Strength in numbers

Market share of hubbing providers, Comfone, Link2One, Vodafone roaming service, Orange, United Hubbing, BICSEstablishing bilateral roaming agreements with every operator a telco wants in its footprint is costly and resource-intensive. An operator has to negotiate each deal on a relationship-by-relationship basis and may end up with thousands of roaming agreements and a mesh of signaling connections.

Each time a new technology, such as GPRS/3G/data, is introduced, more resource-intensive tasks must be carried out with each existing roaming partner. The administrative and operational costs add up as each new destination has to be tested and implemented.

All this makes the bilateral method of achieving a roaming footprint no longer viable. Moving to a hub or exchange model is now the accepted way for smaller operators to grow fast. Through a single agreement and an almost plug-and-play solution an operator can have many roaming partners from the outset of operations. The benefits also can stretch to the bigger players.

By outsourcing their less important roaming destinations to a hub, major operators can focus on the most profitable, high traffic roaming destinations and cut operational costs.

"The principle drivers for operators to join hubs is to reduce opex and capex, to fill in gaps in coverage and form part of a broader outsourcing strategy," Informa's Paul Lambert said in a recent report on the topic.

For small operators and new entrants, he said hubs may potentially facilitate prepaid and data roaming easier than bilateral relationships.

He pointed out two key challenges. "One is operational ?getting roaming connections in place as easily and as quickly as possible; the other is financial ?increasing roaming revenues, or stemming their decline at the very least. The big opportunity for hubbing providers is to show operators that they can easily and quickly connect their customers onto hubs so that they can grow their roaming revenues."

In some cases hubbing services are being provided by mobile operators themselves, and some hubbing providers are even establishing peering agreements with other hub providers so that when an operator signs a relation with one hub provider, it effectively establishes an agreement with two and gains a roaming footprint the size of both roaming hub providers' communities combined. 

An Informa report on mobile roaming notes that 472 operators signed up to hubs, equivalent to 61% of the total number of network operators worldwide." 

"Informa expects that more tier-3 and new operators will sign up to hubs next year as more operators see the value of joining hubs. This increase will be largely driven by the growth in data roaming and the comparative ease with which hubs enable it, as well as by the need to extend roaming services into the prepaid user base."

An ideal hubbing solution is one that provides high security, complies fully with international standards, is quick and cost-effective to implement and, most important of all, will establish service between the home network and a large number of roaming destinations.

The hubbing service is aimed at boosting roaming business development worldwide and should be based on buying, selling and clearing voice and messaging roaming traffic. In short, it acts as a broker between roaming partners, providing an MNO participating on the hub for the first time with access to all existing participants, with the reassurance that they have all been commercially operational and fully tested. 

The broker/hub provider takes care of all international roaming agreements, signaling and technical testing, clearing and billing arrangements for all participants, reducing implementation time and significantly decreasing operational and maintenance costs.

Across Asia Pacific, it's the newer operators that are likely to benefit most by joining a hub. 

With eight GSM operators and one CDMA operator serving a population of 15 million, Cambodia has a mobile penetration of about 35%. This competitive landscape makes hubbing important for more recent entrants as it can help them generate additional revenue streams straight away.

Cambodia Advance Communication (Cadcomms) was the first 3.5G operator in Cambodia and initially established roaming agreements allowing subscribers to use their mobiles in about 60 international destinations. But it turned a roaming hub provider to boost the number of roaming relations in a relatively short timeframe.

Cadcomms' roaming manager Phyrun Uch said: "The challenge we faced in 2008 as a relative newcomer to the already mature international mobile communications circuit was how best to establish ourselves fast and generate optimum revenues from an early stage."

He noted that the old way of establishing individual bilateral relations agreements with overseas networks was simply too time consuming and complex to be an option.

Going forward

"We did this for our first relationships, but needed an alternative. We had to find a solution that would open up the world to our customers ?and help us to also generate lucrative roaming revenues right away. A roaming hub was the clear route to take and enabled us to increase the number of roaming relations we had from around 60 to more than 133, leaving us to concentrate on our core activities."

Data roaming is operators' next big roaming challenge, with data roaming functionality in hubs becoming a standard requirement as more operators in the Asia-Pacific region upgrade their networks to 3G, 3.5G and LTE.

Besides the popularity of such data-bearing services as BlackBerry's support for email, mobile internet access enabled by the plethora of smartphones entering the market offers huge potential to generate data roaming revenues. With average session times of around three quarters of an hour becoming the norm, these trends underscore industry forecasts emphasizing that increases in data roaming traffic will result in substantial increases in roaming revenue.

The faster mobile operators open additional GPRS relations by adopting a data roaming solution, the earlier they will profit from increased revenues. 

Mathias Prussing is CEO of Comfone