ITU Workshop on International Roaming Session-2

7/28/2019 ITU Workshop on International Roaming Session-2

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International

Telecommunication

Union

October 20101

ITU workshop on

International Roaming andInternational Traffic Termination

Session 1: International Roaming challenges and oppotunities

Bangkok5-8 October, 2010

David Rogerson


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Agenda

What is international roaming?

Why is there a regulatory problem?

Stakeholder viewpoints

Operators

Governments National regulators

Approaches to regulation


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International

Telecommunication

Union

October 20103

What is internationalroaming?


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International roaming services

International roaming allows subscribers to a

mobile network in one country (Country X)to make and receive calls when temporarilyresident in another country (Country Y)

Roaming was integrated into the GSM

standard with the specific needs of theEuropean Union in mind a high degree ofroaming between EU member states.

Roaming traffic can include voice, text (SMS)

and data services.


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Outbound call scenario

Y X

Cu s t o m e r f r o m Co u n t r y X b u t r o a m i n g i n Co u n t r y Y ca l l i n g

a n o t h e r cu s t o m e r in Co u n t r y X

2 . Ca l l e r d i a l s f u l l

i n t e r n a t i o n a l

n u m b e r

4 . Ca l le d p a r t y is

u n a f f e ct e d b y t h e

r o a m i n g

3 . Ca l l r o u t e d u s i n g

d i a l le d n u m b e r v i a

i n t e r n a t i o n a l g a t e w a y s

1 . N e t w o r k i n Y

a u t h e n t i c a t e s

r o am e r f r o m X

MSC

IGW

MSC

IGW


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Inbound call scenario

X Y

2 . Ca l l e r d i a l s

s t a n d a r d n a t i o n a l

m o b i l e n u m b e r

4 . Ca l l e d p a r t y

r e c e i v e s c a l l w h i l e

r o a m i n g

3 . Ca l l r o u t e d u s i n g

d i a l le d n u m b e r v i a

i n t e r n a t i o n a l g a t e w a y s


a u t h e n t i c a t e s

r o am e r f r o m X

MSC

IGW

MSC

IGW

Cu s t o m e r f r o m Co u n t r y X b u t r o a m i n g i n Co u n t r y Y r e ce i v e s a

ca l l f r o m a n o t h e r cu s t o m e r i n Co u n t r y X


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Key principles call routing

The non-roaming party is unaffected by themobile subscribers decision to roam.

Roaming is established through a roamingagreement between the mobile networks inCountry X and Country Y Agreements may be direct or indirect via a

roaming gateway The roaming subscriber selects the roaming

network (automatic with manual over-ride) Network selection protocol and practice is a source

of dispute much revenue/profit at stake The network in Y is responsible for

authenticating the roaming subscriber withthe network in X.


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Money flows - outbound call scenario

Y X

Cu s t o m e r f r o m Co u n t r y X b u t r o a m i n g i n Co u n t r y Y ca l l i n g

a n o t h e r cu s t o m e r in Co u n t r y X

3 . N e t w o r k i n X

b i l l s t h e c u s t o m e r

f o r t h e r o am i n g

u s a g e

2 . N e t w o r k in Y b i l l s

N e t w o r k i n X b a se d o n

t h e a g r ee d I n t e r -

O p e r a t o r T ar i f f


p r e p a r e s a c a l l

r e c o r d

MSC

IGW

MSC

IGW


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Money flows - inbound call scenario

Cu s t o m e r f r o m Co u n t r y X b u t r o a m i n g i n Co u n t r y Y r e ce i v e s a

ca l l f r o m a n o t h e r cu s t o m e r i n Co u n t r y X

X Y

1 . Ca l l e r p a y s

s t an d a r d n a t i o n a l

m o b i le r a t e


p r e p a r e s a c a l l

r e c o r d

4 . N e t w o r k in Y b i l l s

N e t w o r k i n X b a se d o n

t h e I OT

5 . N e t w o r k i n X b i l l s t h e

s u b s c r i b e r f o r t h e

r o a m i n g u s ag e

MSC

IGW

MSC

IGW

2 . N e t w o r k i n X

r e c e i v e s s t a n d a r d

m o b i le t e r m i n a t io n

r a t e f r o m c a l l e r s

n e t w o r k


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Key principles money flows

The money flow always starts from theroaming mobile subscriber. There is no

change in the payment made by the otherparty.

The retail charge consists of two parts: The international (IDD) call charge

A roaming supplement, typically 30-50% of IDD The IDD component is not applicable in

some situations (e.g. calls within Country Y)

The wholesale charge is known as the inter-

operator tariff (IOT) The IOT is typically half of the retail roaming

charge, sometimes more


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International

TelecommunicationUnionOctober 2010

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Why is there a regulatoryproblem with roaming?


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Costs and prices

In a properly functioning competitive marketprices converge on long-run incremental

costs There is a major difference between costs

and prices for international roaming. in the EU prior to regulation, voice prices were

estimated as 5-10 times cost levels and SMS pricesaround 20 times cost

There is massive variation in costs but not inprices for different roaming calls:

A subscriber in Country X roaming in Country Ymay pay the same for calling another subscriber inCountry X or another subscriber in Country Y

In the first case, the cost could be that of an on-net mobile call (+ roaming authorisation), in the

latter it is an international call.


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Solution = impose cost-based prices?

The problem of jurisdiction: National regulatory authorities can only impose cost-

based outcomes in their territory

This means that the national operators lose revenues

while the national consumers still have to pay abovecost for roaming in other countries.

Cost-based prices in one jurisdiction provides

consumer benefits only to other jurisdictions

I n t e r n a t i o n a l r o a m i n g r e q u i r e s a r e g io n a l o r g l o b a l

r e g u l a t o r y a p p r o a c h


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Solution = impose cost-based prices?

The nature of the market: Even when cost-based prices are imposed (as in the

EU) there is no effective trend towards competition

Consumers do not take much account of

international roaming rates when choosing theirservice provider.

Consumers have little or no choice of service

provider once they are abroad.

Co s t - b a s ed r e g u l a t i o n o f i n t e r n a t i o n a l r o am i n g i s l i k e l y t o

b e r e q u i r e d o n a p e r m a n e n t b a s i s o n c e im p l em e n t e d


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Are market-led solutions possible?

Marketing of host country SIM cards

Subscriber purchases a pre-paid SIM upon arrival in new country

SIMs available at airports, in the high street etc

Relatively low uptake consumers may be unaware or mistrustful

Marketing of roaming SIM cards by home country service

providers for use while abroad

Subscriber purchases a pre-paid SIM from a service provider in home

country before travelling

SIMs available from main network operators and other service

providers

Relatively low uptake consumers may be unaware or find the barrierto entry too high (e.g. if phone is SIM-locked)

Co n s um e r s se e m g e n e r a l l y u n w i l l i n g t o g o t o m u c h e f f o r t

t o a v o i d p a y i n g h i g h r o a m i n g p r i ce s .


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Are market-led solutions possible?

Traffic steering

Roaming tariffs depend on the network chosen in the hostcountry

Choice of network is automated although with manual over-ride

The protocol for automatic network selection is based on signal

strength at point of switching on the phone This process that does not allow for price elasticity of demand

New arrangements, via SIM card or HLR programming allow

traffic to be directed to a preferred network in return for a

lower IOT

However, there are also anti-steering devices that rely on

spoofing the manual overrides.

T r a f f i c s t e e r i n g h a s e n a b l e d a r a n g e o f m o r e a t t r a c t i v e

r o a m i n g o f f e r s t o m a r k e t .


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Example 1: Vodafone Passport

7 5 p c o n n e c t i o n p l u s s t a n d a r d h o m e t a r i f f *

7 5 p c o n n e c t i o n ; n o ch a r g e p e r m i n u t e *

Opt-in roaming tariff for UK customers travelling to 35

European countries + Australia + New Zealand. Reduced rates for receiving calls and making calls within the

host country or back to the UK.

*Fair use policy: calls over 60 minutes are charged at 20p

per minute


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Example 1: Zain One Network

St a n d a r d t a r i f f f o r v i s i t e d n e t w o r k

N o c h a r g e

A borderless mobile network for Zain Group companies

comprising 14 African and 5 Middle East countries. Roamers treated as local subscriber re tariffing, but receive

functionality of their home network.

No roaming charges: calls received for free; make calls and

send SMS at local network rates


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Regulatory issues arising from trafficsteering

Competition is created in the roaming market but

traffic steering favours large international companies

and alliances

Might it lead to market dominance and abuse of dominance?

Might dominance from one country be leveraged to affect

another mobile competition in another country?

Benefits from lower roaming charges are piecemeal:

Not all customers benefit

Not all countries are part of the deal.

Market-led solutions cannot replace regulation:

They are at best partial solutions; they also need to be

regulated (e.g. fair usage and to prevent abuse of dominance)


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International


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Stakeholder perspectives


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Stakeholders in international roaming


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Brainstorm of key issues for eachstakeholder group


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International


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Approaches to regulation


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Approach 1: Do nothing

The default position Its all too hard

Balance between competing national interests

Supply-side surplus

Consumer deficit

May be suitable where roaming represents a

small proportion of traffic/revenue

Some market-led solutions emerge in time

Approach of most national regulators


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Approach 2: Regional regulation

The benefits outweigh the costs of regulationwhen applied across regional trading blocs

Regulators have a common interest within

these blocs

Hard to prevent some benefits leaking out

Hard to achieve consensus:

Where no regional regulatory body exists

Where roaming traffic is not symmetrical or balanced

Key example is in the European Union


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Summary of EU regulation

Retail and wholesale regulation of roaming

tariffs between EU countries

Regulation introduced in 2007 and extended in 2009

A new Eurotariff introduced:

All operators must offer as default retail tariff option Applies only within EU avoids GATT restrictions

Operators can offer alternatives competition under

the Eurotariff umbrella

Regulated inter-operator tariffs for roaming

calls in the EU.

Full case study from the EU in Session 2.


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Approach 3: Control roaming charges

Set lower limits to roaming charges

Protect government revenues and national

economic benefits

Restricts competition and limits consumer

benefits

May be suitable where:

roaming represents a high proportion of

traffic/revenue Government has significant stake in the telecoms

industry

Approach followed in Saudi Arabia


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Summary of Saudi regulation

CITC established a minimum roaming charge

0.55SAR (US$0.15) per minute for calls received by

Saudi customers when roaming

Ensures operators do not tamper with the fair

competitive environment Decision upheld in the Administrative Courts

Board of Grievance.

Fines of SAR5m imposed in July 2010 on eachmobile operator that offered free roaming.

We warn citizens that these services are not

legal says CITC Deputy Governor


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Thank you.

In the next session we will look indetail at the EU case study on

international roaming

Documents

ITU Workshop on International Roaming Session-2