APEC Tel40 "An overview of roaming initiatives in the SouthAamerican market" (IMOBIX 26-sept-09)

APECTEL 40
Cancun Mexico, September 2009

An 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 Study
project 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. Roaming
Washington 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 2009

Dec07 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 and
challenges for roaming development …
What are the opportunities and
challenges for a South American
Roaming development?

Economics Tax Legal/ Technical
regulatory

Opportu- • International • Definition of • Telecommuni- • GSM base
tourism and trade multilateral tax cations regulation growing
nities growth agreement framework predominance
(examples) • Stability and established in • Effectiveness of
economic growth most countries fraud data
interconnection

Challenges • 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
experiences

Activiti • Roaming market • International benchmark • Priorization of initiatives
research, including: of roaming experiences, for implementation
es - 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


SELECTED RESULTS

14

Prepaid service was the driver of growth in the region, with an
average of 82% of the lines and penetration of more than 90% in
5 countries.

The size of the international intra-regional roaming is estimated at ~174M
minutes and USD ~343M (~1% of total revenue)

The GSM Latin America study considers an alternative scenario for South
American roaming

Using the GSMA estimates for ARPU and postpaid growth, the South American
roaming market is expected to reach USD ~430M by 2012

Intra-regional travel* in Africa has a 2% penetration level**, similar to that in
South 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 focused
on telecommunications (Regulatel and CITEL), and also the regional integration
initiatives (MERCOSUR, CAN and IIRSA)

The study revealed the views of key figures in the South American roaming
market with face-to-face interviews in four countries and supplementary
questionnaires with the remaining stakeholders

The stakeholders are generally optimistic about the development of roaming,
proposing an increase in the relative importance of total revenue from
roaming services (from 1-5% in 2008 to 5-12% in 2011)

Opportunities and initiatives were identified to promote roaming in the
region..

…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 outgoing
services…

Inter-operator tariffs are distinguished by voice and data, each with specific
billing 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 rates
in an effort to increase transparency to the customer

Information on operator web sites and by call centers about client rates should
be clearer and more transparent

Low availability of prepaid roaming in the region because few operators offer
the service

Roaming services face the problem of double taxation in the application of
concepts 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-regional
roaming is affected by double taxation

As an effect of the double taxation of VAT and other fees*, roaming services
end up being 35-60% more expensive than when excluding taxes

Of the 52 countries surveyed outside the EU and South America, VAT is applied
to wholesale billing in 73% of the cases

The South American region has a lower average VAT than the EU but suffers
from double taxation of VAT

Fraud causes significant losses for operators (3 to 5% of revenue), with ~24%
occurring in roaming


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)

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.



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.



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.


Draft Initiatives: Regulation

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.


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

jhunter@imobix.com
Tel: +1 (954) 865-8832

APEC Tel40 "An overview of roaming initiatives in the SouthAamerican market" (IMOBIX 26-sept-09)

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