MIAMI-The market opportunity for international roaming is clear, present and growing, but domestic U.S. carriers so far have been focused on tapping the large and more immediate potential posed by the 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 U.S. investment bank, said recently at a Wireless Partnering conference organized by the U.S. Cellular Telecommunications Industry Association and Cibernet Corp. 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 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 was the first in a series of conferences planned by CTIA and Cibernet that are designed to facilitate dialogue among U.S. and international carriers about opportunities for and impediments to international roaming.
These conferences, along with trade missions to Latin America and Asia, are being set up to deal with issues such as numbering administration, fraud, general compatibility of hardware and handsets, data clearinghouses and protocol conversion for the exchange of billing records and currency issues, said George S. Shaginaw, CTIA senior vice president for technology and operations and Cibernet’s president.
Within the United States, roaming revenues were about US$3.2 billion in 1998, or about 10 percent of the total carrier revenues. 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,” said Daniel Ambrosini, senior manager of carrier operations for Sprint PCS. “This puzzles me, especially with (respect to) some of the more mature operators in North America.
“From a PCS perspective, it is important to start expanding into the international arena to generate more traffic on our network. We are just starting to focus on international roaming.”
Pegaso PCS, which recently launched commercial service in Tijuana, Mexico, expects to soon provide its customers with the opportunity to roam seamlessly on the Sprint PCS network in the United States, according to Alejandro Orvananos Alatorre, 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. Both Sprint PCS and Pegaso PCS offer CDMA digital service. Pegaso is 33-percent owned by U.S.-based Leap Wireless.
Those North American carriers that so far have 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 Brazil’s BCP Telecomunicacoes, in which U.S.-based BellSouth is the major operating partner. In commercial operation for a year, the B-band carrier has more than 1 million customers, mostly in the Sao Paulo metro area. BCP planned 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 Stares 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.
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 PCS customers and the number of airline flights they take yearly, Krier said worldwide roaming revenues, which were US$9.2 billion in 1998 based on an average airtime rate of 60 cents per minute, will rise to US$11 billion in 2003, 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.
Availability of phones that operate on multiple radio-frequency standards is critical to the proliferation of roaming, Krier said. Ericsson and Nokia are planning to introduce their versions of world phones that can use six different wireless technologies soon, he added.
Nextel Communications, a trunked radio operator in the Americas that uses Motorola’s iDEN digital technology, is planning to introduce a handset capable of roaming onto GSM networks.
NTT DoCoMo has 25 million customers on its Japan-proprietary PDC network. For the relatively few customers willing to pay a premium, DoCoMo 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.”
