If the economy is going south for both vendors and operators in the United States, part of the solution may lie in going south, literally.
According to a Strategis Group study conducted on international roaming focusing on TDMA technology, there is huge market potential in that segment untapped by the players in selected countries in Latin America. Yet, fraud and technical obstacles in tracking billing are the booby traps lurking in this potential gold mine.
The Universal Wireless Communications Consortium contracted the study to the Strategis Group.
Although the study does not disclose the revenue presently accruing from roaming, it demonstrates that the potential revenue the United States could have derived stood at $482 million for the year 2000. By 2003, it would grow to $930 million, representing an 87-percent leap within the period.
The Latin American countries covered by the report include Argentina, Brazil, Chile, Colombia, Mexico and Venezuela. The six major carriers operating in these markets are BellSouth, Telefonica, Telecom Italia, Verizon Wireless, Telecom America and Millicom. Mexico accounts for a lion’s share of that market.
Bayardo Gonzalez, who conducted the study, said he used actual and forecast data for TDMA penetration, business and leisure travel, and minutes of use for business and leisure customers. He arrived at the financial figures by setting the roaming airtime arbitrarily at $1 per minute.
Business travelers account for 46 percent of potential revenues in 2000, with a 42-percent jump in 2003. Leisure could have drawn 54 percent last year and is expected to climb by 141 percent, said the report. It also noted that the revenue originating from the United States is 60 percent of the total in 2000, growing to 77 percent by 2003.
The report said the average revenue per traveler was $90 in 2000 and will grow by 73 percent to $156. Broken down, it means the average revenue from a U.S. business traveler to other countries would rake in $103 in 2000 and $223 by 2003.
The foreign traveler coming into the United States generated an average of $76 in 2000, rising 2 percent to $77 by 2003. Traffic between the United States and Mexico gobbles up 92 percent of total revenues for 2000 and 96 percent in 2003. Total potential revenue from business from foreigners traveling to the United States may reach $112 million in 2003.
In spite of these impressive figures, carriers have not yet taken advantage of this because of what analysts think is the chaotic billing process and the absence of a coordinating system or authority.
“We need a higher level of coordination within the industry,” said Richard Downes, director for Latin America and the Caribbean for the UWCC. He attributes the lack of an overarching authority to the absence of any laws that make roaming mandatory internationally.
Gonzales says the carriers will be forced to recognize the potential in due course.
“With the consolidation in the wireless space and lowering MOUs (minutes of use) as well as revenue per subscriber, they will come round to the importance of tackling the problem of roaming.”
Downes identified two types of roaming fraud. Sometimes a caller using a PIN that connects inadvertently to a wrong network. Also, subscribers deliberately use the service without paying.
Part of the reason there is no overarching authority is because different groups are executing different parts of a puzzle. While CiberNet handles billing, the UWCC sets technical standard and IFAST deals with interim numbering.
Gonzales said carriers have failed to initiate agreements between some of the Latin American countries and the United States because the modalities could not be worked out.
