What operators need to know about the 2014 EU roaming regulations.pdf Change

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The whitepaper examines the 2014 EU regulation that allows European telecom subscribers to buy roaming services from alternative roaming providers (ARPs), independent of the home country telecom service provider (domestic service provider), while keeping their existing SIM cards and phone.
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  • Nowadays in „smartphones era” mobile data traffic is skyrocketing. More and more people use their phones not only for voice but also for data. Laptop dongles, flat-rate plans, free social networking and network videos are only a part of what mobile operators are offering their clients. And this only increases data traffic.Moreover some estimates suggest that for every bit sent or received a smartphone generates eight times more signaling than a laptop connected to the network with a dongle or embedded chip. That is one of the reasons why the „All IP” networks is the must.Operators, if they want to be in game, have to migrate to 4G/LTE/IMS and there DRA can become a central component getting more and more responsibility and functionality.Because of above Diameter becomes the signaling protocol of the future. There are more than 50 interfaces now and that amount still increases.
  • Nowadays in „smartphones era” mobile data traffic is skyrocketing. More and more people use their phones not only for voice but also for data. Laptop dongles, flat-rate plans, free social networking and network videos are only a part of what mobile operators are offering their clients. And this only increases data traffic.Moreover some estimates suggest that for every bit sent or received a smartphone generates eight times more signaling than a laptop connected to the network with a dongle or embedded chip. That is one of the reasons why the „All IP” networks is the must.Operators, if they want to be in game, have to migrate to 4G/LTE/IMS and there DRA can become a central component getting more and more responsibility and functionality.Because of above Diameter becomes the signaling protocol of the future. There are more than 50 interfaces now and that amount still increases.
  • Nowadays in „smartphones era” mobile data traffic is skyrocketing. More and more people use their phones not only for voice but also for data. Laptop dongles, flat-rate plans, free social networking and network videos are only a part of what mobile operators are offering their clients. And this only increases data traffic.Moreover some estimates suggest that for every bit sent or received a smartphone generates eight times more signaling than a laptop connected to the network with a dongle or embedded chip. That is one of the reasons why the „All IP” networks is the must.Operators, if they want to be in game, have to migrate to 4G/LTE/IMS and there DRA can become a central component getting more and more responsibility and functionality.Because of above Diameter becomes the signaling protocol of the future. There are more than 50 interfaces now and that amount still increases.
  • What operators need to know about the 2014 EU roaming regulations.pdf Change

    1. 1. Whitepaper / What operators need to know about the 2014 EU roaming regulations
    2. 2. Table of Contents EU roaming regulation background….3 What are the commercial implications? EU roaming market changes First model: Alternative roaming provider (ARP) Second model: Local break-out (LBO) Implications for the domestic service provider ARP infrastructure requirements LBO infrastructure requirements Is there any business case for ARPs? What about LBO? Where Computaris can help EU 2014 ROAMING REGULATION PLATFORM FEATURES Reading recommendations and disclaimer
    3. 3. EU roaming regulation background The EU Roaming Regulation is part of the EU digital agenda, with specific aim to increase customer protection and move towards a unified European mobile market. While the EU Commission & Parliament laid down the legal foundation, BEREC (Body of European Regulators of Electronic Communications) has defined the technical regulation that all operators offering roaming services needs to comply to. The new roaming regulations allow European telecom subscribers to buy roaming services from Alternative Roaming Providers (ARPs), independent of the home country telecom service provider (domestic provider), while keeping the same SIM card and phone. According to the EU Commission, this should increase the competition on the roaming market, and should create a truly pan-European market for roaming services, as any EU mobile operators would be able to target all EU customers. On the long term, the aim would be to create the premises for 'roam like home' type of services, where there is no difference between domestic and roaming tariffs. In simple words, the regulation allows European telecom subscribers to buy roaming services from Alternative Roaming Providers (ARPs), independent of the home country telecom service provider (domestic service provider), while keeping their existing SIM cards and phone. The domestic service providers are required to implement the prerequisite changes in their network to allow this. The regulation is enforced by legally binding documents from EU Commission/Parliament and supported by technical specifications from BEREC. While documenting our research, we thoroughly studied the relevant documentation for the regulation: 1. Jul. 2012 – Regulation (EU) No 531/2012 of the European Parliament and the Council 2. Oct. 2012 – BEREC Guide – LINES ON Art 3 & BEREC opinion on Art 4&5 3. Jan. 2013 – EC Implementing Acts on Art 5 4. Jul. 2013 – Adoption of BEREC guidelines on art. 4 & 5 Objectives From both the political and economical points of view, the goals of these regulatory changes are aiming for: / A tighter integration across EU telecom market / An increased competition at retail and wholesale level / A gradual move towards a “roaming free” Europe The EU Parliament and Commission documents are legally binding. BEREC documents are not legally binding but used by National Regulation Agencies to enforce implementation. / What operators need to know about the 2014 EU roaming regulations page 3
    4. 4. What are the commercial implications? The purchase of roaming services separately, from an ARP and not from the domestic service provider is called "unbundling" or "decoupling". According to EU, the decoupling addresses the lack of competition and aims to have an impact on the retail roaming price by reducing it. Currently, the major factor for choosing a mobile operator is considered to be the domestic price and very rarely the roaming service. The majority of users have to either accept the roaming prices imposed by their domestic service provider, or change their SIM/phone while roaming for a more attractive offer. In parallel with the decoupling, the regulatory framework imposes new roaming price caps for voice, SMS, data at both wholesale and retail level. Price caps for retail data were introduced with the latest regulations. Having the maximum retail levels defined, the power of wholesale negotiation will be very important for the commercial success of any Alternative Roaming Provider. By separating the roaming service from the home country service, the regulation aims to open up the competition on the roaming services within EU. In theory, competition on roaming will naturally lead to a reduction of retail prices. The implications for EU citizens could be positive, on the other hand a decrease of roaming revenue may be observed at operators' side triggered by both competition and imposed price caps. page 4 / What operators need to know about the 2014 EU roaming regulations
    5. 5. EU roaming market changes Terminology There are two decoupling models, each having different impact on the operator network. Before explaining them, it’s important to understand the terminology: • DSP: Domestic service provider is the telecom service provider that supplies the mobile services in the home country. It can be either a fully fledged network or an MVNO • ARP: Alternative roaming provider is the entity that provides the alternative roaming service • LBO provider is an ARP that provides only local data services in the visited country / What operators need to know about the 2014 EU roaming regulations page 5
    6. 6. First model: Alternative roaming provider In this model, regulated roaming voice, SMS and data are purchased together from an Alternative Roaming Provider. The user must enter into a billing relation (contract/ prepaid) with the ARP. The ARP coverage is only for regulated services (simplistically the user must be roaming within EU, and call/text towards EU destinations or use roaming data), however coverage can be extended based on commercial agreement with the Domestic Service Provider. This model is technically called 'Single- lMSI'. page 6 / What operators need to know about the 2014 EU roaming regulations
    7. 7. First model: Alternative roaming provider From the B2B perspective, in this model the ARP has a wholesale contract with the DSP, and a retail contract with the end- customer, resembling to the MVNO type of business. page 7 / What operators need to know about the 2014 EU roaming regulations
    8. 8. Second model: Local break- out (LBO) In this second model, the user can purchase only data services directly from the visited network where he/she is roaming, while Voice and SMS are provided by the existing roaming provider. To be able to use local data, users must set a special APN on their handset. To allow users to use local data from a visited network of their choice, Domestic Service Providers must disable steering within the EU. If this model wasn't allowed, all roaming services would have to be provided by one operator. This model is called 'LBO' - Local Break-Out. In practice it means that the internet traffic breaks-out to the internet directly from the visited network's GGSN, instead of returning to the home GGSN. The visited network providing the local data is called also ARP, or LBO provider to avoid confusion with first model. page 8 / What operators need to know about the 2014 EU roaming regulations
    9. 9. Second model: Local break- out (LBO) In this second model, the business-to- consumer (B2C) relation between the LBO provider and end-customer is not affected by any wholesale agreement with the DSP. The visited network sells directly the data services to inbound roamers from within EU. From the billing perspective, the LBO model adds further complexity for both the mobile subscribers and operators. It is important to note that since a combination of pure ARP and LBO is possible, the customer acquisition and experience management are more complex for all types of roaming providers. With the new regulations, the mobile users can buy all roaming services (voice, SMS, data) from an ARP or they can buy only data directly from the visited network. From the customer’s point of view, this may generate confusion unless the differences and advantages are clearly communicated during acquisition and subscription life-span. New entrants (ARP, LBO providers) and existing ones need to explore new ways and channels to attract and retain customers. / What operators need to know about the 2014 EU roaming regulations
    10. 10. Implications for the domestic service provider For the domestic service provider, the requirements are fairly complex. At the same time they would require a low CAPEX/OPEX solution, as the regulation does not generate any revenue, but rather a loss in roaming revenues, as subscribers can choose a different roaming provider. To comply, the domestic service provider must at a minimum level: • (ARP enablement) Implement the provisioning process required to enable ARP subscriptions; • (ARP enablement) Implement real-time logic that routes the roaming charging events towards the ARP systems; • (ARP enablement) Implement wholesale billing process with the ARP; • (ARP enablement) Notify the partner ARP network of subscriber mobility events within EU; • (LBO enablement) Remove steering logic across EU to allow their users to use LBO when attached to EU network; • (LBO enablement) Reject any roaming data traffic that uses the EU Internet APN. Optionally, based on commercial agreements the domestic service provider may enable additional services for the ARP: • USSD service; • SMS services; • Fraud management (if the interface to the ARP charging system is not real-time). The domestic service providers must implement a set of IT and network changes to comply with the regulation. The existing mobile network architecture has the greatest impact on the approach that would be chosen. While the exposed services towards the ARP are standardized, the internal changes require coordination among several departments and changes in multiple network and IT systems. page 10 / What operators need to know about the 2014 EU roaming regulations
    11. 11. ARP infrastructure requirements The ARPs are technically similar to MVNOs. They do not own the network and do not have their own roaming agreements, but are able to sell roaming services directly on the retail market. Of course, with the important distinction that in the case of MVNOs a commercial agreement is generating the partnership with the host network, whereas in the ARP case is the law and regulation that enforces this partnership. From this point of view, the infrastructure that ARPs require is at least comprised of: • Real-time charging platform • Prepaid platform for customer subscription and account balance management • Perhaps postpaid capabilities if business case allows this • Payments platform for top-ups, voucher management • Messaging capabilities for regulated SMS notifications and customer care notifications • Provisioning platform for integration with the domestic service provider • Wholesale solution for settlement with the domestic service provider. It's fairly obvious that ARPs needs are similar to those of MVNOs, and, as in the case of MVNOs, the ARPs need to run at a considerable lower cost than the incumbent operators to leave enough room for profit. Therefore, choosing an ARP enablement platform (similar to an MVNE platform) may be an option to consider for ARPs, instead of owning the technical platform. As in the case of LBO business, balancing between up-front investment (own the platform) and future business flexibility (the use of a hosted service, such as an ARP enabler) is recommended, however both options are technically feasible. There is also the case when an MVNO/MNO becomes an ARP, and in such scenario the existing infrastructure and integration experience may be reused. There is however a significant difference between ARPs and MVNOs. The former needs to integrate with multiple networks, whereas the MVNOs integrate with only one network in most of the cases (there are only few cases where an MVNO integrates with a couple of networks). page 11 / What operators need to know about the 2014 EU roaming regulations
    12. 12. LBO infrastructure requirements The technical needs of LBO providers are rather simple and straightforward. An LBO provider needs to: • Implement local-break-out functionality in their network. This is a standard 3GPP feature, and does not require complex changes on the legacy infrastructure. This routes the data traffic from the visited network directly to the internet, with no routing back to the domestic service provider (this avoids wholesale charges). • Implement a provisioning platform to send notifications to the domestic service provider(LBO providers are required to notify the domestic service provider if a roamer uses local data) • Modify the wholesale process, so local data traffic is not charged to the domestic service provider. • Implement data charging functionality for the inbound roamers using local data. At the same time, the LBO providers can enable secondary tools that improve their insight on the new service and customer behavior: • Implement location monitoring, to understand subscriber movement, and detect roamers arrival • Implement reporting across the LBO solution, for better support of the marketing process. From a high level perspective, the operators that wish to become LBO providers, need to implement a data charging solution for inbound roamers. There are two main approaches to consider: • Using the existing prepaid system to control LBO data usage has some advantages: • No additional software to deploy • May (if possible) reuse existing licensed capacity • No new technology/learning time • Potentially fast roll-out. • Using an adjunct system only for LBO usage offers following advantages:. • Avoids complex changes in the existing systems (CRM, Loyalty, Prepaid); • LBO requires a lightweight approach, rather than heavy prepaid system. • LBO flexible license may cope with seasonal variations in traffic, whereas most incumbent prepaid systems require up-front license upgrade. • Separate Voucher Management, payments. Essential To become LBO providers, operators need to have prepaid data charging and support full LBO customer lifecycle with minimal cost. Depending on the existing infrastructure, an adjunct system may work best or changing the existing platforms could prove less costly. Either way, implementing LBO is rather straightforward from the technical perspective and roll-out can be done in a very short time frame. page 12 / What operators need to know about the 2014 EU roaming regulations
    13. 13. Is there any business case for ARPs? The ARP is the most challenging business model inside the new legal environment, as the cost base is dependent on the wholesale prices offered by the domestic service provider, and the revenue is limited by the capped retail prices. It is expected that the domestic service providers will charge the maximum regulated wholesale price. The model is very close to the MVNO model, where a strong differentiator is required to be able to succeed. A few models seem to have most chances of succeeding: 1. Heavy MVNOs, if they have negotiation power; These business already have the platforms and the implementation cost would be minimal 2. Roaming MVNOs expanding into the ARP model. These operators have the technical know-how and the technical platforms to become ARP. They already excel at marketing roaming services 3. Travel agencies/touring operators if they can bundle the mobile service with their core product. Such entities would need to run on top of a ARP Enabler (similar to MVNE business), and use the mobile service only as differentiator. As a competitive retail price is not very likely to be possible, part of the cost for the mobile service would have to be absorbed by the travel agency, striving to generate more sales of their main travelling services. ARP is a niche model, where the business model needs to be carefully crafted. As with MVNOs, the ARPs are dependent on the wholesale prices offered by the domestic service provider, therefore wholesale negotiation power, the ability to attract subscribers and the capability to differentiate beyond price are key elements on the path to a commercially viable and successful business model. page 13 / What operators need to know about the 2014 EU roaming regulations
    14. 14. What about LBO? The LBO model is perhaps the most compelling scenario that the new regulation brings on the EU market. Visited networks have now the opportunity to sell data directly to the roamers, without retributing the domestic service providers. As roamers attach to the network to use cheaper local data, they also use the Voice/SMS through the visited network, so revenue is also generated from wholesale Voice/SMS. Overall, this can be a disruptive model that has significant chances of adoption, especially in countries with large number of visitors (touristic countries). A business case can be built easier, as operators already have the numbers that can be put in a financial model (number of inbound roamers, roamers service usage, types of handsets, etc). From the service proposition point of view, LBO has also special requirements: • Marketing channels - where, when, how to I attract & enroll customers • Easy to understand services offering • Smooth customer experience for activation, self-service, payment • A prepaid service is most likely to be considered to offer both cost control to the user and protect operator from debt • Focus on customer acquisition rather than retention. While LBO is an obvious revenue generator to consider, following variables need to be factored into the business case: • Implementation costs • Systems licensing and dimensioning must be optimal to adapt to seasonal variations • Operational costs should be reduced by offering self service and payment automation • Business intelligence and reporting - this is a new service, and precise performance indicators must be built and monitored Operators can consider one of the following implementation options: / Implement LBO on the existing platforms (charging, voucher management, self service, etc.) / Use a Pay as you Grow model with on- premises virtualized deployment. Monthly license can be based on a number of active users per month, or percentage of revenue generated by the platform / Use a SaaS model where the platform is fully in the cloud. Advantages Each model offers technical and economical advantages, and the decision must be taken by properly balancing between cost control (platform fully in the cloud) and flexibility (local implementation). LBO has significant potential adoption across EU under the current regulation. Having relevant data already available, operators can build a business case for LBO, having access to accurate forecasts, being able to take better investment decisions. At the same time, operators have several technical options to choose from, ranging from virtually zero investment to fully owning the technical solution. page 14 / What operators need to know about the 2014 EU roaming regulations
    15. 15. Where Computaris can help Computaris platform For domestic service providers For ARPs For LBO providers Telecom application server Real time signaling routing for SS7 and IP protocols Mobility messages towards ARP SMS&USSD services (ARP IF1, IF2, IF3, IF4, IF5, IF9) from BEREC specifications Voice call control SMS/data charging SMS & USSD services 9ARP IF1, IF2, IF3, IF4, IF5, IF9) from BEREC specifications Management of MAP signaling for BI (inbound roamers movement) and triggering marketing messages (LBO IF1 from BEREC specifications) Real time mediation platform Real time signaling routing for IP protocols (ARP IF2 AND IF3) from BEREC specifications Real time signaling routing for IP protocols (ARP IF2 and IF3) from BEREC specifications Diameter routing agent functionality between GGSN, incumbent OCS and LBO OCS adjunct (Optional) Real-time prepaid charging platform Not applicable Real time charging 7 rating for ARP subscriptions Subscription & account balance management Real time charging&rating Subscription and account balance management VMS platform Not applicable Scratch cards Virtual vouchers CC payments Scratch cards Virtual vouchers CC payment Offline mediation platform TAP IN files filtering (ARP IF6 from BEREC specifications) TAP IN files pre-processing (ARP IF6 from BEREC specifications) Filters out data CDRs before they reach the wholesale platform 9relates to LBO IF3 from BEREC specifications) or TAP OUT files filtering (LBO IF3 from BEREC specifications) Provisioning platform Allows ARP subscription provisioning Interface towards ARP Interface towards LBO provider (ARP IF7 from BEREC specifications and LBO IF3 from BEREC specifications) Allows ARP subscription provisioning Interface towards DSP (ARP IF7 from BEREC specifications) Allows LBO subscription notifications towards the domestic service provider Allows internal provisioning in the LBO platform (LBO IF2 from BEREC specifications) Reporting Generate relevant reports and statistics to support the business decision making process. Generate relevant reports and statistics to support the business decision making process. Generate relevant reports and statistics to support the business decision making process. page 15 / What operators need to know about the 2014 EU roaming regulations
    16. 16. Reading recommendations and disclaimer Regulation • BEREC guidelines on the application of article 3 of the roaming regulation - wholesale roaming access. Read more here • BEREC guidelines on roaming regulation (EC) no 531/2012 (3rd Roaming Regulation, articles 4 and 5 on separate sale of roaming services). Read more here • BEREC guidelines on roaming regulation (EC) no 531/2012 (third roaming regulation, excluding articles 3, 4 and 5 on wholesale access and separate sale of services). Read more here • International roaming BEREC benchmark data report July 2012 - March 2013. Read more here • BEREC international roaming compliance report (regulation (EU) no 531/512 of the European Parliament and of the council of 13 June 2012 on roaming). Rea • BEREC views on the proposal for a regulation "laying down measures to complete the European single market for electronic communications and to achieve a connected continent". Read more here Legal: • Regulation (EU) no 531/2012 of the European Parliament and of the Council. Read more here • Commission implementing regulation (EU) no 1203/2012. Read more here DISCLAIMER The 2014 Roaming Regulations will be reviewed by EU Commission in 2016, therefore other regulatory and legal changes may be introduced at that time or before. The current analysis is based on the latest published documents as of Jan 2013, and regulatory changes beyond this date may invalidate part of this document. / What operators need to know about the 2014 EU roaming regulations
    17. 17. / Thank you! / [+44]20.7193.9189 www.computaris.com

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