (USA, Canada, Australia and South-East Asia offering) and Roam-line (global). Among these Interfone (global) offers a chip-based solution. The chip must be installed on top of the existing SIM card. Every time an international number is dialled, the call handling is directed through Interfone’s server so a local charge is incurred. Another example is TravelSIM (Austral-ia), which supplies customers a prepaid SIM with a single number valid for 190 countries. The user receives free calls in 115 countries. Users can divert calls to their home mobile number to the TravelSIM service so they also receive these calls, for a charge. 7 Syniverse Transient roamer potential was based on expert insights into average roaming volumes, end-user roaming habits, and third-party travel and roaming reports (2012 end-user spending estimates $8.7bn spent on hotel WiFi, $3.9bn on paid WiFi hotspots, $225m on in-flight WiFi, and $4.8bn on local SIMs). 8 GSR 2012 Discussion Paper 9 International Mobile Roaming Services ITU report
  • 12. BackChat Mobile (Australia) offers a similar service. Regionally, alternatives are particularly active at targeting users in Europe, Australia and the US, where outgoing travel is high and international roaming well-publicised as expensive. The inherent global nature of the tel-ecoms 12 – 13 industry means no one opera-tor is unaffected by these substitutes, although it is the domestic provider of international roaming in Europe or Australia that stands to lose the most. In response to this loss, operators are offering more competitive roaming packages. For example Vodafone Eu-rotraveller allows users to use their UK contract allowance in Europe for £3 per day. Operators also offer the option to buy data allowances for a daily rate (e.g. £6.67 for 100MB). EE offers customers voice, SMS or data packages e.g. £35 for 200MB for 30 days roaming data in Europe (voice and SMS are monthly contract packages). No frills mobile operator Frogmobile (Europe) offers users prepaid 24 hour or 7 day roam-ing data passes, a service activated for all prepaid subscribers. Users send an SMS to activate the pass (unlimited data costs €15 for 1 week). Network-based technologies • Local WiFi: by definition not a truly mobile substitute. Usage of WiFi combined with IP telephony boosts the usefulness of this substitution. • Alternative data roaming providers and local break-out: From July 2014 EU regulations will give users the option to sign up to an alternative roaming provider separate from their domestic provider. This will allow a company in the visited country to offer data roaming services, separate from any arrangement with the home operator. • Sharing applications: CrowdRoaming (Europe) is an application that allows users with unlimited data access at home to automatically access locals’ WiFi hotspots when travelling abroad. In return, when these travel-lers get back home, they themselves open their mobile WiFi hotspot to visiting users. Cell Buddy (targeting medium-sized corporations) enables users to purchase a SIM card in the marketplace (carriers, MVNOs and resellers put their SIMs up for sale). The SIM is then downloaded to their phone without the need to switch SIMs. When abroad this SIM will act as a local SIM and no roaming charges are incurred. The breadth of alternatives to interna-tional roaming is wide and continues to expand. There may be some develop-ments that restrict the choices for con-sumers such as sponsored data, which provides free access to the services of just one company or content provider as they pay for wireless broadband to give a user access to their services. Overall, the industry is in a nascent stage; however, this does not reduce the significance of activity in this new alternatives market and the potential to capture consumer demand, thereby shifting a growth market away from traditional operators.
  • 13. Opportunities for operators perspective the future of mobile roaming in partnership with Faced with declining roaming revenues, some mobile operators have started reacting by increasing their domestic pricing plans or increasing the cost of roaming outside the area of regulation (particularly in the EU once roaming charges in the EU are removed). This might not be the best strategy. Instead operators should adopt new pricing roaming structures, and develop alternative sources of revenues by capi-talising on this significant latent demand for services. Change/adopt new roaming pricing structures Mobile operators should restructure their roaming pricing plans in order to address the latent demand. Some mobile operators have already started doing so: • A number of operators waive roam-ing charges as an add on incentive for its subscribers like 3 and Orange Spain and T-Mobile US • Other operators like Orange in France offer waiving of roaming charges for its subscribers if they spend over a certain limit • In Germany, E-Plus, owned by Dutch group KPN NV, lets customers pur-chase a no-roaming-fee plan for a flat rate of €3 a month. Vodafone PLC has a similar deal • In many cases, budget operators such as Sweden’s Comviq, VikingCo NV’s Mobile Vikings and Iliad SA’s Free of France are leading the no-fee push, forcing larger rivals like Orange to follow suit in a market already caught up in price wars • Comviq, the low-cost brand of Sweden’s Tele2 AB, offers Swedish subscribers unlimited calls, messag-ing, and one gigabyte of data traffic in all EU countries, for €55 a month. Comviq thinks it can make up revenue on additional usage, once customers stop worrying about roaming fees. Faced with declining roaming revenues, rather than simply increasing the prices of their other services, mobile operators should adopt new pricing roaming structures, and develop alternative sources of revenues by capitalising on this significant latent demand for services.
  • 14. Develop alternative sources of revenue • Some mobile operators might be interested in setting up roaming hubs or networks (IPX) to provide high quality access to their networks for a fee. The operators that are part of a commercial group are perhaps in the best position to do this. IPX hubbing makes the process of supporting roaming for multiple IP-based ser-vices 14 – 15 much simpler and cheaper. • Technical evolutions such as LTE and Voice over LTE (VoLTE) can support local access to services rather than the tromboning approach described earlier. This reduction in costs by using local breakouts can enabled higher usage packages at lower cost. • Enabling global access to WiFi net-works using authentication controlled by the home mobile network can ease access to high speed connec-tions when travelling and maintain control and revenue for the mobile operator. • LTE roaming usage growth is ex-pected to drive a range of different services like data usage monitor, premium data connectivity quality, Rich Communications Suite (RCS)/ messaging, video streaming, HD voice, video calling, social networking and location-based services. This will increase value of low ARPU custom-ers, combat high value customer loss, raise commitment level of customers and capitalise on apps. • Real Time Intelligence/Big Data is another avenue where Wholesalers can offer tools which allow MNOs to access retail oriented and actionable information, using the wholesale raw data coming from Signalling and Roaming (GTP, info from Data clear-ing House DCH). These tools can help to stimulate retail usage by helping customer sub-segmentation • Some large service providers (e.g. Facebook) have suggested that some elements of internet access should be provided to all their customers and may be willing to sponsor that access in some way. Similarly, large providers of online content, e.g. Net-flix, may be willing to pay for guar-anteed high quality access to mobile smartphones to permit video viewing both at home and when traveling. Such deals could provide an interest-ing and valuable additional revenue stream to mobile operators and IPXs interconnecting them.
  • 15. perspective the future of mobile roaming in partnership with CONCLUSION Mobile operators face many challenges in the next few years with accelerat-ing technology changes, regulatory activities and changing user behaviour all impacting the way their services are used and their financial health. At worst, a do-nothing scenario in addressing these changes will inevitably move them down the value chain towards wireless transport providers. The mobile industry has one massive advantage compared to many other ap-plication providers – the ability to use a globally recognised addressing scheme – the telephone number – and to seam-lessly use those services wherever the customer happens to be. Traditional roaming pricing has discouraged the ad-vantage in the minds of many consum-ers and they have sought alternatives to meet their needs. Refocusing efforts on creating eas-ily used and simply priced services that persuade the customer that their mobile service is the default service wherever they are could pay dividends in generating incremental revenue and customer satisfaction, while remov-ing the need for regulatory action on pricing in the future. In addition, mobile operators could also seek to develop alternate revenue generating services and adapt to the changing landscape.
  • 16. How Value Partners and HOT TELECOM can help With our extensive experience in this sector, Value Partners and HOT TELE-COM believe we can help mobile opera-tors develop the right strategy in order to position themselves successfully in the future roaming market. Our expertise is also greatly supple-mented 16 – 17 by the fact that we have access to roaming statistics and data world-wide that will be essential to conduct meaningful analyses and develop effec-tive strategies for mobile operators. Potential voice and data roaming revenue and traffic forecasts • Our team of experts can help mobile operators, carriers and regulators define potential roaming revenue and traffic, taking into consideration the latent demand and the growth of the demand over the next 5 years • The model derives its input from interviews with mobile operators in different regions, discussions with industry experts, regulators and mo-bile data hubs as well as market data developed during past projects • Forecasts are developed by region and technology (2G/3G and LTE). Roaming elasticity analysis • Our team of experts can help you understand the performance of past roaming propositions by mobile operators around the world • Our assessment of the pricing elastic-ity is presented using cases studies as well as an elasticity models • Typical case studies include pro-files of mobile operators (company overview, services offered, number of subscribers, technology used), pricing package offered (structure, timeline), and impact of pricing pack-age/ structure on traffic evolution. The elasticity model includes, for example, variation of demand gener-ated by the variation in price, and the review of the optimal pricing to maximise revenue • This data is provided by region • A qualitative evaluation of the differ-ence in demand elasticity for 2G/3G and LTE can also be analysed.
  • 17. perspective the future of mobile roaming in partnership with Competitor analysis and identification of disruptive offerings • Our team of experts can generate a detailed analysis of the competitive landscape highlighting examples of innovative organisations in the data roaming market, showcasing their business models and performance • The analysis is framed around several areas of innovation and opportu-nity in the roaming market, drawing examples from each (including local SIM cards, global SIM cards and Apps). LTE roaming strategy • Our team of experts can support you in developing your LTE roaming strategy, whether in terms of roaming hubs, partners and pricing to ensure optimal quality and return on invest-ment • Our knowledge of the Interna-tional carrier segment enables us to provide an up-to-date view of who is offering what, when it comes to roaming support, and what solution and provider would best meet your objectives • This type of project can also include workshops on IPX and how it can help you offer the best customer experience to your LTE subscribers when roaming while optimising your revenue. With extensive experience in this sector, Value Partners and Hot Telecom can help mobile operators develop the right strategy in order to position themselves successfully in the future roaming market.
  • 18. 18 – 19 AUTHORS colin Brooks Managing Partner, London Office colinj.brooks@valuepartners.com Isabelle Paradis President, Hot Telecom paradis@hottelecoms.com Etienne Piciocchi Engagement Manager, London Office etienne.piciocchi@valuepartners.com Steve Heap CTO, Hot Telecom steveheap@hottelecoms.com Aditya Kandath Business Analyst, London Office aditya.kandath@valuepartners.com
  • 19. perspective the future of mobile roaming in partnership with About HOT TELECOM Hot Telecom is a leading telecommu-nication research company provid-ing premier quality telecom research and services to the International telecom community. Hot Telecom’s team is composed of International telecom experts based in America, Europe and Asia, giving it a unique insight into the global telecom market. In over 11 years, Hot Telecom has served 200+ of the industry’s lead-ing operators, consulting firms and governments globally, providing them with telecom analysis and reports, training and consulting services across a wide range of subject areas. We have extensive and unrivalled international experience working on data roaming from both a technical and commercial perspective. Our projects include: • Development of a comprehensive model of international voice, messaging and data traffic and revenue - This has been extended with a detailed regional analysis of roaming of those services coupled with assessments of the impact of changing technology, particularly LTE, on the roaming volumes and revenue • Detailed financial analysis to support an actionable plan for a major voice wholesale company – Our client was looking to expand into the support of mobile international interconnect and roaming services • Detailed report on carrier and mobile operator IP migration, advanced service launch and IPX deployment plans - we developed the report from comprehensive interviews with key players and a global survey of the industry For more information on the issues raised in this note please contact the authors. Find all the contact details on hottelecom.com
  • 20. Copyright © Value Partners Management Consulting Limited All rights reserved About Value Partners Value Partners is a leading interna-tional strategy consultancy focused on the converging industries of telecommunication, media and infor-mation technology. Founded in Milan in 1993, Value Partners’ rapid growth testifies the value it has created for clients over time. Today it draws on 25 partners and 250 professionals from 23 na-tions, working out of offices in Milan, London, Istanbul, Dubai, São Paulo, Buenos Aires, Beijing, Shanghai, Hong Kong and Singapore. Value Partners has built a portfo-lio of more than 350 international clients – from the original 10 in 1993 – with a worldwide revenue mix. Our clients include the world’s lead-ing operators, vendors, financiers, policy makers and regulators. We work across corporate and commercial strategy, economic and financial advisory support, licensing, regulation, rights management, organisational change and opera-tional improvement. In particular, we have deep expertise in carrying out projects related to data roaming and regulation. Some of our projects include the business model evaluation in the roaming market, evaluation and development of a new business model for the Multinational Companies (MNCs) segment, and the assessment of roaming market - we supported a mobile roaming start-up client in gaining investment for a multiple-number based roaming solution. For more information on the issues raised in this note please contact the authors. Find all the contact details on valuepartners.com Milan London Istanbul Dubai São Paulo Buenos Aires Beijing Shanghai Hong Kong Singapore