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Outsourcing: The Answer to Margin Pressures on International Roaming?

International roaming revenue has proved to be a major source of profitability for mobile operators in the GSM era. This profitability is now under threat as both the market and regulators exert downward pressure on roaming revenue and margin. This report examines the operational outsourcing options for maintaining the growth of both revenue and margin in the face of this pressure. It covers opportunities for enhancing revenues and reducing costs.

The GSM Association is leading a major programme to stimulate international roaming markets. Through its work on Open Connectivity, fostering an environment of improved economics for roaming coverage and service rollout, new opportunities for revenue and cost improvement are emerging for mobile operators. This paper identifies those new opportunities along with existing ones that may be new to some operators or only partially explored. It concludes with key findings on operator strategies for roaming outsourcing and concrete recommendations for their exploitation.

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Table of Contents


1
Overview
1
2
Introduction
2
2.1
Background to the Report
2
2.2
Report Content
2
3
Examining the Service Value Chain
4
3.1
The Definition of International Roaming
4
3.2
International Roaming Service Delivery
5
3.3
Treatment of Billing Functionality Outsourcing
6
3.4
Roaming Value Chain Cost and Revenue Drivers
6
3.4.1
The Impact of European Union (EU) Roaming Legislation
6
3.4.2
Operator Priorities for Cost and Revenue Drivers
7
3.4.3
Wholesale Roaming Costs and Revenues (IOTs)
8
3.4.4
Adding New Roaming Agreements
9
3.4.4.1
Service Priorities
11
3.4.4.2
Partner Priorities
12
3.4.5
Quality of Service
13
3.4.6
Roaming Operations Headcount
13
3.4.7
User Experience
14
3.5
Changing Operator Attitudes to the Roaming Value Chain
15
4
Outsourcing Opportunities
17
4.1
GSM Association Open Connectivity
17
4.2
The Roaming Hub
18
4.2.1
Open Connectivity Scenario 1 - Bilateral Connection
19
4.2.2
Open Connectivity Scenario 2 - Connection Via One Roaming Hub
19
4.2.3
Open Connectivity Scenario 3 - Connection Via Two Roaming Hubs
20
4.2.4
Case Study - Current Capability of Roaming Hubs
20
4.2.5
The Current Roaming Hub Market
21
4.2.6
The Changing Economics of the Roaming Hub Market
23
4.2.7
Case Study - Large Operator Decision to Connect to a Roaming Hub
23
4.2.7.1
Implementation Benefits
24
4.2.7.2
Operational Benefits
25
4.3
Network Extension - An Established Means of Fast Roaming Coverage Acquisition
26
4.4
The Roaming User Experience
28
4.4.1
Virtual Home Environment (VHE)
29
4.4.2
Roamer and Roaming Traffic Steering
30
4.4.3
New Outsourced Offerings
31
5
Key Findings
33
5.1
Operator Outsourcing Strategy
33
5.2
Barriers to the Adoption of Open Connectivity
34
5.3
The Future of Outsourcing
35
6
Recommendations
36