Roaming margins are a lot like mobile phones. 20 years ago they were fat and resilient. Now they’re wafer thin and easily cracked. All of this leads to the misconception that margins are low and roaming managers are exposed to so many external pressures that most operators seem to have almost forgotten these teams exist.
The good news is that also like mobile phones from 20 years ago, as they become thinner, they also become more popular. Although margins are decreasing, the actual volume of international and internal roaming activity is on the up. Cheap flights, accessible plans and the “always-on” mentality have led to an explosion in the size of the roaming market. So what is going wrong?
90% of roaming managers say they have no control over their business since they delegate so many responsibilities to clearing houses. Yet roaming revenues can represent over 10% of an operator’s revenue. This number reaches as high as 50% for smaller countries with large tourist influxes. When you abdicate control of such an important business process, it’s not a surprise that it doesn’t perform to its true potential. Especially when the roaming business is facing a myriad of problems. In no particular order, roaming manager are worried about:
DCHs control nearly all the traffic exchanged between operators and as such, they have all of the data. This leads to 4 principle problems. 1) Data is power. It would take a heroic effort to have not noticed the recent craze about monetizing big data, so why exactly would an operator voluntarily cede this information to someone else? 2) By controlling the traffic and the data, it means that validating the information and revenues received/given becomes an unnecessarily difficult task. 3) Your profits, the DCH’s and those of your competitors also served by the DCH are not necessarily in alignment. It is usually impossible to please everyone, even less so in this highly competitive context! 4) You are reliant on a third party to keep operating. The risks a DCH faces, suddenly become your own.
You don’t need to be operating in the EU to have felt the tighter squeeze from regulatory agencies. Roaming managers are now operating in an environment where prices can be capped, services need to be restricted (or freed up in some cases) and a full audit trail needs to be presentable at a moment’s notice. Operating 32 networks, in 32 countries, each with their own tax codes, rules and regulations, as Digicel do for example, can make this a huge burden. Given the already mentioned problem of using DCHs, this can make a company far less agile. Yet at the same time, things like the international roaming changes in the EU can very much be seen as a positive, especially in regards to data roaming. Anything that motivates people to use roaming services has to be a good thing, right?
Price competition among operators
There are many operators these days. If you happen to be going to a GSMA WAS event, then you will know first-hand from the amount of business card in your pocket that the industry is in good health. Of course, with a limited number of subscribers, this means that competition is fierce. This drives down the prices, which in turns puts roaming margins under immense pressure. As with tighter regulation though, there is room to take advantage. Companies with full control over their data, and with access to tools like RAID Roaming, are able to implement and execute marketing plans immediately (without having to wait for marketing or billing campaign implementation) so that they can attract customers in an intelligent and cost-effective way.
Local SIM usage and Wi-Fi cannibalization
It used to be travellers would learn how to ask where the train station was in the language of their destination. Now they ask “What is the Wi-Fi password?” In conjunction with the ease of getting local pre-paid SIMs, it has meant that roamers no longer need to actually use international roaming services. With the right discipline, they can use OTT services and a hotel’s Wi-Fi to do everything they need which in theory causes a problem. However, according the GSMA the situation is more complex. It seems that as the use of WiFi when travelling increases, so too does the use of cellular data. Perhaps this is due to people being accustomed to always “being-on” and having access to several GBs per month. In other words having a tool that can target a profile based on usage and behaviour, quickly set-up local agreements and then make roaming a frictionless user-experience helps immensely.
Too many wholesale partners and roaming agreements
With so many other operators, so much travel, so many DCHs and so many legacy tools, it is a wonder that these agreements are made at all! The process of reaching an agreement, defining the services & flow direction, implementing the tariff and then managing it for mistakes means that this is probably one of the slowest areas of movement within a telecom company. In an era of corporate agility and shortening go-to-market strategies, any ability to speed up this process and manage it accurately will be of enormous benefit.
It’s all about the incremental gains
On a superficial level, margins are tight and the roaming environment seem bad at a glance. But for operators who take back control, there is enormous potential for growth. The first step to effective roaming management is to take back control. Whether it’s an on premise solution, cloud-based, internal or external, it’s about time roaming business was treated as the revenue-generating powerhouse it should be.
The second step is to follow the incremental gains. Like an Olympic cycling team, every action that delivers an extra 1% of performance needs to be followed. The essential thing is to address each issue head on and control it with the right solutions.