Operators can’t continue to justify the margins they make on roaming, and will need solutions to replace lost profits when current margins are inevitably eroded, Abraham Punnoose, director of marketing and business development at Roamware has said.
“Total GSM roaming revenues in 2004 were $60 billion,” Punnoose said, “out of an overall operating income for the GSM industry of $580 billion. Not only is that a significant percentage, the gross margin on that $60 billion is unreasonably high, and operators are dependent on this to subsidise and discount local calls.
“So if, due to regulation or competition, that number came down to £30 billion then that’s a major piece out of both revenue and bottom line profit.”
Unsurprisingly, Punnoose argues that the answer is to increase the total addressable roaming market. At present, only around 240 million users roam, he claimed, out of around 600 million people who actually travel. In other words, there’s 360 million users who don’t or can’t use their phones when they travel.
Punnoose said that roaming prices will have to fall. If the industry doesn’t act first, then the regulators will, he argues, probably imposing worse terms than the industry could get away with if it made the first move.
But operators frightened of losing that revenue should not panic, Punnoose would argue. Implementing something as simple as guaranteed Voicemail Call Completion (VCC) could add a Euro per customer per month, at 100% margin, he argued. VCC as developed by Roamware uses the signalling network to determine if the called party is available. If not, the outbound call is never hooked up over the network to the roaming party, instead it is switched directly to the local voicemail server.
By keeping a voicemail call local, rather than routing the call out to a user in another country and then back again when he turns out to be unavailable, an operator can guarantee CLI delivery of the caller back to the voicemail server (CLI is often lost on the return leg of a call) but also swerve the cost of carrying the call abroad and back again in the first place.
So either the sneaky operator can charge the full cost of the international call to the user (who doesn’t know their call never left the country) or he can offer the service at a discounted but still highly profitable rate, to encourage increased usage.
That’s just one example, but such value added services could drive loyalty and increase revenues in the face of commercial and regulatory pressures on basic roaming tarrifs.
Another example is to open up pre-paid users to roaming. Here Roamware has a Local Number service where a pre-paid roamer is sent a text asking them if they would like a local number, which gives them full access to voice services in the foreign country, which their existing number could not give them. That second number sits on top of the user’s existing SIM, and is managed within a VLR (virtual LR) sitting in Roamware’s service platform.
Prepaid roaming is of huge interest in all markets, Punnoose argued, and Roamware currently has three operators trialling the product, one of them in Europe.