Roaming to Where the Money Is

GSM carriers could make more money from roaming by allowing users to hook into affiliated networks, says Roamware

November 1, 2002

5 Min Read
Roaming to Where the Money Is

GSM operators desperate to make more money from existing services and operations are in luck if mobile solutions startup Roamware Inc. can deliver on its promises.

Roamware, until recently known as Mobileum, says its system can help operators generate even more cash from one of their major cash cows -- roaming charges.

"Our killer application is the ability of our system to allow mobile operators to connect outbound roaming customers to a specified network," says Bobby Srinivasan, executive VP of sales and marketing.

Currently, mobile phone users outside their home territory will roam randomly onto mobile networks in the country they visit (depending on a number of technical and coverage factors) unless the phone user decides to manually intervene and choose a preferred network. Most people (99 percent, according to Roamware) simply use the default connection to a random local operator, as they either do not know they can make a choice, do not know how to, or cannot be bothered to do so. For most people these connections change frequently.

This situation is a big deal to the network operators. Revenues from roaming customers are crucial (and sometimes outrageous), and the operators want to retain as much of the revenue as possible. Giving a carrier the ability to determine which networks its customers use when overseas, especially if that carrier is part of an international organization with operations in multiple countries, would boost income significantly. If carriers are able to selectively keep users on affiliated networks, they may be able to lower costs while keeping roaming charges the same.

Roamware says that, on average, customers traveling overseas are connected to associated or affiliate networks between 40 percent and 60 percent of the time. It claims its product could increase this by between 5 percent and 15 percent.

"You could use the word 'invaluable' to describe the revenues operators get from roaming charges," says Lars Vestergaard, research manager at IDC's European wireless program. "Even though regulators are targeting roaming prices and deals, it is likely people will be paying premium prices for roaming calls for some time yet."

Vestergaard says a system such as that developed by Roamware would be "extremely important" to carriers. "You cannot underestimate how much of a benefit this would be. It makes it all easier for the customer, too, and user friendliness is the key factor in roaming. It helps that this company has real customers already. That's a good sign."

Roamware also says its system includes already available but valuable features, such as allowing the use of shortcut codes to directly access voicemail and other value-added services over roaming networks. The theory goes that making such codes available or delivering features such as Caller ID the same as the user is on his home turf would be of great benefit to the customer and lead to increased use of services.

On the carrier side, the goal is to keep users on their affiliate or partner network and drive average revenue per user (ARPU). While roaming charges are high, most heavy roaming users are business customers who do not think twice before using their phone overseas because the additional costs do not come out of their personal bank accounts.

The ease of use comes from the capabilities of the Roamware's Service Delivery System. This allows carriers to provide their customers with access and features similar to those of their local services.

The product was first demonstrated at a recent plenary meeting of the GSM Association in Turkey (see GSM Body Gets Makeover).

Roamware's system has already attracted 17 operator customers, 10 of which have already deployed the company's system. While initial uptake has been with some of the world's smaller carriers, such as StarHub in Singapore, and Malaysia's TimeCel, Roamware has also managed to pick up business with parts of the Orange SA (London/Paris: OGE) and Vodafone Group plc (NYSE: VOD) international empires. "We have deployed with several Orange operators [in India and Thailand] and with D2 Vodafone [in Germany]," says Srinivasan. "It's a viral product. Once you get into a group, you have great opportunities with multiple properties."

Roamware folk say they're also working on a solution for those carriers that may not be part of large multinational roaming networks, as well as working on systems to make data roaming a real possibility.

"Our plans for 2003 are under wraps, but what we can say is that they are focused on multi-carrier solutions, not single-carrier solutions," says Srinivasan.

Roamware is also attempting to maximize its own revenue. The company is about two years old. Srinivasan says its revenues are in "double digit millions of dollars" and that they hope to be profitable in the next quarter. He says many of the senior team have been involved in successful startups before and know how to keep costs down. The development team is based in India, for example.

"We have people on our advisory board with a lot of experience in regulatory matters," adds Srinivasan. Such individuals include Scott Fox, currently Chairman Emeritus and a member of the board of the GSM Association, and Craig Ehrlich, deputy chair of the GSM Association. No prizes to anyone spotting the theme here, or for making rash assumptions about Roamware's gig in Istanbul at the association's plenary meeting.

Roamware is a privately held company. It is backed by a small number of companies and venture capitalists, including BEA Systems Inc. (Nasdaq: BEAS), Mitsubishi International, Shelter Capital Partners, and Tibco Software Inc.

— Ray Le Maistre, European Editor, Unstrung

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