How can operators win the international roaming battle?

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.

In the last years, it has been constantly suggested at different forums that operators should greatly reduce their international roaming tariffs, including those for voice services and data transmission. As such, top-tier operators should be willing to provide preferential services for all international operators. Depending on the scenario, international roaming can be categorized in two ways. The first concerns roaming between a single transnational group network (Zain’s One network or Vodafone’s Passport) and the second across different group networks, which is the case I would like to mention in this post.

As you may’ve seen in my previous posts, I have been recently in KSA, and I found a STC’s service that I felt as top-notch. STC lacks the luxury of transnational network resources for non-Saudi customers using their network when visiting or establishing in the country for a while. The challenge comes when STC tries to increase the loyalty of roaming clients while 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 travelling 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 travellers 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.

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.

Best, CVA. Flying to Madrid.