APEC Tel40 "An overview of roaming initiatives in the SouthAamerican market" (IMOBIX 26-sept-09)
APECTEL 40 Cancun Mexico, September 2009An Overview of Roaming Initiatives in the South American Market
Agenda • IMOBIX Overview • Thoughts on Roaming • Current Global Roaming Initiatives • The South American Roaming Study – Background & Objectives – Selected Results – Draft Initiatives • Recommendations for APEC 2
IMOBIX Overview• Founded in 2005. IMOBIX Offices & Points of Presence• 20 employees and more than 30 consultants in over 10 countries.• Experts in the mobile industry with a focus UK in Wireless Carriers & Roaming. Turks & C.• Projects from Strategy, through Italy Florida Implementation and Operation. Asia• Quality solutions for Network & end-to-end (planned) Uruguay Brazil testing. Pioneers in Roaming QoS & Drive Argentina Test consulting services.• Roaming & Wholesale Management (including Startup, Strategy & Operations, Some of our Clients Revenue Assurance & Reporting, Testing and QoS)• Active Participants in: - GSM Association - GRQ (GSM Global Roaming Quality Group) - CITEL (Inter-American Telecommunication Commission) - AHCIET (Ibero-American Association of Research Centers and Telecommunication Enterprises)
Thoughts on Roaming roaming as a business – “Roaming” Roaming is a complex business, involving many functional, technical, and commercial areas. Roaming wholesale and retail pricing is complex, made up of several cost components. Roaming departments inside mobile operators (due to multi-discipline nature) are found sometimes in Network & Engineering, or Finance, or Wholesale, or Marketing. Is a telecom regulator’s function to monitor its own country’s market, its residents, or both? What is a telecom regulator’s role in Roaming? (think about Inbound and Outbound Roaming) How does Value Added Tax apply to Roaming? Does it apply based on residency, service location, or both? Which cost components of Roaming should be except from VAT?
Current Global Roaming Initiatives Region Entity Info Europe European Union http://ec.europa.eu/informati on_society/activities/roamin g/index_en.htm South Africa Communications Regulators http://www.crasa.org Association of South Africa South America Initiative for the Integration of http://www.iirsa.org/BancoC onocimiento/R/roaming_sur Regional Infrastructure in South americano/roaming_surame America (IIRSA) ricano_ENG.asp?CodIdiom a=ENG Central America Regional Technical Commission on www.comtelca.org Telecommunications (COMTECLA) 6
THE SOUTH AMERICAN ROAMING STUDY www.iirsa.org/roaming.asp PROJECT BACKGROUND & OBJECTIVES 7
The South American Roaming Regional Studyproject was generated by an IIRSA initiative • September/2000: Creation of the IIRSA initiative during the meeting with 12 South American countries Presidents: – Its main objective is the integration of South American physical infrastructure as a key factor for promoting economic growth in the region. – The original mandate is for ten years (2000-2010) • November/2004: Definition of the consensual implementation agenda (AIC) by IIRSA’s Executive Steering Committee (CDE) with: – 31 priority projects to be implemented before 2010… – …among them, the South American Roaming agreement implementation 8
Project motivations • Creation of competitive roaming markets in the South American region, to improve: – Costs – Quality – Coverage • Need for regional coordination of the regulatory entities in countries involved in its implementation • IADB proposes the Regional Technical Cooperation (CTR) RG- 1302 within IIRSA’s Technical Coordination Committee IIRSA (CCT) • March/2008: IIRSA-CITEL workshop on “International Roaming Services for Mobile Telecommunications”
Timeline IIRSA – CITEL First Exec Tech GSMLA Meeting / Second Presentation of Draft Deadline for Workshop Group S.A. RoamingWashington DC, USA GTE – Initiatives by GSMLA comments to Bogota, Presentation CITEL & Roundtable Action Plan March 2008 Colombia Punta del Este, Cuzco, San Jose, Costa Rica July 10, 2009 November 2008 Uruguay Peru July 2009 December 2008 May 2009Dec07 Mar-08 Jun-08 Sept-08 Dec-08 Mar-09 Jun-09 Sept-09 Dec-09 S.A. Roaming Initiatives Study Implementation
Member countries of IIRSA within scope of study(12 total) Argentina Brazil Bolivia Chile Colombia Ecuador Guyana Paraguay Peru Suriname Uruguay Venezuela
The objective is to identify opportunities andchallenges for roaming development … What are the opportunities and challenges for a South American Roaming development? Economics Tax Legal/ Technical regulatoryOpportu- • International • Definition of • Telecommuni- • GSM base tourism and trade multilateral tax cations regulation growingnities growth agreement framework predominance(examples) • Stability and established in • Effectiveness of economic growth most countries fraud data interconnectionChallenges • Limited purchase • Double taxation • Lack of effective • 4 bands 2G power legislation against and 2 bands(examples) • Lack of prepaid fraud in most 3G in the roaming countries region • Incentive for border • Most regulators • Complexity for traffic govern only implementing domestic traffic in prepaid country, not roaming roaming
Project Phases July 2008 / Kick Off October/November 2008 Workshop with GTE* Phase II:Phase Phase I: Initial Phase III: Action International Diagnosis and analysis plan experiencesActiviti • Roaming market • International benchmark • Priorization of initiatives research, including: of roaming experiences, for implementationes - Market context including: - Supply and demand - Market context • Identification of resources dynamics - Key success and failure and incentive - Roaming agreements factors mechanisms and for implementation • Opinion poll of relevant • Relevance and viability players in the market analysis of the • Development of a (regulators, operators, international initiatives in communication strategy organizations) the South American market • Development of • Identification of presentation for GTE’s opportunities and workshop threats for roaming initiatives in the region Completed * GTE - IIRSA’s Executive Technical Committee
THE SOUTH AMERICAN ROAMING STUDY www.iirsa.org/roaming.asp SELECTED RESULTS 14
Prepaid service was the driver of growth in the region, with anaverage of 82% of the lines and penetration of more than 90% in5 countries.
The size of the international intra-regional roaming is estimated at ~174Mminutes and USD ~343M (~1% of total revenue)
The GSM Latin America study considers an alternative scenario for SouthAmerican roaming
Using the GSMA estimates for ARPU and postpaid growth, the South Americanroaming market is expected to reach USD ~430M by 2012
Intra-regional travel* in Africa has a 2% penetration level**, similar to that inSouth America (3%)
Intra-regional travel* in the Asia-Pacific region has a low penetration level**,at 6%, which is similar to levels in South America
Travelers from Asia Pacific conduct ~73 million trips per year using roaming,which represents 30-35% of the total trips in the region * Includes Singapore, Taiwan, Australia, Hong Kong, Japan, South Korea and New Zealand. ** Includes Bangladesh, Bhutan, Brunei, Cambodia, China, Cocos I, Cook I, East Timor, Federated States of Micronesia, Fiji, French Polynesia (ex-Tahiti), Guam, India, Indonesia, Kiribati, Laos, Macau, Malaysia, Maldives, Marshall I., Mongolia, Myanmar, Nauru, Nepal, New Caledonia, Niue, Norfolk I., North Korea, Northern Marianas, Pakistan, Palau, Papua New Guinea, Philippines, Samoa, American Samoa, Solomon I., Sri Lanka, Thailand, Tonga, Vanuatu and Vietnam. Source: Informa, Work team analysis
South American regulatory coordination is carried out by 2 agencies focusedon telecommunications (Regulatel and CITEL), and also the regional integrationinitiatives (MERCOSUR, CAN and IIRSA)
The study revealed the views of key figures in the South American roamingmarket with face-to-face interviews in four countries and supplementaryquestionnaires with the remaining stakeholders
The stakeholders are generally optimistic about the development of roaming,proposing an increase in the relative importance of total revenue fromroaming services (from 1-5% in 2008 to 5-12% in 2011)
Opportunities and initiatives were identified to promote roaming in theregion..
…and main challenges for development were also identified
The rates for roaming calls are cheaper in Asia Pacific than in South America(~20% lower)…
…while the rates for SMS in roaming are slightly higher than in South America(~5% higher)
Inter-operator tariffs (IOT) can vary widely between incoming and outgoingservices…
Inter-operator tariffs are distinguished by voice and data, each with specificbilling parameters
Retail rates for roaming calls vary widely among South American countries
Voice IOTs are higher in South America than in the EU and are affected by VAT,which is not applied in the EU
South American operators are standardizing their international roaming ratesin an effort to increase transparency to the customer
Information on operator web sites and by call centers about client rates shouldbe clearer and more transparent
Low availability of prepaid roaming in the region because few operators offerthe service
Roaming services face the problem of double taxation in the application ofconcepts of locality and residency…
Crossing the taxes for both inbound and outbound billing generates an intra-regional VAT matrix…
…which shows that, in the majority of cases (72%), revenue from intra-regionalroaming is affected by double taxation
As an effect of the double taxation of VAT and other fees*, roaming servicesend up being 35-60% more expensive than when excluding taxes
Of the 52 countries surveyed outside the EU and South America, VAT is appliedto wholesale billing in 73% of the cases
The South American region has a lower average VAT than the EU but suffersfrom double taxation of VAT
Fraud causes significant losses for operators (3 to 5% of revenue), with ~24%occurring in roaming
THE SOUTH AMERICAN ROAMING STUDY www.iirsa.org/roaming.asp DRAFT INITIATIVES 43
Draft Initiatives: Pricing & Taxation Initiative Objective Principle Activities 1) Standardization of Provide clear, • Analysis of Best Practices • Definition of an information Information comprehensive, and template to be provided by updated information to every operator to the the end user. information channel defined. 2) Double-Taxation Reduce the impact of • Short term: focus on bi-lateral roaming agreements. Study taxation on roaming • Long Term: progress with the services creation of a regional agreement to decrease double taxation. Note: Initiatives listed above should be considered DRAFT and do not yet have final approval from the project participants.
Draft Initiatives: Technical & Fraud Aspects (1/3) Initiative Objective Principle Activities 3) Prepaid roaming platform Increase roaming coverage • Feasibility study for the prepaid market • Develop platform specifications segment • Pilot project with 3 operators in at least 3 countries. • Development for additional operators 4) NRTRDE (Near Real Reduce roaming fraud • Implement NRTRDE including Time Roaming Data coverage for Voice and Data. Exchange) • Other solutions such as retention of payments for suspected fraud and criminalization of IMEI cloning. 5) CLI Recognition Improve roaming quality of • Identify requirements for CLI service improvement by country. • Implementation of CLI recognition regionally. Note: Initiatives listed above should be considered DRAFT and do not yet have final approval from the project participants.
Draft Initiatives: Technical & Fraud Aspects (2/3) Initiative Objective Principle Activities 6) Global Roaming Quality Improve roaming quality of • Definition of KPI to be (GRQ) Implementation service through monitoring monitored. of key performance • Analysis of resources required to implement monitoring. indicators • Include Long Distance (LD) service providers (Carriers). 7) Development of a Improve costs and quality • Detailed analysis of investment Regional IMS platform of roaming through required and expected returns. utilization of a Next • Analysis of current technological development Generation Network (NGN) plans for operators in the region and the eventual integration with the IMS network. 8) International Gateway Reduce roaming prices • Analysis of the current situation Liberalization through increased and indication of existing competition. monopolies by country. • Identification of initiatives for selected countries. Note: Initiatives listed above should be considered DRAFT and do not yet have final approval from the project participants.
Draft Initiatives: Technical & Fraud Aspects (3/3) Initiative Objective Principle Activities 9) Bypass Fraud Improve user quality of • Identification of the regulations service and protect against and context in each country to long distance fraud. prevent bypass. • Recommendations per country. 10) Inadvertent Border Limit undesired roaming • Analysis of best practices to Roaming between borders limit inadvertent roaming in border regions. • Implementation of recommendations in priority border areas. Note: Initiatives listed above should be considered DRAFT and do not yet have final approval from the project participants.
Draft Initiatives: Regulation Initiative Objective Principle Activities 11) Creation of a local Improve communications • Prioritize border regions to border roaming zone prices for residents of implement a pilot project. border regions. • Analyze regulatory, technical, and commercial alternatives to create border regions. • Implement pilot project and share results. Note: Initiatives listed above should be considered DRAFT and do not yet have final approval from the project participants.
Recommendations for APEC Establish solid and open dialogue between Regulatory Agencies and Mobile Operators (look at Roaming from both sides). Include in discussions Intl and Long Distance carriers, industry and consumer organizations, country and regional taxation authorities. Review in detail successes/failures in other regions. Establish cooperation with other regions for implementation of certain initiatives. Look beyond Roaming pricing.
Contact IMOBIX For more information, please contact: Jeff Hunter CEO firstname.lastname@example.org Tel: +1 (954) 865-8832