Prepaid roaming is currently one of the hottest developing segments of the mobile market. This choice of words is not even merely describing how agitated this market currently is: several executives have switched companies, as the latter are attempting to get established in a rapidly evolving market while reputable companies are aggressively attempting to increase footprint and secure future revenue streams.
But what is causing all of this turmoil?
Prepaid users are many more than post-paid (especially in developing markets where pre-paid may account of up to 90% of subscriptions) and operators are expected to harness their roaming potential in order to combat declining revenues due to competition, regulation (Eurotariff), increased mobile phone penetration, cheap fixed telephony services, VoIP and several others that are threatening their revenue streams. Informa estimates that approximately 62% of mobile subscribers worldwide are prepaid, counting more than 1.5 billion as of July 2006.
The necessary technologies to implement prepaid roaming are heavily fragmented much more so than post-paid roaming, mainly because a prepaid user requires authorisation to communicate before each call, which is based on his credit, requiring this procedure to take place in near real-time.
There are several ways to enable prepaid roaming:
Call back with USSD: The Unstructured Supplementary Services Data is the simplest method of enabling prepaid roaming. It relies on entering a short code on the handset to query current balance and enable communication. An example of a USSD code is *99#phone number#. It is hardly user-friendly and in most cases complicates use beyond the reach of most users. On the other hand it is practically costless to implement but not considered as a long term solution, only in some developing markets where revenues do not permit an integrated roaming solution or roaming is not seen as a revenue driver.
CAMEL: Customised Applications for Mobile networks Enhanced Logic is a set of standards published by ETSI which describe services that operate above a GSM or UMTS network and are based on Intelligent Network standards. Its use is completely transparent to the end user who uses the mobile phone as in their home network. However, CAMEL requires heavy expenditures to deploy (some vendors quote a cost of 7-8 per subscriber) and also both home and visited networks to be CAMEL-enabled. The evolved mobile markets in Western Europe have implemented CAMEL widely for prepaid roaming.
Proprietary solutions: Several vendors have released roaming solutions that either mimic or translate CAMEL signalling between home and visited networks to enable prepaid roaming.
Prepaid hubs: A solution vendor establishes a roaming ecosystem with multiple agreements with mobile operators, international traffic carriers, signalling providers and other players in the roaming value chain. An operators that seeks to enter the roaming market only has to form an agreement with the hub provider and enjoys several advantages: pricing transparency, wide reach and customer base without the need for complex and extensive bilateral agreements.
It appears that prepaid hubs is the most efficient and cost-effective way to go forward in a fragmented roaming world but market dynamics do not suggest a simple migration. In advanced markets, CAMEL is already established, but operators will still want the flexibility of hubs in markets where CAMEL is unavailable. More so, CAMEL gives the operator the choice of partner networks abroad so that subscribers can be steered to a quasi-controlled environment allowing both operators to benefit.
On the other hand, in developing markets including Asia, Africa and South America, the value of prepaid hubs may be priceless in the eyes of operators whose prepaid subscriber base accounts in most cases for more than 90% of all subscribers. It is these markets that are leading the prepaid hub evolution.
In the rapidly changing world of roaming, it seems that operators are closer to breaking from the ambiguity of roaming charges and provide a transparent service and pricing to end users. Hubs are expected to change the roaming landscape, but to what extent will operators want to shift from their established semi-walled gardens to a more flexible and cost-effective offering for end users? Hubs are expected to play a major part in enabling prepaid roaming but some players in the industry including service providers, vendors and mobile operators fell that hubs are threatening their established roaming business.
One thing is for sure though: With the advent of the Eurotariff and distributed solutions like hubs, the shift towards realistic and competitive charges and pricing transparency for end users is slowly becoming a reality.