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February 2013

Roaming — if Managed Correctly — Can Be a Spark to Revenues

 Roaming — if Managed Correctly —  Can Be a Spark to Revenues

According to recent analyst studies, global roaming revenues in 2012 were a staggering  $45 billion dollars.

However, this is just the starting point for projections by Informa, Visiongain and Juniper Research who forecast roaming revenues to significantly increase to over $80 billion by 2017 (see Figure below).

What are the catalysts driving this growth and how can mobile operators maximize their opportunities here?  Before answering these questions, let’s do a little research on roaming itself.

Global Growth in Roaming Revenue

Roaming Revenue Growth

Sources: Informa, Visiongain, Juniper Research

Roaming has -- and always will be -- a cornerstone of wireless industry success.  Imagine if cellular phones couldn‘t roam outside a single cell site, or if subscribers were restricted to using their home networks only.

In my opinion, the simplicity of U.S. domestic voice roaming plans can be traced back to one key event: the AT&T Wireless launch of a revolutionary service called Digital One Rate back in May 1998.

Most us forget what a breakthrough that event really was, because prior to Digital One, a consumer had to worry about local rates, high roaming fees, and extra long distance charges.  Digital One easily consolidated everything into high buckets of minutes at one flat fee so consumers no longer had to fear bill shock when a “Roaming” icon was on their phone.

Digital One was a big win-win for all parties: the plan became extremely popular, with new consumers quickly adopting wireless phones as part of their everyday use.  The numbers speak for themselves in the table below:

MOU after Digital One Rate Plan

Digital One Plan MOU

Source: CTIA

Fifteen years after the Digital One Rate Plan was introduced, the mobile industry again is set to transform the way consumers interface and interact with their devices.  This time around the transformation will be around data roaming.  The driving forces behind this growth opportunity are likely to be:

  • Smart Phone Adoption. Nearly 700 million units were sold in 2012 resulting in a 40% year-over-year growth rate.
  • M2M.  The use of telematics and other devices will increase significantly over the next 3 years.
  • LTE Network Launches and Increased Speeds. Video streaming is now the norm.
  • New Regulations (both domestically and international).  These will help remove bill shock as well as keep a level playing field between Tier I and Tier III operators.

My gut tells me that Wireless Carriers are again at a pivotal inflection point, one that is likely to play out over the next 15 years.  Three key questions remain to be answered:

  1. AT&T’s Digital One Rate simplified the process, sparked incredible growth, and forever changed the way customers use their wireless phones.  But how do Wireless Carriers bring these same virtues to the world of smartphones — and at the same time protect their revenues and support profitability?
  2. How do they process and validate their records across multiple technologies and OTT players to eliminate revenue leakage? and finally;
  3. On the global front, how will plans change to protect customers from bill shock and allow them to freely leverage their wireless devices no matter where they may be across the world?

On a personal note, two weeks ago I had the opportunity to travel to Rio de Janeiro, Brazil.  I discovered that the voice and data plans are still too expensive to allow me to freely call or text while in Brazil.  I found myself constantly monitoring my phone, switching off the data when not needed.  Where possible, I leveraged Skype over WiFi to avoid paying $100s of dollars in roaming fees.

But where does this leave the service provider?  They are letting an OTT service bite into their core business.  For the future, I’m hopeful that International plans will closely replicate the simplicity offered in today’s domestic plans, and allow my one phone to become a true global device.

Over the next few blogs I will dive into these and other strategic issues impacted by Roaming Management, in particular data roaming.

Copyright 2013 Black Swan Telecom Journal

 
Brian Silvestri

Brian Silvestri

Brian Silvestri is Founder of SilverEcho Consuliting and provides technical and strategic business advice to companies in the telecom eco-system — including software, service and communications providers.

SilverEcho help companies map out business strategies by promoting collaboration across multiple departments with clear objectives, success metrics and timelines.

Based in Washington, DC, Brian is the former head of North American Sales for WeDo Technologies and prior to that was CEO of Connectiv Solutions, a specialist in traffic analytics and cost assurance, a firm that WeDo acquired.   Contact Brian via

Black Swan Solution Guides & Papers

cSwans of a Feather

  • Deep Fraud Investigations: Mavenir and the Role of Machine Learning in IRSF Control interview with Ilia Abramov & Marie Casey — Machine Learning-based fraud protection promises an answer to blocking fraud with precision, especially in roaming and nextgen mobile networks.  An ML champion discusses unusual and interesting fraud schemes uncovered by deep investigations.
  • Safety in Numbers and NRTRDE: Syniverse’s Strategy to Constantly Enrich Its Mobile Fraud Intelligence interview with James Stewart — A discussion on NRTRDE, the Near Real Time Roaming Data Exchange, the complexity of the roaming settlement process, and the fraud challenges mobile operators face as their subscribers roam.
  • Global Interconnect Specialist iconectiv Ramps up its Fraud & Identity Solutions in Bypass & A2P Messaging interview with Bojan Andelkovic — Today’s IRSF, SIM Box, and SMS A2P frauds call for coordinated and broadly conceived FM programs.  A leading interconnect specialist explains the benefits of its managed services approach.
  • A Real-Time Packet-Based Solution to Detect & Block any Hijacked OTT Call interview with Paul David & Andy Gent — Two veterans of the SIM Box call bypass wars describe a new solution for stopping OTT bypass.  Get vital intel on the call hijacking of VIBER and other OTTs.  Learn why the revenue threat to roaming is as serious as it is to international calls.
  • Protecting the Roaming Cash Cow: Using a Global Test Network for LTE Deployments & Beyond interview with Florian Leeder — International is a premium service that operators must ensure the roaming business is reliable and optimized.  This article makes the case for a global roaming test service.  It explains the problems operators face in contracting with roaming partners, maintaining quality, and rolling out LTE.
  • Recruiting Smartphone Users as Partners in Telecom Fraud & Security Control by Tal Eisner — Premium Rate Service (PRS) fraud and spyware on a mobile phone can ruin an operator’s relationship with a  subscriber.  The attacker uses malware to automatically generate phone calls, SMSs and data sessions to high cost (premium) phone numbers.  This article discusses a new crowd sourcing mobile app that addresses the problem and helps operators better manage the threat.
  • Roaming — if Managed Correctly --  Can Be a Spark to Revenues by Brian Silvestri — Major analyst firms are predicting that roaming revenues will almost double in five years.  What’s more, roaming remains at the pivot point of Wireless Carrier strategy.  Drawing lessons from the incredible rise of AT&T’s Digital One Rate Plan, this article points to future challengtes and raises key  questions about how mobile operators will ultimately come to terms with smartphone market profitability, service quality, and data roaming.
  • International Revenue Share Fraud: Are We Winning the Battle Against Telecom Pirates? interview with Colin Yates — International Revenue Share Fraud (IRSF) is one of the telecom industry’s most enduring problems.  Yet many of us have only a foggy notion of how IRSF works and how operators around the globe are coping with the issue. This interview covers the bases: the origins of IRSF, typical fraud scenarios, efforts to get international cooperation on the issue, and the future outlook of IRSF.
  • Roaming Fraud: The Importance of Real-Time Data Exchange and Analysis interview with James Stewart — The Near Real Time Roaming Data Exchange (NRTRDE) is a GSM standard allowing operators to gain fast access to the roaming records of service providers half way around the world.  The article explains how 65 carriers are using this data to combat fraud through a service bureau.  Learn about the dangers of international roaming fraud and the value a roaming service bureau brings to the table.

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