International roaming leads everywhere

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The international roaming service is bringing greater profits for mobile operators, and currently comprises 10% - 18% of European mobile operators' business revenue. Nevertheless, as the demand for lower tariffs for international roaming becomes more pervasive, major mobile operators are beginning to research methods globally for providing the lowest international roaming tariffs, while delivering services that are similar to those of a home network. This, of course, is under the precondition that operators' business revenue remains ensured.

At the end of November 2007, around 30 top global operators including NTT DoCoMo, AT&T, Vodafone and T-Mobile convened in Beijing to discuss International Roaming Services' Cooperation for the 2008 Beijing Olympic Games. Held by China Mobile, the conference focused on identifying ways to yield high-quality and convenient mobile roaming services to visitors from all over the world during the Games. Mr Wang Jianzhou, the president of China Mobile, suggested that operators should greatly reduce their international roaming tariffs, including those for voice services and data transmission. As such, China Mobile would be willing to provide preferential services for all international operators.

Cooperation for the Beijing Olympic Games represents only one of the trials involving international roaming services that have occurred over the past few years. Depending on the scenario, international roaming can be categorized in two ways. The first concerns roaming among a single transnational group network and the second across different group networks. The latter, moreover, can be subdivided directionally into inbound and outbound.

Roaming in a single group network

Roaming among a single transnational group network leads itself to lower charges, given that the benefit is exclusively enjoyed within the group, and associated services are more easily acquired due to uniform group deployment.

Vodafone's passport

As early as July 2005 Vodafone Group launched a Passport plan in which all mobile subscribers who registered for this service could benefit from close to local prices when roaming through Vodafone's subnets and preferential networks.

Currently, the number of global networks joining the Vodafone Passport plan has reached 21, including some non-European countries and regions such as Australia and Japan. Vodafone UK, for example, allows a British subscriber to roam to another network for an additional £0.75 for each connection, while other fees remain the same as in the UK. Calculations exhibit that a 1-minute call gives a tariff saving of nearly 10%, which rises to 50% for 2 minutes, before peaking at 90% after 4 minutes. The Passport plan has successfully reduced roaming tariffs via a roaming alliance that has demonstrably stimulated international roaming traffic growth and enhanced high-end subscriber loyalty to mobile services.

By June 2007, the number of registered Passport subscribers had reached 6 million, including 62% of Vodafone's high-end customers. Moreover, commercial customers increased their average international roaming call duration by 15%, post-paid individual customers by 39% and prepaid individual customers by 105%. Vodafone Passport represents a successful attempt to lower international roaming tariffs, despite the fact that it has not yet joined its service to the networks of different operators.

Celtel's One network

In September 2006, Africa's Celtel Group launched One Network, the world's first transnational international roaming service. At first, the Tanzanian, Ugandan and Kenyan subnets in east Africa were included, and Celtel subscribers could roam between them while retaining their home country numbers at a local tariff rate for local calls. A nominal 10% was added for international calls between the three countries, while received calls remained free. Prepaid subscribers, moreover, could recharge their accounts with a Celtel rechargeable card in any of the three countries. In the end of 2007, One Network was expanded to twelve Celtel African subnets, with existing plans in place to gradually extend this to fifteen.

Confronted with the reality of Celtel's competitive advantage following One Network's inception, other operators in Tanzania, Uganda and Kenya - MTN, Vodacom, and Safaricom - quickly formed a roaming alliance under which their KamaKawaida plan was launched in January 2007. This allowed mobile phone calls to be made and SMs (short messages) sent among the three countries at the local tariff. Safaricom's statistics indicate that its international traffic has increased by 400% since KamaKawaida implementation.

However, Celtel's comparative superiority is reflected by its better coordination in increasing or decreasing different countries' roaming revenue. The loss of revenue in one country, for instance, can be compensated by the international traffic and subscriber increase in other countries. For MTN, Vodacom and Safaricom, lower roaming revenue can only be compensated by increasing network traffic and subscribers.

The reduction of international roaming tariffs remains in its infancy, and most roaming subscribers focus on tariff comparisons. The greater convenience of the One Network service and thus its enhanced long-term development potential will become gradually evident only if sharp competition spirals international roaming tariffs closer to cost, giving broadly homogenous pricing strategies among operators.

Roaming across different group networks

Domestically or regionally confined mobile operators lack the luxury of transnational network resources, and larger-scale or transnational operators usually formulate higher international roaming tariffs to maintain customer loyalty. Thus a significant challenge arises for those operators in terms of avoiding expensive international roaming settlement to provide competitive services? Fortunately, the answer is embodied by Single IMSI Multi MSISDN (SIMM), a transnational roaming service that is divided into inbound and outbound.

Inbound SIMM

Inbound SIMM allocates a temporary local number to a roaming subscriber for making and receiving local calls, and the tariff is set at a local rate. These are processed through the local network, along with service availability, billing, recharging, and other associated services. The ease of applying for inbound SIMM adds to its value given that entry into another country initiates an SM from the SIMM service, the activation of which is determined by the receiver's reply to the SM. This strong promotional tool increases traffic by actively pursuing subscribers, and the service attractiveness is enhanced by the fact that a local SIM card is unnecessary to gain network admission. Moreover, inbound SIMM's prepaid status eliminates deliberate fraud and payment default risks.

Nevertheless, inbound SIMM has its defects. The need to recharge before use causes some subscriber loss, and the difficulty of dealing with a non-extendable remaining balance discourages some from taking up the service. Moreover, significant numbers of international roaming subscribers activate SIMM to benefit from local tariffs, and a number of operators are concerned with potential reductions in international roaming revenue as a direct result of SIMM. Actually, the answer to this problem is whether operators can compensate for revenue losses due to international roaming services by increasing both traffic and subscribers. These two aspects -traffic and subscribers - are to an extent symbiotic, and exert a multiplier effect on operators' revenue.

Marketing via advertising and promotions prior to a given subscriber traveling provides an effective, proactive tool to increase subscriber numbers. Flight brochures can be utilized to introduce service registry and use procedures, which encourages SIMM usage after reaching a destination. A rational approach can be taken with regard to service tariff formulation, such as a 10% - 20% increase on local tariffs, so as to reduce the influence on international roaming revenue settlement.

Effective service package design can stimulate traffic, and number reservation with a rental fee will encourage the loyalty of frequent travelers to a given destination. The difficulty operators' face in terms of balance return can be ameliorated by offering a small-amount recharge mode, extending the marketing channels for recharge cards and promoting recharge convenience.

Given the enormous number of Muslims who embark on a pilgrimage to Mecca each year, Saudi Arabia reflects a country with optimum inbound SIMM conditions. At the end of September 2007, Saudi Arabia STC officially launched its inbound SIMM for commercial use by issuing a complimentary call fee of 5 Riyals (USD1.5) beforehand, thus obviating the need for prior recharge. Promotional activities could be comfortably simplified to short welcome SMs, and this was demonstrated as the first month of the service secured 50,000 subscribers, a fact that testifies to the service's potential.

Outbound SIMM

Outbound SIMM allocates a local number to a subscriber from a visited country's cooperative operator before entering the country. Arrival stimulates network access and preferential tariff activation. Host operator cooperation in the visited country is essential in terms of number and mobile service resources, while the subscriber's home country operator should be responsible for service provision, billing, number management and marketing, and fee forwarding to the host operator for number and network rental.

Therefore, the role of the operator of the home country is more like a special mobile virtual network operator (MVNO), which rents the host operator's network and number to provide the outbound subscriber with mobile services in the visited country.

For the home country operator, the outbound SIMM service possesses the advantages of avoiding a high international roaming cost, extending the service range for network subscribers, enhancing QoS, brand equity and subscriber loyalty, and reducing the ratio of local SIM cards used by outbound subscribers. For host country mobile operators, the outbound SIMM service gains considerable high-level roaming subscribers from the cooperative operator, thus greatly enhancing their own network traffic.

The current outbound SIMM business describes an "MVNO network traffic wholesale and number resources rental" international roaming model. This reflects a shift from the previous system within which the host country operator controlled pricing, while the home country operator passively operated. The outbound SIMM surrenders operational initiative to the home network, thus facilitating a win-win situation through cooperation.

In March 2006, China Mobile Guangdong and China Resources Peoples Telephone Co. Ltd., Hong Kong, partnered up to launch a Guangdong-Hong Kong SIMM service, targeting China Mobile GoTone subscribers who frequently travel between Guangdong and Hong Kong. To date, around 200,000 people have subscribed to the service, and, to register, a GoTone subscriber sends the SM "BLYKDH" to 10086 before receiving a Hong Kong number that is allocated by the system. Subscribers have to pay a monthly rental fee to retain the number, thus guaranteeing that China Mobile's SIMM service revenue does not fall below that of the previous international roaming service. Furthermore, the actual rise in traffic has in turn increased income.

Over the past two years, there have been various international roaming services with diversified features and different requirements for operators. In the context of local conditions, mobile operators must make available the most appropriate roaming services, and the prevalent current problem remains low tariff provision. However, innovation is sure to mitigate this issue and, in the future, international roaming will cover everywhere with service experiences that mirror domestic conditions.

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