Professional Documents
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roaming explained
Asia Pacific
Contents
3
1. Mobile roaming explained
1
How mobile roaming works
When a mobile user is abroad and turns a visited mobile network. The visited
their mobile device on, the mobile device network picks up the connection from
attempts to communicate with the user’s mobile, recognises whether
2
Mobile Mobile
User B User A
RETAIL
it is registered
Home with its system, and The visitedVisited
network also requests
Visited service
attemptsoperator
to identify the user’s home informationoperator
fromAthe home operator
networkB
network. If there is a roaming agreement about the user, such as whether the
between the home networkClearing and onehouse phone being used is lost or stolen, and
WHOLESALE
of the mobile networks in the visited whether the mobile device is authorised
Roaming
country, the call is routed by the visited
agreement for international use. If the phone is
network towards an international transit authorised for use, the visited network
International
network (Figure 1.1). The international carrier creates a temporary subscriber record
transit network carrier is responsible for the device and the home network
for theRoaming
call delivery
services to the destination
Traffic flow updates
Revenue flow its subscriber record on where
Data exchange
network. Once this is done, the the device is located so if a call is made to
destination network will connect the call. the phone it can be appropriately routed.
Mobile Mobile
User B User A
Clearing house
WHOLESALE
Roaming
agreement
International
carrier
call volumes in the TAP file and rates in the the call and handing over the call to Home
wholesale roaming agreement. Operator. International Carrier pays Home
Operator a termination rate for terminating
Visited Operator A pays an international
the call in the home country.
carrier (International Carrier) for carrying
3
Data roaming
With the increasing popularity of feature megabytes (MB), which refers to the
phones and smartphones, the use of volume of data transmitted for the
mobile data services while roaming is service used. Data traffic volumes can
set to continue to grow exponentially. vary significantly depending on the type
Mobile data services are typically and use of different data services.
measured in kilobytes (KB) or
There are significant differences in the size estimates, as file size depends on
the type of data, quality, and file length. For example, high definition and DVD
quality streaming consumes greater amounts of mobile data than standard video
or audio streaming.
4
2. Mobile roaming in the Asia Pacific
5
Roaming alternatives Regional challenges
The Asia Pacific mobile market is As the Asia Pacific market develops,
evolving in different ways to other parts structural and technical barriers must
of the world, with new lower-income be addressed. Introducing roaming
subscribers and multi-SIM ownership regulation while these obstacles
driving the trend. It is also common remain could result in unintended and
to see Asia Pacific mobile users using unforeseen consequences that negatively
roaming substitutes, such as call impact the industry, mobile users and
back services and international call government revenue. There are active
forwarding services. Certain substitutes and engaged regional groups working
may be more appropriate than others within the region to manage and
depending on national market improve roaming services for users. An
conditions. intergovernmental organisation, the Asia
Pacific Telecommunity (APT), serves
For data roaming, Wi-Fi is generally
as the focal organisation for ICT in the
regarded as the most common substitute
region, covering 38 member countries,
in Asia Pacific. Although Wi-Fi coverage
four associate members and 130 affiliate
in some areas might be limited, it is
members. Its roaming working group
considered that the main reasons for
has been working with regulators and
Wi-Fi being unavailable is low market
mobile operators to review the roaming
demand or regulatory concerns.9 In
environment for mobile users, resulting
general, countries within the Asia
in the recent adoption of guidelines, as
Pacific region believe substitutes provide
part of its working group report.
benefits to budget-conscious consumers
rather than all mobile users.10
6
Technical and structural barriers significant proportion of the total
roaming costs. Even with volume
Legal and technical developments are
growth, there is no bargaining
required to combat fraud and liberalise
power for operators working across
international gateways. Combating
monopolised gateways. This means
these barriers is vital prior to any
inter-operator tariffs are likely to
implementation of roaming regulation,
continue to be high. International
as they artificially inflate roaming
long distance termination charges
charges in individual countries.
are another cost that inflates end-
Fraud remains a major financial user prices. Although there has been
concern for operators despite increased much improvement in the level of
efforts and requires further investment competition, international gateway
in technology and negotiation of monopolies remain in at least eight
roaming agreements for minimisation. per cent of Asia Pacific.11 International
Some countries in the region regard roaming call prices between countries
particular types of telecommunications with liberalised gateways are typically
as illegal and bypass, for example 25 per cent lower than between those
traffic concealment by licensed with gateway monopolies.12
carriers to avoid taxes or contribution A sia Pacific countries have worked
to universal service; termination of hard to remove issues of double
traffic by unlicensed operators using taxation in the case of international
technologies like VoIP and SIM roaming, which is a key issue in
boxes; flow of international voice other regions. This is where sales or
traffic from PSTN to PC-to-PC calls other indirect taxation is applied at
through service provided by VoIP a wholesale level on roaming or on
providers. In many countries, however, international inbound services, and
VoIP services are permitted. There produces a situation of double taxation.
is currently no specific investigation
It is important that governments focus on
method for detecting heavy mobile
removing and reducing these structural
callers in relation to bypass through
barriers to help to reduce roaming costs
VoIP and SIM boxes.
for mobile users.
International gateways are the
facilities through which international
calls are sent and received. Where
international gateways are not
liberalised, their costs make up a
7
Technical barriers Quality of service: Further investment
In addition to structural burdens, the is required in the Asia Pacific region
industry continues to heavily invest to ensure consistent performance of
in meeting the technical challenges the link connections for international
of international roaming. This level roaming. This is so links have
of investment is in addition to the the adequate capacity, reliability,
investment in new technologies to redundancy and diversity available
achieve roll outs of mobile broadband in more developed mobile markets.
across the region. Regulatory Additional investment is also required
intervention on roaming services will to constantly monitor the loading and
affect the ability of operators to invest performance of the links to prevent
in meeting the challenges of national congestion and ensure that the
mobile broadband roll outs. requirements are met.
8
Case study: routes, a crucial stage of assessing the
Singapore and Malaysia positive impact of competition was missed.
Assumes: Initial retail price = 1, Initial IOT = 0.6. Roaming traffic is inelastic.
9
Before regulation After regulation
ngapore retail revenues Malaysian retail revenues Singapore retail revenues Malaysian retail revenues
350 mins x 1 100 mins x 1 350 mins x 0.7 100 mins x 0.7
450
400
350
300 Singapore to Malaysia
250
200
150 Malaysia to Singapore
100
50
10
3. Price trends
11
4. Impact of regulation
12
Impact on tourist destinations developed markets, there appears to
be a wealth transfer from the regulated
Roaming prices in the Asia Pacific are
communications sector to businesses in
substantially lower on high volume,
other economic sector, with no overall
bilateral routes and the highest discounts
increase in economic performance.
are found on the highest volume, and
most travelled routes. Regulation is Competitive market dynamics are
unlikely to acknowledge the difference already strong in the Asia Pacific and
between on-net and off-net14 visited are the best frameworks from which to
networks, and as such reduces the determine the price for international
competitive impact of such offers. The mobile roaming services. Mobile users
economic cost of providing roaming choose a mobile tariff based on the
in tourist destinations may also be full value it provides across a number
significantly greater than the economic of services and operators optimise the
cost of providing mobile services to the pricing and value of the bundled tariff to
local population. Any shortfall might address the needs of their local market.
need to be met through increasing prices Regulating on the roaming elements of
for the local population, which means the tariffs reduces operators’ flexibility
they may end up subsidising the network to tailor its services for the mass market
capacity used by affluent tourists. of end-users. The Asia Pacific region
should aim for a more competitive long
Economic impact
term landscape than has resulted from
The macro-financial implication the adoption of price regulation in to the
of roaming regulation is an overall European Union.15
reduction of financial transfers from
developed markets like Singapore to The mobile sector is a major contributor
other Asia Pacific economies (Figure to Asian economic growth and accounts
2.2). In addition, mobile operators in for an estimated US$485 billion, or
less developed markets are subject to 2.7 per cent of GDP, across the 17 major
greater percentage revenue reductions AP17 countries. It also accounts for 11.4
as inter-operator tariff revenue falls million jobs — and for each job created
in addition to retail revenue, leaving by a mobile operator, there are eight more
less revenue to invest in innovative generated in the mobile ecosystem and
services and extended broadband wider economy. Additionally, in 2010
coverage in the future. Within the more almost US$300 billion was generated
13
through various taxes and fees. This
positive contribution of the mobile sector
to employment, public funding and
productivity is important for the
region to sustain and grow. A global
or regional regulation that decreases
coverage, penetration and mobile phone
use may in turn reduce the region’s
economic prosperity.16
14
5. Best practice
The industry recognises the concern of Only consider price regulation after:
regulators regarding international mobile
– Other measures have been given
roaming prices. However, regulators
sufficient time to conclude there is a
need to also recognise that international
persistent problem
mobile roaming is a complex service,
involving many different factors that – Clear evidence shows that operators
can influence price, as described in offering roaming services have market
this brochure. This complexity creates power — that is, competition in the
a significant risk that regulatory market for roaming services is limited
measures will result in unintended, – Clear evidence shows that the
detrimental consequences for mobile operator company derives its market
users, governments and the industry, power from owning a natural
particularly in the long term. Regulating monopoly
price may result in short-term benefits for – Clear evidence shows the benefit
mobile users; however, these are more exceeds the cost of regulation.
than likely to be offset in the long-term
by a reduction in the level of competition Regional guidelines
and innovation, as evidenced by the
European Union experience. The Asia Pacific Economic Cooperation
(APEC) Telecommunications and
It is for this reason that the industry Information Working Group (TEL)
supports a measured approach to developed the Guidelines for the Provision
regulation, where regulators: of Consumer Information on International
Encourage operators to take measures Mobile Roaming17 following a workshop
that enhance mobile user awareness on international roaming. The APT
(transparency and bill shock) of tariffs further developed the guidelines into
when they travel two best practice versions, for mobile
operators and regulators.18 These
Address structural barriers that documents provide guidance on how to
increase costs for service providers and
address international roaming and raise
mobile users, such as double taxation
mobile user awareness for using mobile
and international gateway monopolies,
services while travelling abroad.
as well as those barriers that hold
back the development of market based
substitutes
15
Industry self-regulation These are consistent with the
APEC TEC guidelines and the
In June 2012, the GSMA announced an
APT international roaming working
initiative that will provide mobile users
group report.
with greater visibility of their roaming
charges and usage of mobile data The measures – which already cover
services when travelling abroad. more than a billion mobile users – will
offer a more transparent and uniform
At a meeting held in July, 24 operator
experience for all travellers. These
groups agreed to undertake a number
operators groups agreed to implement
of measures which will help mobile
these data roaming transparency
subscribers better understand their data
measures by the end of 2012, extending
roaming charges and more effectively
the coverage to more than four billion
manage their use of data services.
connections across 120 countries.
The measures include:
Sending text messages to remind
mobile users of their data roaming
tariffs when they arrive in another
country and turn on their mobile
device
Implementing a monthly data roaming
spending limit to help consumers
manage their roaming bill and
sending alerts when their data usage
approaches the limit
Temporarily suspending data service
when use exceeds the spending limit.
16
Endnotes
1 h
ttp://www.broadbandgenie. 13 Source: Celcom Axiata
co.uk/mobilebroadband/help/
mobilebroadbandusage-guide-what-can-you- 14 ‘On-Net’ is when a call or message originates
get-foryourgigabyte, accessed 25 June 2012 on the mobile user’s home operator’s network
and terminates to another mobile number that
2 A.T. Kearney 2012 resides with the operator. It does not matter if
the receiver is using the home network or is off
3 Ibid Island roaming with a different provider. ‘Off-
4 Source: EIU, Wireless Intelligence, Merrill Net’ applies when the call or message is made
Lynch Wireless Matrix, A.T. Kearney analysis on a different network, such as while roaming,
or when a mobile user uses their home network
5 Wireless Intelligence Q1, 2012 to make a call or send a message to a number
that resides with a different network provider.
6 A.T. Kearney analysis. Based on detailed
bottom-up data for Europe. Asia Pacific is based 15 Commissioner Kroes’ makes the observation
on high-level estimate and includes wholesale that, in the case of the European Union,
and retail revenues for intra- and inter- region price competition has not emerged in the
roaming EU roaming services markets following
the introduction of price regulation, http:
7 A.T. Kearney 2012. Based on number of trips
europea.eu/rapid/pressReleasesAction.
divided by population so overestimates
do?reference=speech/10/735
percentage of unique roamers. Regions based
on UNWTO definitions. 16 GSMA, Asia Pacific Observatory 2011
8 A.T. Kearney analysis, 2011 17 http://www.apec.org/Home/Groups/SOM-
Steering-Committee-on-Economic-and-
9 Asia Pacific Telecommunity, International
Technical-Cooperation/Working-Groups/
Mobile Roaming Working Group, Working
Telecommunications-and-Information
Group Report, 15 May 2012
18 http://www.apt.int/sites/default/files/2012/05/
10 Ibid
APT_IMR_Working_Group_Report_Final.pdf
11 A.T. Kearney, 2012. Sample for Asia Pacific
based on 24 countries – data not available for 14