MIAMI-The market opportunity for international roaming is clear, present and growing, but domestic carriers so far have been focused on tapping the large and more immediate potential posed by burgeoning data traffic at home.
“Many of the U.S. carriers I follow have not spent a lot of time yet building roaming into their plans,” Timothy W. O’Neil, a principal of SoundView Technology Group, a Stamford, Conn., investment bank, said April 28 at the Wireless Partnering conference.
“This has to do with the theory of hitting the sweet spot where revenues will skyrocket … The sweet spot is the bigger convergence of the personal computer, television and telephony,” said O’Neil. “(Wireless carriers) are focused on domestic issues like rolling out a data product in order to become ‘infocom’ players. They see a much bigger pie to go after.”
Wireless Partnering is the first of an ongoing series of conferences planned by the Cellular Telecommunications Industry Association and Cibernet Corp. The meetings are designed to facilitate dialogue among domestic and foreign carriers about opportunities for and impediments to international roaming. Cibernet, a wholly owned subsidiary of CTIA, is a clearinghouse with 200 carrier customers that exchanges roaming information and provides financial settlements for roaming calls.
“This conference and our trade missions to Latin America and Asia are for dealing with issues like numbering administration, fraud, general compatibility of hardware and handsets, data clearinghouses and protocol conversion for the exchange of billing records, currency issues,” said George S. Shaginaw, senior vice president for technology and operations of CTIA and president of Cibernet.
Within the United States, roaming revenues were about $3.2 billion last year, or about 10 percent of the total. CTIA’s goal is to facilitate the concept of wireless as a mobile cordless phone that permits international long-distance landline replacement, Shaginaw said.
“Latin American and Asian operators can’t get the attention of U.S. operators on roaming. This puzzles me, especially with (respect to) some of the more mature operators in North America,” said Daniel Ambrosini, senior manager of carrier operations for Sprint PCS.
“From a PCS perspective, it is important to start expanding into the international arena to generate more traffic on our network,” Ambrosini said. “We are just starting to focus on international roaming.”
By mid-year, Pegaso PCS S.A. de C.V., which recently launched commercial service in Tijuana, Mexico, expects to provide its customers with the opportunity to roam seamlessly on the Sprint PCS network in the United States, said Alejandro Orvanarios, chief commercial officer.
“Essentially, for the first time, a U.S. and a Mexican customer will feel no difference when they roam, getting 100-percent digital technology wherever they go, so we are delivering on (the North American Free Trade Agreement),” he said.
Those North American carriers that have so far engaged in roaming agreements have had their attention focused on Europe, but they now are starting to look south toward Latin America, said Marienne Cordeiro Bernades, roaming product manager for BCP Telecomunicacoes. In commercial operation for a year, the Brazilian B-band carrier has more than 1 million customers, mostly in the Sao Paulo area. BCP plans to begin offering international roaming to its Sao Paulo subscribers in May.
Bernades said BCP estimates 1 percent of the wireless customers in the United States are international roamers.
International roaming today represents less than 5 percent of the revenues of American wireless carriers, said Michael S. Krier, director of the Latin America practice for The Strategis Group, Washington, D.C.
Based on consulting projects it has done for clients, Strategis estimates 50 million people will be global roamers in 2003, compared with 32 million in 1998.
Looking at cellular and personal communications services customers and the number of airline flights they take yearly, Krier said worldwide roaming revenues that were $9.2 billion in 1998, based on an average airtime rate of 60 cents per minute, will rise to $11 billion, based on an assumed average airtime rate of 45 cents per minute. The Strategis model assumes each of the 50 million global roamers will travel abroad six times per year on trips averaging four days each, and they will use their wireless phones an average of 20 minutes daily for international calls.
“Most business travelers go to large cities. If no roaming is in place, (mobile satellite systems) make sense. If there is (roaming), it makes more sense to use a cellular phone,” Krier said.
Availability of phones that operate on multiple radio-frequency standards is critical to the proliferation of roaming, he said. Ericsson Inc. and Nokia Corp. are planning soon to introduce their versions of world phones that can use six different wireless technologies, Krier added.
Nextel Communications Inc., which uses integrated Digital Enhanced Network technology for its enhanced specialized mobile radio network in North America, is planning to introduce a Global System for Mobile communications version “for the rest of the world in a few months,” O’Neil said.
Japan’s NTT Mobile Communications Inc. has 25 million customers on its unique Personal Digital Cellular network. For the relatively few customers willing to pay a premium, it has established a call forwarding process so they can rent phones using local technologies in their destination cities and still get calls to their domestic numbers, said Takashi Tokita, executive director of global business development.
“DoCoMo plans to further simplify roaming through development of dual-mode handsets compatible with PDC and various other technologies,” he said.
For Tokita, the biggest impediment to global roaming isn’t so much incompatible wireless technologies as it is the lack of a “roaming broker” to facilitate such agreements among carriers in different countries.
“I don’t have a specific organization in mind, but we need to have a clearinghouse instead of each participating carrier having to negotiate bilateral agreements individually,” he said.
“This would be an improvement for the whole industry.”
