roaming explained
Latin America
Contents
3
1. Mobile roaming explained
1
How mobile roaming works
When a mobile user is abroad and a visited mobile network. The visited
turns their mobile device on, the mobile network picks up the connection from
device attempts to communicate with the users mobile, recognises whether
To explain roaming in more detail, more than one operator in the same visited
Figure 1.2 the shows commercial and country, which in this case is Visited
technical details for international mobile Operator A and a second network, Visited
roaming. The diagram focuses on the Operator B. As a result, Mobile User A
international roaming wholesale and can call home using either visited operator
networks, both of which use international
retail arrangements, for simplicity.
transit services to carry the call back to
The mobile user (Mobile User A) has an Mobile User As home country.
international roaming service with their
Mobile User A pays a retail price to Home
home operator (Home Operator) and
Operator for the roaming service and
is automatically connected to a visited
does not pay Visited Operator A. Provided
network (Visited Operator A) while
Mobile User B is not also roaming, they
roaming. Mobile User A is automatically
will not incur any extra charges to receive
granted access to Visited Operator As
a call from, or to make calls to Mobile
network when arriving in the visited
User A.
country by an exchange of a data between
Home Operator and Visited Operator Visited Operator A sends transferred
A, where Visited Operator A confirms account procedure (TAP) files to a
Mobile User A is a roaming customer with clearing house which forwards them to
Home Operator. As such, the wholesale the Home Operator. TAP files are used for
roaming agreement between Visited billing of calls while roaming.
Operator A and Home Operator specifies
Home Operator can then pay Visited
how this data is to be provided to the
Operator A the wholesale charges as per
visited operator. Home Operator usually
call volumes in the TAP file and rates in
has wholesale roaming agreements with
the wholesale roaming agreement.
2
Mobile Mobile
User B User A
RETAIL
it is registered
Home with its system, and The visitedVisited
network also requests
Visited service
attemptsoperator
to identify the users home informationoperator
fromAthe home operator
networkB
network. If there is a roaming agreement about the user, such as whether the
between the home networkClearing and onehouse phone being used is lost or stolen, and
WHOLESALE
of the mobile networks in the visited whether the mobile device is authorised
Roaming
country, the call is routed by the visited
agreement for international use. If the phone is
network towards an international transit authorised for use, the visited network
International
network (Figure 1.1). The international carrier creates a temporary subscriber record
transit network carrier is responsible for the device and the home network
for theRoaming
call delivery
services to the destination
Traffic flow updates
Revenue flow its subscriber record on where
Data exchange
network. Once this is done, the the device is located so if a call is made to
destination network will connect the call. the phone it can be appropriately routed.
Mobile Mobile
User B User A
Clearing house
WHOLESALE
Roaming
agreement
International
carrier
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Data roaming
With the increasing popularity of feature (MB), which refers to the volume of
phones and smartphones, the use of data transmitted for the service
mobile data services while roaming is used. Data traffic volumes can vary
set to continue to grow exponentially. significantly depending on the type
Mobile data services are typically and use of different data services.
measured in kilobytes (KB) or megabytes
There are significant differences in the size estimates, as file size depends on
the type of data, quality, and file length. For example, high definition and DVD
quality streaming consumes greater amounts of mobile data than standard video
or audio streaming.
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2. Mobile roaming in Latin America
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Argentina
North America
Portugal
Spain
Mexico
Honduras
Guatemala
Nicaragua
Venezuela
El Salvador
Colombia
Ecuador
Latin America
Peru Brazil
Paraguay
Chile
Uruguay
Argentina
Figure 2.2 Main inter-regional and major intra-regional roaming routes for Latin America5
6
Regional challenges Few agreements have been reached to
prevent double taxation in Latin America
As the Latin American market and some operators report that tax
develops, structural and technical treaties in existence are operationally
barriers must be addressed. difficult to implement. In addition,
Introducing roaming regulation many countries levy other local taxes,
while these obstacles remain could such as withholding taxes and local and
result in unintended consequences state taxes, which further inflate prices.
that harm the industry, mobile Double taxation remains on 72 per cent
users and government revenue. of roaming routes in South America.6
Fraud remains a major financial
Structural barriers concern for operators despite increased
Legal and technical developments are eradication efforts, causing loses of
required to remove double taxation, up to five per cent of total mobile
combat fraud and liberalize international revenues in Latin America and
gateways. Combating these barriers up to 25 per cent can occur while
is vital prior to any implementation of users are roaming.7 The GSMA and
roaming regulation, as they artificially regional bodies are leading initiatives
inflate roaming charges in individual to reduce fraud, and more than 80
countries. per cent of Latin American operators
have implemented Near Real Time
Double taxation inflates retail Data Roaming Exchange (NRTDRE).
prices. This means retail prices can be For fraud to be significantly reduced,
inefficiently high, which affects the NRTDRE must be enforced through
industry and mobile users, as well as roaming agreements, which requires
government revenue. While initiatives further investment in technology and
by regulatory bodies such as the negotiation of roaming agreements.8
IIRSA (Initiative for the Integration
of Regional Infrastructure in South International gateways are the
America) exist to help remove double facilities through which international
taxation, the problem continues and calls are sent and received. Where
substantially increases roaming tariffs. international gateways are not
In Latin America VAT rates range from liberalized, their costs make up a
seven to 27 per cent, complicating the significant proportion of the total
task of roaming pricing for operators. roaming costs. Even with volume
growth, there is no bargaining
power for operators working across
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monopolized gateways. This means GSMA recommends governments
inter-operator tariffs are likely to focus on removing and reducing these
continue to be high. International structural barriers to help to reduce
long distance termination charges are roaming costs for mobile users.
another cost that inflates end-user
prices. Although there has been much
improvement in the level of competition,
international gateway monopolies
remain in at least 29 per cent of
Latin American countries.9 In Arab
countries, for example, international
roaming call prices between liberalized
gateways are typically 25 per cent lower
than between those with gateway
monopolies.10
+ X% 1.5 + X%
0.20
0.22
1.07
+40%
8
Technical barriers
In addition to structural burdens, the
industry continues to heavily invest
in meeting the technical challenges
of international roaming. This level of
investment is in addition to the mobile
broadband roll outs across the region.
Regulatory intervention will diminish
the ability of operators to invest in
meeting the challenges of mobile
broadband roll out.
Interoperability: CDMA technology is in use Enforcement and monitoring costs, which will
in some parts of the region which prevents disproportionately burden least developed
seamless roaming. Additionally, use of different countries. Additional investment is required
GSM/3G spectrum can prevent many low-cost by operators to provide consistent quality of
handsets from roaming. service across roaming networks.
Coverage: Network coverage, particularly 3G, Consumer communication and marketing costs
remains patchy as operators continue to roll out will need to increase to promote roaming and
and upgrade their networks. ensure transparency.
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Route availability
Origin (for South America only) Increase in routes available
2007 2011
Argentina 5 21 16 (320%)
Brazil 2 12 10 (500%)
Colombia 0 6 6 (N/A)
Chile 17 32 15 (88%)
Peru 0 4 4 (N/A)
Total 24 74 51 (213%)
Figure 2.4 Prepaid route availability for a sample of South American countries,
2007 vs. 201114
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3. Price trends
Regionally, market trends are positive Tariffs options may generally include
and the industry is committed to taking different call prices (pre-paid/postpaid),
the lead. Roaming prices are declining whether the mobile phone has been
and operators continue to develop purchased as a part of the bundle, the
innovative offers, with reductions of size of the monthly access fee, among
up to 79 per cent since 2007 (Figure many other factors.
3.1). Operators across the region are
taking steps to serve the needs of mobile
users living on international borders
and address inadvertent roaming, as
described in Chapter 2, as well as cater
for regional tourism. Additionally,
operators are investing heavily to address
the technical challenges such as prepaid
route availability and interoperability.
Mobile operators offer their customers
a menu of tariffs from which they can
choose from depending on their own
preferences. With different needs and
uses, mobile users can choose the
most appropriate tariff to suit them. If
regulators chose one price over another,
this would effectively favor one group of
mobile users over another.
11
Outgoing local call SMS Data
1.29 9.85
0.36
-68%
0.41
-72% -79%
0.10 2.07
Figure 3.1 Selected examples of postpaid tariff comparison for Argentinian users
roaming in Paraguay (USD), 2007 to 201216
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4. Impact of regulation
13
Impact on universal broadband These impacts suggest large businesses
and affluent leisure customers would
Universal broadband access in Latin
benefit most from lower prices, rather
America depends on the ability of
than the mass market of mobile users
mobile operators to continue their
who is most often incorrectly cited as
high rates of investment. The mobile
suffering from high roaming charges.
industry is capital intensive and
Competitive market dynamics are
the pace of asset replacement and
the best frameworks from which to
investment in new technologies is
determine the price for international
rapid. Operators take considerable
mobile roaming services. Mobile users
risks when they invest. The level of
choose a mobile tariff based on the
regulation is a strong influence on
full value it provides across a number
the investment decisions made by
of services and operators optimise the
mobile operators and that, in turn,
pricing and value of the bundled tariff to
will impact on the services available to
address the needs of their local market.
mobile users. By reducing the incentive
Regulating on the roaming elements of
for operators to invest in innovative
the tariffs reduces operators flexibility to
services, it reduces the likelihood that
tailor its services for the mass market of
mobile users will benefit from new
end-users.
services and extended broadband
coverage in the future. As such, Regulating roaming is a move away
regional roaming regulation will from successful liberalisation of
ultimately negatively impact on the telecommunications markets which has
broadband services available for the promoted technological development
unmet needs of consumers. and economic progress over the last
two decades.
With mobile phone penetration in
some Latin American countries at just
13 percent17, regulation of roaming
could be detrimental to connecting the
region and providing access to universal
broadband.
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5. Best practice
It is for this reason that the industry In June 2012, the GSMA announced
supports a measured approach to an initiative that will provide mobile
regulation, where regulators: users with greater visibility of their
roaming charges and usage of mobile
Encourage operators to take measures data services when travelling abroad.
that enhance mobile user awareness At a meeting held in July, 24 operator
(transparency and bill shock) of tariffs groups agreed to undertake a number
when they travel of measures which will help mobile
Address structural barriers that subscribers better understand their data
increase costs for service providers and roaming charges and more effectively
mobile users, such as double taxation manage their use of data services.
and international gateway monopolies, The measures include:
as well as those barriers that hold
back the development of market based Sending text messages to
substitutes remind mobile users of their
data roaming tariffs when they
arrive in another country and
turn on their mobile device
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I mplementing a monthly data roaming
spending limit to help consumers
manage their roaming bill and
sending alerts when their data usage
approaches the limit
Temporarily suspending data service
when use exceeds the spending limit.
These measures, which already cover
more than a billion mobile users, will
offer a more transparent and uniform
experience for all travellers. These
operators groups agreed to implement
these data roaming transparency
measures by the end of 2012, extending
the coverage to more than four billion
connections across 120 countries.
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Endnotes
1 h
ttp://www.broadbandgenie. 11 A T Kearney 2012, Outgoing voice call
co.uk/mobilebroadband/help/ price is given for a hypothetical example of
mobilebroadbandusage-guide-what-can-you- a Claro Argentina subscriber travelling to
get-foryourgigabyte, accessed 25 June 2012 Chile in USD
2 AT Kearney, 2012. Note: Barbados and Aruba 12 Other resident taxes may be indirect
have very high GDP per capita on PPP basis or regulatory fees applied to IOTs and
(up to 86 times the lowest GDP country) but retail prices
they have been excluded from this analysis
because of their small size 13 CAMEL is Customized Applications for
Mobile networks Enhanced Logic, which is
3 A T Kearney based on information from an intelligent network designed to work on
UNWTO and EIU either GSM or 3G core networks. CAMEL
features include no-prefix dialling, real-time
4 Regional Study of the South American billing and being able to receive voice calls,
Roaming Services Market Stage I, IIRSA, MSM and use data services while abroad for
April 2009 pre-paid users
5 Source: SICA - Central American Integration 14 A T Kearney 2012. Sample is of the five
System, WTO Factbook, BlueNote MC largest Latin American countries by mobile
6 Percentage on all roaming routes provided by subscribers numbers, October 2011
A T Kearney, based on a sample of 10 South 15 Source: IIRSA: Initiatives for the
American countries and sourced through improvement of the South American
IIRSA Regional Study of South American market of roaming services, Analysis and
Roaming Services Market, April 2009; EIU; Recommendations, February 2010
Operator websites
16 Selected examples of operators decreasing
7 Source: IIRSA: Initiatives for the prices, using medium data from Argentina
improvement of the South American Telecom Personal, Argentina Claro and
market of roaming services, Analysis and Argentina CT Movil sourced from operator
Recommendations, February 2010 websites
8 Ibid 17 Wireless Intelligence, Q1 2012
9 AT Kearney, 2012. Note: Sample for Latin
America is based on 24 countries as data
unavailable for 14 countries