The operators’ cash cow that is roaming has almost been milked dry as regulators attempt to control the charges operators can make — and users simply turn off data when abroad in fear of massive bills.
With another technological shift waiting in the wings as networks migrate to LTE and WiMax, the question of how roaming will be adapted is being thought through now. It is clear that the shift from 3G to LTE will be more challenging than the shift from 2G GSM to 3G because of spectrum diversity between markets.
But, in the LTE environment, operators that previously were outside the GSM world will be entering the market for the first time. That brings greater choice of roaming partner but also a greater number of operators to interoperate with.
The good news for the industry is that there is some time to make preparations as the market waits for consumer devices to gain critical mass.
“LTE roaming is actually a bit of a remote proposition,” says Bengt Nordström, chief executive at consultancy Northstream. “It doesn’t necessarily become applicable until you have smartphones and I don’t see that happening in any significant way until 2013.”
Even so, that’s only 18 months away and, in telecoms development terms, that’s little more than the blink of an eye.
“On a technical front, diversity of spectrum and how it has been allocated around the world will require years — and by that I mean between three and five years — to be fully addressed,” acknowledges Jeff Gordon, the new CEO of Syniverse.
“The situation in 4G is different than in 2G and 3G. The forecast demands on the network are much, much higher and there will be more utilisation of data and more broadcast. The demands on the network are much greater right out of the starting gates than they were for 3G which was largely under-utilised initially.”
LTE by its nature isn’t an overnight switch and that will lead to heightened interoperability requirements. “With 4G and roaming services rolling out, the need for interoperability between different operators will increase,” says Lokdeep Singh, vice president of technology and innovation at MACH.
“As people move towards LTE it becomes an IP environment and roaming will take place to and from legacy networks and we see the boundaries between interconnect and roaming blurring a bit. When it comes to LTE, lots of changes are happening but at a different pace from market to market and operator to operator so the need for interoperability increases.” 
                                  
                         
Switching off roaming 
                         
Something clearly needs to be done to unify efforts. “A much greater question than the technical one is the commercial one,” says Nordström. “The biggest question is pricing and most of us switch off roaming when abroad. The situation becomes more and more weird because user behaviour is normally so always-on.
“Operators realise their data roaming and data charges make them look stupid and makes all their arguments such as those regarding a Google tax look ridiculous but, in continental Europe, they have so much cashflow that they want to milk that cow for as long as possible.”
One challenge rarely seen in pre-4G environments is the breadth of spectrum diversity between countries. Where previously different network technologies proved a stumbling block to smooth, efficient roaming, spectrum will now be the challenge. This will be especially apparent in western Europe, where a previously homogenous market will be composed of services running on different spectrum bands in different countries’ licence blocks.
“Spectrum diversity does make a difference,” says Singh. “We see data specific devices like USB dongles not being a great issue because people are comfortable with having several dongles but, when you talk about voice over LTE and VoIP, the focus on spectrum and bands could potentially slow down the ramp up of LTE services beyond data.”
Nordström agrees: “On the technical side it is fragmented. The spectrum picture is fragmented and the answer is to have a lot of bands [on devices] but that’s a complicated project when you think of the radio frequency filters and the combination of high and low bands.”
For Rupert Baines, vice president of marketing at PicoChip, spectrum diversity is an issue but there’s always 3G for operators to fall back on where they can’t interoperate. 
                         
                         
Frequency options 
                         
“In some ways [roaming] is easier,” he says, “There is more experience and most operators now have established commercial models. For WiMax, the frequency allocations were standardised comparable to 2G — although perhaps not as good as 3G. For LTE, there could be a lot more frequency options — FDD/TDD, 700 and 800 megahertz, 2.3 gigahertz and others — so that is a bit of a complication. The saving grace is that if you cannot roam with LTE, you can fall back to 3G which very likely will work.”
In addition to spectrum diversity, operators also face pressure on roaming pricing which will become more and more acute as data consumption on the move increases. For Singh those pressures are already here and not necessarily new.
“The first pressure which is already here is on price,” he says. “The user really expects almost no boundaries, but wholesale pricing needs to become service aware and quality aware and provide the ability to charge on the type of service rather than purely on the bandwidth consumed. The second pressure in terms of priority is roaming regulations. While regulations play an important role as a catalyst, at the same time the focus of regulation is not holistic. As LTE comes into the picture, this needs to be balanced against use of IP networks by third party providers.”
Regulation has however made some aspects of the migration to 4G simpler from a roaming point of view.
“The GSM Association was quite visionary when it started to work on 4G so all the agreements are technically neutral,” adds Singh. “So from a people point of view there’s not a lot of work required but, with interoperability and testing and the emphasis on quality there is still a lot of work that needs to be done, especially when mapped against the timescale available.” 
                         
                         
Second tier partners 
                         
However, the situation isn’t static, as Gordon acknowledges: “If you look at the work that has to be done, if you are not already underway in terms of technology and partners you need to be, there’s a ton of work to do,” he says. “In addition, your partners of today may be relegated to second tier status when it comes to LTE because they may not even offer LTE. In our estimation you need to take a year to ensure solutions are truly carrier-grade.”
Lars Esshagen, director of product management of Birdstep’s EasyConnect product, agrees: “They can piggyback on existing [agreements] in general,” he says. “New relationships may need to be established between previously CDMA-only, now CDMA-LTE, players and the operators from the GSM/WCDMA camp. You can always argue to the contrary and come up with cases where there could be a better solution — but in the end most of these cases stem from someone with an interest in making it appear more complex than it is.”
The burden operators and roaming and hubbing enablers face has undoubtedly increased as the number of providers needing to hand-off and the services supported has proliferated. “Complexity has definitely increased manyfold,” says Singh.
“If you look at the traditional business model and business processes that companies like us had, they were done only in near real-time. Those things are now done in real-time and similarly when it comes to interoperability, the complexity has increased. It’s no longer about rating CDRs from the visitor network and is more about enabling roaming transactions to happen.”
Gordon agrees: “Our view is that the best way to think of LTE is that it is the best opportunity for an operator to convert voice revenue into video calling revenue,” he says. “The dilemma is that with mobile voice and SMS we delivered as an industry the promise of ubiquity — I can call four or five billion people with a 2G phone — but with MMS the promise of ubiquity has been broken and that is also true with LTE.”
Broken promises or not, roaming revenues have become such a critical aspect of operators’ financial health that all view the 4G environment with caution. That caution needs to be shaken off with a renewed recognition that customers want that always-on environment when they roam. The operators that can provide that will be ahead of their competitors and become favoured by customers and third party content and service providers.
“Roaming is a bottleneck and is a barrier for users and for the growth of the market,” concludes Nordström. “LTE doesn’t change that picture. Technically we will be able to support more spectrum but we don’t need that because devices won’t be available soon.” GTB