ITU Workshop on International Roaming Session-2
Transcript of 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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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
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
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
1 . N e t w o r k i n Y
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
3 . N e t w o r k i n Y
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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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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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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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