Mobile operators face a multitude of challenges in a very competitive market. In this blog, we note 5 of the most significant ones in the roaming domain.
The general consensus, based on numerous discussions with our customers and business partners, is that in order to tackle the IoT market and be prepared for the near future with 5G, it is no longer possible to conduct business in the same way the industry has been doing for decades. Automation is needed, now more than ever!
Pricing Disputes Impacting Cash Flow
The different types of tools operators use are driving pricing disputes that can amount to $2M per MNO and long negotiation processes that may last up to 3 months. As business complexity is growing with the introduction of new technologies such as VoLTE, MIoT and 5G, the number of disputes will grow. For example, the existing charging models used in discount agreements are not supported as part of the TAP process, and therefore, the risk of having misaligned tariffs, different traffic aggregation or even missing destinations in the different billing systems is high.
While the market is currently assessing solutions such as blockchain-based settlement, its adoption needs a critical mass to become successful. And equally important is that the applications used, need to be agnostic to the DLT network. Similarly, the new Billing and Charging Evolution (BCE) settlement process allows more frequent reconciliation activities, which should also minimize disputes. These are especially relevant for IoT agreements considering that aggregated volumes and charges per segment are also validated, which is not possible in the current transaction-based process.
Numerous Agreement Types
According to market research, the IoT market is expected to grow around 30% YoY in the next few years. Combined with the introduction of 5G, which will allow mobile operators to provide differentiated services to enterprises and play a significant role in the application space, it is expected that not just new types of agreements will appear, but also their number will increase by a factor of 5. This is happening already, where a one-size-fits-all agreement is not suitable anymore, but rather multiple ones to serve different business purposes are required.
As mentioned, the existing and future discount agreements charging models are not supported in TAP, and many operators therefore have different billing systems in place – in some cases, even Excel is still used. This becomes even more complex for operators that resell roaming and global connectivity services to wholesale partners such as MVNOs or enterprises. In such a scenario, these operators usually cross-check these commercial agreements with their roaming agreements to forecast and track margins, fine-tune the steering, and finally settle. Combining all this data to bring clarity to the business may even require additional applications.
To avoid multiple billing systems with dispersed information, agreement management applications need to support, as much as possible, all types of commercial and wholesale agreements, regardless of the underlying technology. This can only be achieved with a significant focus on UX and horizontal integration via open APIs. Such an application should be flexible enough to be adaptative to custom workflows and support specific agreement parameters and charging models, so that users can properly manage, simulate, track, bill and settle all their agreements from a single interface.
Misaligned Steering Policies with Commercial Targets
Wholesale discount agreements and steering policies are traditionally managed by separate systems with different configuration sets and levels of granularity. This may potentially lead to misalignment between business and technical strategies. For example, whereas the discount agreement can be negotiated for an entire group, the steering policies are defined at a country level, which means that moving traffic away from one single affiliate may affect the entire group agreement performance. Our studies show that such decentralized systems can result in $1.5M in commitment penalties, unnecessary costs due to incorrect steering or simply long reaction time after a commitment has been met for a Tier 1 operator.
Operators often rely on complex calculations to ensure maximum agreement profitability. As market complexity grows, it becomes imperative to implement applications that can recommend optimal traffic distribution and execute these recommendations. Such logic must be able to accommodate all types of commitments, individual or group, for single or combined services, to balance costs. The horizontal integration among services accelerates the implementation of these steering changes needed to protect the margins.
An approval workflow in place to allow the implementation of such recommendations would, in addition, streamline the communication between the commercial and technical teams.
Undetected IoT Traffic Leading to Missed Opportunities
IoT is a global business and is completely different from consumer roaming behavior and usage patterns. It has different requirements related to steering, coverage and QoS. Our statistics show that IoT roaming already accounts for more than 40% of inbound traffic. This was highlighted dramatically during the COVID-19 pandemic.
Typically, IoT devices consume minimal traffic with an ARPU of a few cents per month. As a result, operators need to apply differentiated commercial strategies that can produce proper revenue streams. Otherwise, charging merely based on usage will not be profitable.
The key to monetization is the ability to detect this traffic via device-based or Machine Learning algorithms. Essentially, the detection logic is more accurate when both usage and signalling data are combined so that even silent devices in permanent roaming can be spotted.
Alongside the detection comes the ability to negotiate the right wholesale agreements with the roaming partners and have the proper, segmented, device-based rating and settlement processes in place. Aligning these segments throughout all applications and keep them up to date is inefficient if done manually. These applications, to name just a few, can be the steering of roaming, billing, forecasting, simulation and reporting.
Scattered Business Configuration and Information
Multiple systems cause repetitive and redundant provisioning tasks, long onboarding processes and tedious service activation. It increases the risk of missed or misaligned configuration amongst multiple service instances, for example, outdated roaming information. This leads to incorrect business execution, which can result in annual spending of $800K, especially in operator groups with a centralized operation. Moreover, the lack of end-to-end visibility, especially in the roaming area, can hinder some business decision making.
Operators have expressed the desire to have more viable ways to manage their business, launch new services faster and reduce Total Cost of Ownership, especially now that the whole industry is moving towards virtualization with the introduction of 5G.
A fully virtualized multiservice system allows operators to monitor, configure and maintain their services from a single location. It potentially reduces error rates as every configuration is performed centrally and replicated throughout the system. It also facilitates troubleshooting and health check monitoring. Such systems can automatically scale up and down depending on traffic.
Groups, operators with MVNOs or operators that resell roaming services are looking for multitenant systems so they can easily onboard new affiliates or wholesale partners. The system must provide the right user permission to manage the business centrally, while each affiliate or wholesale partner can only access their own data due to privacy reasons. A multitenant system reduces 40% of hardware and maintenance costs by sharing resources within the group. In addition, the centralized data lake allows better tracking capabilities and business insights, making it easier, for instance, to deploy new use cases across usage and signalling.
Conclusion
With these challenges in mind, TOMIA launched the TOMIA Platform that enables the desired automation and simplification of the entire wholesale business cycle, from agreement negotiation through execution to settlement. It facilitates the fast roll out of global connectivity services and streamlines day-to-day activities to improve efficiency.
The TOMIA platform is also a framework for every product development: everything needs to be interoperable, flexible to adapt to market dynamics and customer needs, simple yet efficient.
This blog lists the most common challenges mobile operators face in roaming today. We acknowledge that there are more challenges we haven’t mentioned here, and therefore invite you to connect and share your thoughts with us so that we can continue this conversation.
