A prolonged outbreak presents significant problems to telcos

While the telco industry might be getting well-deserved attention and praise today, the longer the coronavirus outbreak plagues society, the greater the risk of penalties for the telcos.

In the short-term, the risks which have been presented to the telcos could well be mitigated by the delay of some spectrum auctions, as well as more residential customers upgraded services. There is likely to be an incremental gain from the residential business, while fewer spectrum auctions mean significant less outward investments.

These might seem like attractive numbers, though what is worth noting is that the residential upgrades are highly unlikely to result in a significant increase in revenues, as increases in internet traffic is not a linear relationship with cash rewards, especially with upper limits on contracts being relaxed.

“This increase in traffic will not lead to any significant increase in revenues for telecom operators as most consumer offers for consumers products are based on flat-rate fees for broadband, mobile data traffic as long as consumption caps are not reached,” said Jacques de Greling, an analyst for the Scope research group.

“The real question is more on the longevity and depth of this crisis. A deep and prolonged recession in Europe could nevertheless put some, if limited, pressure on telecom operators’ revenues.”

The enterprise customer revenues are the ones which are under immediate threat, though should a recession take hold of society, consumer markets could feel the pinch also. Right now, there does not seem to be an immediate need to panic, China reopening for business is a very encouraging sign, but with more people working from home the threat to enterprise revenues is very real.

On the most basic level, the less people in the office, the smaller the connectivity contract which can be won from the corporate customers. Moving up a level, this might force companies through a digital transformation project to encourage more flexible and remote working. And finally, ambitious projects are generally being put on hold. This will include the trials and initiatives to further embed connectivity in the business, a trend telcos were hoping would lead to increased revenues.

Alongside the potential dampening enthusiasm from enterprise customers, revenues derived from roaming traffic is also disappearing.

As you can see from the Juniper Research forecasts above, individuals are travelling less. Should governments be less successful than some would hope in combatting COVID-19, this could lead to 653 million trips being cancelled over the next nine months.

Although this challenge is primarily directed towards the travel industry, some telcos might feel the pinch also, most notably those who operate in nations which are popular tourist destinations. The UK, Spain, France, Italy and Portugal might suffer quite considerably, as you can see from the Juniper Research estimates below:

Cumulative loss telco roaming revenues
Next three months Next six months Next nine months
Medium impact $4.807 billion $16.529 billion $20.779 billion
High impact $6.42 billion $19.306 billion $25.832 billion

The medium impact scenario which has been outlined above is based on the assumption that travel plans would be materially impacted through to December. 65% of travel will be cancelled over the next nine months in this scenario, though in the high impact scenario, additional travel bans would be introduced, more trips cancelled, a longer period of impact and thus a much more notable impact.

Although these are only two of the areas which could see strain due to the COVID-19 pandemic, there are certainly many others. Supply chains will certainly be strained over the coming weeks and months, both for devices and network infrastructure equipment, while the closure of retail outlets will also see sales of existing stock plummet and new device launches could be delayed. All of these elements together could postpone the anticipated rewards from 5G embedding in society.

Should governments be able to combat the coronavirus, the impact to the telecoms industry is minor, but as the weeks turn into months, the consequences could compound to some serious damage for operators.

Cisco’s OpenRoaming wifi tech to become open standard

The Wireless Broadband Alliance (WBA) intends to take over ownership and management of OpenRoaming as a global wireless industry standard.

Right now it’s a technology owned by Cisco and offered to its customers, presumably for a price, but it looks like Cisco has decided it can’t be bothered with the hassle anymore. OpenRoaming is designed to provide a network of wifi hotspots that present a single identity for the purpose of access. In other words, if it becomes ubiquitous then the days of having to muck around with awkward passwords and clunky login pages would be over.

The stated aim of the WBA is to enable collaboration between service providers, technology companies and organizations to make the global wifi experience as seamless as possible, so this seems like a perfect fit. The aim will be to get as many wifi ecosystem stakeholders to buy into this technology in order to improve the global experience.

“OpenRoaming now becomes an open standard, creating a world where wifi users will be able to move seamlessly from one wifi network to another without re-registering or signing in,” said WBA CEO, Tiago Rodrigues. “As a global wireless industry standard, WBA OpenRoaming will improve wifi services and availability, making life easier for users, and more efficient for the global mobile and wifi ecosystem.

“OpenRoaming is now open for business and I call on anyone with a wifi network, private or public, coffee shop or sports stadia or any other type of venue, to join our open ecosystem in order for the service they offer to their users to be automatic, secure, and interoperable, making their networks available to a wider audience.”

“There is considerable pull from the industry and our customers, both enterprise and service provider, to automate secure onboarding across multiple verticals,” said Matt MacPherson, Wireless CTO at Cisco. “We knew OpenRoaming would be a game-changing wireless technology, but the support from across the industry has even surpassed our expectations. OpenRoaming is vital to unlocking the potential of wireless communications. Cisco has been proud to lead the OpenRoaming efforts, but we believe strongly that the WBA is the right organization to steward, with neutrality and confidence, such an important industry initiative.”

Improved wifi user experience is long overdue. It doesn’t feel like it has evolved for decades and it’s an ongoing scandal that even telecoms events often fail to provide public wifi that can cope with more than a couple of people on it. We don’t know whether OpenRoaming is the answer, and even if it is it won’t solve the clunky interface problem by itself, but it does seem like a step in the right direction.

UK telcos are potentially helpless in the European roaming debate

Brexit is now a reality for the UK, and despite the telcos asserting their commitments to the roaming status quo, the financial burdens could become too great to swallow.

With the January 31st deadline come and gone, the UK Government has started to warn its citizens of what Brexit actually means. Very little will change over the next 11 months, but come December 31st, the ‘grace period’ will have concluded and change will be a reality.

New passports might have to be ordered, the European Health Insurance Card (EHIC) will no-longer be valid, an international driving permit (IDP) might have to be sought and the Government cannot guarantee you won’t be charged a small fortune for cruising down the digital highways.

While it might seem like another era, EU roaming regulations were only introduced in 2017. Some telcos had built ‘roam like at home’ features into tariffs already, but this was a market reaction to impending regulation. Until the EU started making a fuss, the telcos and the GSMA were more than happy to charge ludicrous amounts and attempt to justify them in a truly laughable manner.

Using data when travelling to Europe has become almost second nature to UK consumers nowadays and few would want to return to the days of huddling around the wifi hotspots. The UK telcos have been keen to point out there are no intentions to return to the dark days of ‘bill shock’, but soon it might be out of their control.

“At O2, we are committed to providing our customers with great connectivity and value when they travel outside the UK,” an O2 spokesperson said. “We currently have no plans to change our roaming services across Europe. We will be working closely with the UK government to try to maintain the current EU ‘Roam like at home’ arrangements once the UK leaves the EU.”

Vodafone and Three have also confirmed Brexit will not have an impact on EU roaming for their customers, while BT/EE are yet to provide comment.

The issue which is at the heart of this debate is how much control the UK telcos actually have.

As it stands, termination fees on international networks are strictly managed and limited by the European Commission. This will no-longer be the case for UK telcos come January 1st, 2021; European telcos will be free to charge whatever termination fees they see fit for their network.

In the years passed since the introduction of EU roaming rules, telcos have effectively seen reciprocal revenues for roaming, as it was simply a case of any individual is equal to any other on a different network, irrelevant of destination or origin. However, should some nations decide to raise the termination fees, the telcos will have to decide whether to absorb these costs or raise prices for consumers to compensate and maintain profitability. This is a ‘doomsday’ scenario, though we suspect it wouldn’t take long for telcos to realise absorbing the cost in some areas is not feasible.

As you can see from the table below, the numbers do not add up.

Country Visitors from UK Visitors to UK
Spain 15.6 million 2.53 million
Germany 2.8 million 3.26 million
France 8.6 million 3.69 million
Netherlands 2.7 million 1.95 million

The question which remains is how much European telcos will decide on charging for termination fees for UK customers and how the UK telcos will react. For any telco, simply watching costs go up and doing nothing is not an option. If there are more visitors from the UK than going the other direction, termination fees will start to add up.

What is worth noting is that some telcos in the UK are more at risk than others. As part of the Telefonica Group, O2 could be protected in some European nations, as would Vodafone, but the risk cannot be completely mitigated. There is no-such thing as a genuine pan-European network, and partnerships might well be tested.

Some might suggest there is an opportunity for the UK and Europe to strike a deal, and while this might be the case, there is one significant argument against it; why would Europe want to help a post-Brexit Britain?

Brexit has looked like a painful procedure to anyone watching. What the material impact will be is anyone’s best guess for the moment, but there are some aspects we already know. The legislative agenda has slowed due to a disproportionate amount of time being spend debating Europe. Relationships have been damaged. Corporations face a restructure of some degree. Travel to Europe will be different for consumers.

We do not know how this will impact our day-to-day lives exactly, but Europe will only help to a degree. If they help too much or it looks attractive, leaving the European Union might become an option for some nations. This is a very cynical view to take, but it is probably also true.

The other factor you have to consider is the work some countries will put in to protect valuable tourism industries. The Spanish, Greeks and Portuguese will not want to lose the money which flows from the UK into their own economies and might be in a position to negotiate their own localised deals.

This is very much crystal ball gazing at the moment. There might be a deal to protect the UK consumer, but it is just as likely that there will not. The European powers control the roaming fate of the UK consumer, not the UK telcos.

UK warns free European roaming may end in 2021

The UK government has published guidance on how travelling to Europe will change when we properly leave the EU at the end of this year.

Most of it is mundane, commonsense bureaucratic stuff to do with passports, driving licenses, etc. Irritatingly for the Brexit catastrophists is the news that there will be no need to apply for a visa for normal visits to any European country. So it looks like the Côte d’Azur, Costa del Sol and Tuscan villages won’t be rid of us as easily as expected.

One real issue we will have to deal with when we leave, however, is the matter of mobile roaming. The EU was responsible for forcing operators across the continent to stop charging extra for roaming on their networks, which has been very handy for things like checking the footie scores on the beach and publishing evidence of how much better your trip is than everyone else’s.

Freed from the EU’s benign tyranny, there’s no obligation for continental operators to play nice with UK ones and the opportunity to fleece our tourists will present itself once more. That doesn’t mean they’ll have to take it, of course, but that won’t stop the alarmist news stories predicting mass bankruptcies resulting from bill shock being written.

“From 1 January 2021, the guarantee of free mobile phone roaming throughout the EU, Iceland, Liechtenstein and Norway will end,” warns the site. “Check with your phone operator to find out about any roaming charges you might get from 1 January 2021. A new law means that you’re protected from getting mobile data charges above £45 without you knowing. Once you reach £45, you need to opt in to spend more so that you can continue using the internet while you’re abroad. Your phone operator will tell how you can do this.”

Since the mechanisms for free roaming are already in place, European operators would have to actively change them to start charging again. This looks like a great opportunity for businesspeople and politicians to sort something out in the coming months to ensure our relationship with the continent is undiminished by us leaving its mega-bureaucracy. If the last three years are anything to go by, however, the chances of them doing so are slim.

4G roaming traffic doubles once more – BICS

Roaming platform provider BICS has revealed that 4G roaming traffic around the world doubled for the third year running in 2019.

BICS reckons this indicates surging appetite for 4G connectivity, which is pretty hard to argue with. It also takes this geometric growth as a good sign for 5G, noting that 50 national 5G networks are now live, although we should add that in many cases the term ‘national’ needs to be taken with a pinch of salt. BICS boldly predicts that 5G roaming will gain further traction this year.

“The exponential growth in roaming traffic highlights how important international connectivity has become to the subscriber experience,” said Mikaël Schachne, CMO of BICS. “Through the provision of seamless, cross-border 5G connectivity, operators will be able to create new revenue streams and support a wide range of new and innovative use cases in areas such as automotive, gaming, telemedicine and logistics. As carriers launch 5G networks, roaming must be at the heart of their offerings to deliver maximum value for subscribers.”

The rest of the short press release is mainly spent stressing how great BICS is at enabling all this roaming, which is fair enough but doesn’t really add much value for the curious industry punter. It will be interesting to see what happens to roaming after Brexit, which is due to finally complete its first phase at the end of this month. This is an opportunity for operators and intermediaries to show they don’t need the help of politicians to keep the global telecoms business functioning smoothly.

Outlay vs opportunity: the 5G roaming landscape

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Mikaël Schachne, VP Mobility and IoT Business and CMO at BICS, looks at the economics of roaming in the 5G era.

Last month, South Korean operator SK Telecom reached a landmark one million 5G subscribers. Not content with enabling super-fast speeds and greater capacity domestically, SK Telecom has also established roaming agreements with China, Italy, Finland and Switzerland. As such, those with next-generation smartphones visiting these countries from South Korea (and vice versa), will be able to take advantage of 5G cellular services in much the same way as they do at home.

5G trials and roll-outs will continue – especially in regions within Korea and Japan, which remain at the forefront of the tech evolution – but delivering international 5G roaming will require collaboration between and investment from operators globally.

Despite the growth in 5G roaming, deploying 5G networks has largely remained a domestic priority. In the US, for example, mobile 5G is now available from Verizon, AT&T, T-Mobile, and Sprint in a number of areas, with the likes of U.S Cellular, C Spire, Charter, Comcast and Starry either offering fixed 5G, testing services, or aiming to launch next year.

Look at the boom in data traffic generated from smartphones, and this will come as little surprise. Driven by the popularity of video streaming via mobile and the increase in the number of IoT devices, global mobile data is predicted to reach 131 exabytes per month by the end of 2024 – an almost unimaginable sum. Ensuring that subscribers get a reliable, consistent, high-quality service – while at the same time supporting connected businesses and heavy industry – remains the ultimate goal for operators.

5G: home or away?

This is where 5G comes in, providing greater bandwidth, easing network congestion and giving rise to new, ‘smart’ services, and whole new ‘smart’ cities. Let’s return to SK Telecom for an example of 5G in action. In October, the operator linked 46 houses in a remote village in South Korea to its 5G network, supporting an emergency response system, agritech applications, and VR-enabled learning at the village school. This example can be seen as a microcosm for macro, 5G-enabled urban areas in the future. However, while the benefits for the village’s emergency response teams, its schoolchildren, and its farmers are clear, the opportunities it can bring on a wider scale are limited, due to service availability being restricted to this small geographical area.

What would happen, for example, if a farmer wanted to develop a connected agritech business and distribute devices overseas; or if another farmer wanted to ship its crop and track the cargo across other countries? To guarantee always-on, borderless connectivity of devices, operators across the world must support 3G and 4G roaming. The number of 4G network launches and resulting roaming traffic is increasing year-on-year, but there’ll come a point at which these networks will not be capable of managing global traffic demands. The growth of smart cities and IoT deployments, alongside ever-more migratory populations and the globalisation of trade, means 5G roaming will be an essential next step.

We’ve seen 5G roaming launches in APAC and Europe (including Swisscom, which launched the first intercontinental 5G roaming service) but availability remains limited to a handful of areas within these countries. Subscribers in the European Union arguably have an advantage over global geographies, as they’re able to roam on 5G networks without the additional tariffs imposed elsewhere. This is due to the EU’s ‘roam like at home’ regulation, introduced in 2017, which has helped to drive the uptake in roaming services and the decrease in the number of ‘silent roamers’.

An elimination of bill shock, an ability to stream HD videos at lightening speed, new opportunities for global connected IoT businesses: the benefits of 5G roaming are many, so why is it that operators are slow – and sometimes reluctant – to launch new services?

The cost and the core

The 3GPP announced the specifications for non-standalone 5G back in 2017, which involved the radio part of the network, and enabled new 5G networks to be built on existing 4G infrastructure. Operators are still relying on 3G and 4G network cores, meaning we’re unlikely to see truly global 5G roaming until the core is moved to 5G, (still fairly new) standalone 5G specifications are met, and 5G signalling is adopted.

The second major challenge is the cost of upgrading core networks to 5G. This is a major investment which involves developing and testing network equipment, and deploying the infrastructure. In addition to this, stakeholders also have to navigate the political and cybersecurity minefield which currently governs the 5G equipment market.

Historically, roaming was a lucrative part of an operator’s business, providing it with additional revenues above and beyond domestic network access fees. However, recent market changes have disrupted this model, narrowing a revenue stream which could otherwise have helped to finance network upgrades and roaming roll-outs. The disruptor isn’t just EU regulation, it’s also increased competition from digital service providers as well as operators themselves which are missing opportunities to improve the quality of user experience.

Overcoming disruption; funding the future

Upgrading networks to 5G is an expensive business, but it’s also an inevitability. The money must come from somewhere, and that somewhere is the IoT and industrial IoT (IIoT). Businesses emerging from this latter ecosystem, in particular (which includes those in connected agriculture, processing and manufacturing plants, and utilities), have the funds and financial incentive to invest in and pay for high-speed, low-latency 5G connectivity. The result is a win-win: the IIoT benefits from remote tracking, robotics, greater productivity, automation and so on; and operators can unlock a major revenue opportunity, predicted to hit $619 billion by 2026.

In addition to heavy industry, there’s also a strong consumer-focussed use case. Funding investment in 5G infrastructure could be supported by developing and launching new business-to-consumer services. These include multi-player, virtual and augmented reality gaming, and with such a huge market of global gamers currently, up-selling these services to businesses (and then to subscribers) in the future is an opportunity that shouldn’t be ignored.

Over those six years we’ll see dramatic changes across the telecoms landscape, the digitalisation of industry, a vastly improved subscriber experience, and a move toward global, borderless mobile connectivity. While 5G roaming is an investment, it’s also a huge opportunity, open to those operators which look beyond traditional revenue streams, and focus on future IoT opportunities.

 

Mikaël joined the international division of Belgacom in 2001 which was then spun-off and merged with Swisscom International and MTN International. After having successfully led the product development and management of new international mobile data services such as Signalling, GPRS Roaming eXchange (GRX), SMS Hubbing, MMS Hubbing, Instant Roaming and Open Connectivity Roaming Hubbing, he’s now in charge of the Mobility and IoT Business at BICS. The portfolio is now supporting international mobile communications needs for more than 500 Mobile Operators and MVNOs across the world. He graduated from the Brussels University Applied Science Faculty (Belgium) as a Civil Electrical Engineer specialized in Electronic and Telecommunications and holds a master in Business-to-Business Marketing from the Vlerick Management School in Leuven, Belgium.

Another Vodafone billing fail hits roaming customers

Vodafone UK suffered yet another billing-related PR disaster as some of its customers piled up huge charges while roaming and were consequently disconnected.

The incidents took place over the weekend, just in time to make it onto mainstream media grateful for something to report on a Monday morning. One of the first Vodafone customers to flag the matter up on Twitter was David Maddison, whose trip to Malta was compromised by him suddenly being hit with five grand in charges that he wasn’t expecting.

After a few hours Vodafone tweeted that it was aware of the problem and promised customers would not be incorrectly billed. This was apparently insufficient for Andy Pearch, also travelling in Malta, who was seriously stressing out about being incorrectly billed. He was eventually placated by Vodafone, but remained unimpressed by the speed with which the problem was addressed.

“We are very sorry that yesterday, some customers could not use data or calling services when roaming abroad,” said Vodafone’s emailed statement. “This was due to a technical error, which we have now fixed. Any affected customer should restart their phone to ensure that services are resumed.

“As a result of the issue, some customers are receiving billing messages in error; we are working through these as an urgent priority and removing any errors from customer accounts. Customers will not be charged and do not need to worry about contacting us as we are proactively checking accounts and fixing any issues.”

Vodafone also explained that The spending limit cap was inadvertently triggered by a software change, which must have brought back bad memories of is major BSS fail three years ago. It added that it affected around 40,000 customers, but it’s now fixed. Hopefully for Vodafone this was an isolated glitch, and it’s bad luck that it happened on a Friday, but it still represents another setback for a company that has historically been criticised for its customer service.

KT boasts of 1mn 5G subs and European roaming deals

KT has announced its 5G subscriber base has gone past the one million mark and it has entered into 5G roaming agreements with operators in Italy, Switzerland, and Finland.

KT, South Korea’s second largest operator, announced that it has won one million 5G subscribers five months after the service was launched, and one month after its competitor, SK Telecom, the country’s biggest operator, hit the milestone.

Meanwhile, KT has also reached 5G roaming agreements with TIM in Italy, Sunrise in Switzerland, and Elisa in Finland. This means that KT’s 5G subscribers will be able to use the 5G networks provided by those three operators in the three European countries.

KT has standing agreements with operators in 185 countries for 3G and LTE roaming. The operator aims to extend those agreements to 5G when 5G services go live in those countries. Prior to the agreements with the three European countries, KT had already set up a similar agreement with China Mobile, despite the fact it hasn’t launched services yet.

According to KT’s price proposals at the time of 5G launch, customers on the starting package (paying KRW 55,000, or $46 per month) will have 8 GB roaming data while overseas, with the speed capped at 1 Mbps. Those on higher tiers (paying KRW 80,000 ($67) or KRW 100,000 ($84) per month) will have unlimited roaming data, but the speed will be capped at 100 Kbps. Customers on the premium tier of the 5G service (KRW 130,000, or $109, per month) will have the speed limited lifted to 3 Mbps.

KT is not the first South Korean operator to tie 5G roaming partnerships. SK Telecom 5G subscribers will be able to connect to Swisscom while travelling in Switzerland, while those on LG U+ will be able to connect to China Unicom’s 5G when travelling to its neighbouring country, after the latter’s 5G service goes live.

The only catch for KT 5G users intending to visit Europe is that the roaming can only be done on Samsung Galaxy S10 5G, the vendor’s first 5G smartphone, though KT said the service will be extended to other devices soon. Earlier this month, at IFA in Berlin, Samsung announced that it had already sold 2 million 5G smartphones and expected to double the volume to 4 million by the end of the year.

Swisscom, SK Telecom, Elisa and BICS claim world’s first 5G roaming services

The very small number of people who are capable and inclined can now roam between the 5G networks of Swisscom and either SK Telecom or Elisa.

Swisscom has over 6 million mobile subscribers but hasn’t revealed how many of them have upgraded to 5G. Since Swisscom only started to roll out its 5G network in April of this year, it seems safe to assume its 5G subscriber base is struggling to hit six figures. Of those, owners of Samsung Galaxy S10 5G smartphones can now fly from Zurich to Seoul confident of maintaining their newly-won boosted download speeds. The converse is true of SK Telecom’s 5G punters.

“SK Telecom once again proved its leadership in advanced roaming technology with the launch of world’s first 5G roaming service” said Han Myung-jin, Head of the MNO Business Supporting Group of SK Telecom. “We will continuously expand our 5G roaming service to enhance customer experience and benefits.”

“We want to offer our customers the best network – both in Switzerland and abroad,” said Dirk Wierzbitzki, Head of Product and Marketing at Swisscom. “So we are proud to be one of the world’s first providers to offer 5G abroad. We will continue to expand 5G availability abroad with additional partners.”

Swisscom has struck up a similar deal with Finnish operator Elisa, which is also claiming the world first, so it looks like SK Telecom has a fight on its hands. We were amongst the first countries to start building 5G networks in Finland,” said Elisa’s Director of Consumer Handset Subscriptions Jan Virkki. “Now that Swisscom has opened their 5G network, we are more than happy to be able to provide the ultrafast 5G to our consumer and corporate customers travelling to Switzerland.”

Roaming specialist BICS also wants a piece of the action, having got involved in the SK Telecom gig. “Today’s successful implementation of a trans-continental 5G data roaming relation further endorses our position at the forefront of global mobility for people, applications and things,” crowed Mikaël Schachne, CMO and VP Mobility & IoT Business at BICS. We couldn’t find any other corporate chest-beating over this bit of news but there probably was some.