National (Internet) and Intranet Roaming: Global Practice
Analytical Report (full version)
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Analytical Report (full version)
National (Internet) and Intranet Roaming: Global Practice
There is no such a phenomenon as intranet roaming in the majority of countries with large territory, however Russia is an exception. It is expected that in a year – starting from first of March 2014 – subscribers of large Russian mobile operators, on arrival in another region of the country, will be able to make calls within the home network without any extra charges. J'son & Partners Consulting company presents the results of the research ‘National (internet) and intranet roaming: world practice’. The research contains analysis and summary of experience of several countries, as well as possible scenarios of removal of internet roaming in Russia.
Background of appearance of national roaming in Russia
There are several major reasons of appearance of national¹ (¹ National internet roaming is the one that provides the possibility to use network of the other operator as a guest network on the territory of one country. Internet roaming agreements are, as a rule, bilateral in nature.) and intranet² (² Intranet roaming is the one where subscriber is served within his own operator’s network but outside its home region. Depending on the operator and tariff plan home network may cover one or several regions of the country.) roaming in Russia. Among them are the following:
1. Geographical features. Russia is the largest country in the world occupying the area of more
than 17 million square km and an extends from West to East of almost 10 000 km.
2. Unequal development of federal mobile operators during stage of network construction and
limited coverage of regional operators.
3. Historically local mobile markets with their own tariffs are developing in every region of the
country. Tariffs in this case are defined by such factors as, for example, level of demand and
competitive environment. By setting up restrictive tariffs for neighboring regions, local branch
may continue to expand its subscribers base.
4. Specific characteristics of sectoral legislation. In particular, each licensed operator is assigned a
specific frequency range within which he has the right to deploy networks and use them for
commercial activities on the territory of the subject of federation. Moreover, there are certain
technological features of traffic transmission enshrined in the law in Russia.
Initiatives on removal and simplification of intranet roaming in Russia
Propositions to remove intranet roaming in Russia are actively discussed during past few years (Table 1). In the end of 2012 deputies Yaroslav Nilov and Ildar Gilmutdinov submitted amendments to the law "On Communications" on removal of intranet roaming to the State Duma. In February 2013 the Ministry of Communications supported the draft law however underlined that it requires serious improvements. In particular, certain rules on provision of services to subscriber using his operator’s network outside his ‘home’ region should be specified.
For example the following scheme is under development. When subscriber, who has signed an agreement with operator in ‘home’ region A, comes to regions B (‘guest network’) he will talk with subscribers of the same operator from region B paying according to local tariffs ( The concept of the Ministry of Communications provides that when subscriber leaves the ‘home’ region and makes a call within ‘guest’ region they will be automatically switched by the operator to the most popular local tariff (determined by the operators themselves).) without additional roaming charges, and will not pay for incoming calls from subscribers of the region B ( This refers to subscribers who signed an agreement with the operator in region B). At the same time it is assumed that the subscriber stays within the network of his operator while traveling. However, calls outside region B, will still be considered inter-city and paid for according to appropriate tariffs. Incoming calls from other regions will also be considered as inter-city calls and will be paid for by receiving subscriber.
Meanwhile deputies of the the State Duma proposed the roaming tariff scheme according to which calls between subscribers within Russia would be paid for according to unified tariffs irrespective of the region where subscriber is located. In other words the Ministry of Communication proposes to reform national roaming and keeping inter-city component of tariffs at the same time. It is explained by the fact that according to sectoral legislation operators are obliged to transmit traffic through regional area and inter-city network when setting up connections between subscribers form different regions as well as carry respective expenses. In doing so the Ministry has actually supported the idea of removal of ‘tax on travel’ (roaming) of the subscriber between Russian Federation members rather than the project of deputies of the State Duma.
In February 2013 the Vice President of ‘Rostelecom’ Naum Marder sent on behalf of the company a letter to the Ministry of Communications with the objections against the draft law of Duma deputy Yaroslav Nilov on removal of intranet roaming in Russia. Mr. Marder warns that in order to compensate for losses from the removal of intraroaming, mobile operators will be forced to raise tariffs on local calls. According to him, the new law ‘will have negative consequences for the industry, and will not lead to a positive social effect’.
Deputies of the State Duma, mobile operators and the Ministry of Communication agreed on step removal of internet roaming in Russia. At the same time payment for inert-city calls will also be removed. MTS warns that full removal of roaming will lead to an annual decrease in profit of ‘big three’ operators by 5 billion RUB.
Removal of internet roaming in Russia was discussed by market participants on State Duma Committee on Information Policy, Information Technology and Communications meeting on February 14th, 2013. Deputy Head of the Ministry of Communication Denis Sverdlov agreed with the number of proposals of operators and stated that process of network construction is already simplified. He also promised that ‘all the changes will come into force by summer’(http://www.comnews.ru/node/70285).
In February 2013 the Association of Regional Operators (AROS) prepared a number of proposals for the new law ‘On Communication’ and submitted it to the Ministry of Communications. According to AROS, ‘regional operators without federal licenses are discriminated by operators which possess such licensees and provide interregional services at non-regulated prices’. The Association proposes to impose state regulation of tariffs on inter-operators roaming services. According to AROS ‘this will help regional subscribers to receive services in the guest regions at prices that will not exceed prices for local customers’. This proposal is supported among others by the largest regional operators Tele2. At the same time large federal operators as well as the Federal Antimonopoly Service (FAS) are against it ( http://www.comnews.ru/node/70360).
An amendment to the law ‘On Communication’ removing national roaming for subscribers of large operators may be introduced in March 2013. Deputies are already working on the respective initiative, and if proposal will be approved by lawmakers, subscribers of mobile companies will be able to make phone calls within home network on arrival in other regions of the country without additional charges. The law may come into force in a year – starting from March 1, 2014.
Historically roaming appeared in countries with large areas (e.g. USA, India, China) on the development stage of mobile communication. At that time, roaming played a role of instrument of government regulation of the industry. Its task was introduce to the market new players that did not have national networks (or licenses for their deployment). Moreover, the introduction of roaming caused protests from the part of large operators. To overcome it regulations should have been changed.
United States may be a vivid example of it. Due to historical specific features of formation of mobile market in this country there was no such a notion as ‘intranet roaming’. At the same gateway (inter-operator roaming) was provided in the form of setoff. US mobile market can be considered as mature market with developed competition. In such market conditions, gateway roaming is especially useful for regional operators that explore new territory. It should be noted that the resolution of the Federal Communications Agency, requiring mobile operators to enter into agreements on data-roaming with all the interested parties on commercially reasonable terms caused protests from the part of such giants of the industry as Verizon Wireless and AT & T.
Canada may be a more interesting example for Russia. Canada is similar to Russia by such indicators as territory size (2nd in the world) and density of the population. It’s worth mentioning that as in Russia, the mobile market in Canada is dominated by the ‘big three’ operators (Figure 1).
Due to the conditions of mobile market development (such as concentration of the main customer base for in the small area and principles of licenses issue) despite similar geographical conditions with Russia, there is no such thing as ‘intranet roaming’ in Canada and internet roaming is provided at basic tariffs on the basis of setoff.
An opposite example is India, where a different model of interaction between operators regarding roaming developed. Despite the active role of the government in the area of development of communication in India (for example, country has a singe operator of tower site created with participation of the government), inter operators relationships are not regulated by it. Mobile connection coverage and increase in number of mobile operators took place within single state.Market growth rate, states size and population density – these and other factors allowed operators to conduct business without intranet roaming. At the same time prices for internet roaming are not excessive. For example while an average price per minute within network is 0.01 USD, price for internet roaming is 0.01-0.05 USD. On the other hand, the absence of state regulation of roaming creates obstacles in concluding the agreements – such situation usually arises when, for example operators have different coverage (license are of one operator license is much wider compared to the area of another one). It becomes one of the drivers of merger of operators with Mobile First alliance as an example. This alliance was created by 4 regional operator each having small subscribers base. It is likely that the alliance will continue to grow by means of new members.
As opposite to India, regulators of the European Union countries are actively interfering in billing and development of roaming. By 2000, few large operators existed in the EU with networks covering several countries. Roaming billing was characterized as non-transparent, moreover the process was complicated by high mobility of population and existence of different currencies.
As a result, the EU Commissioner for Telecommunications decided to reform tariff regulation for internet roaming. The reform stipulated establishment of graded billing limits which would allowe to gradually reduce cost of communication services for subscribers as well as adapt operators strategies to avoid sharp decline in business effectiveness and compensation of lost income from internet roaming by means of other services.
The reform involves several stages extended for the period from 2007 to 2017. It is expected that after the reform supranational regulation will give way to the market one. Reform provides, in particular, double reduction of prices of outgoing SMS messages and a 6-fold reduction in tariffs for outgoing calls in a ten year period. The most significant decline should affect data transmission: there should be a 20 time reduction in tariffs.
Cost of one minute of an outgoing call for subscribers should be reduced by at least 2.6 times, the cost of outgoing SMS - by 1.8 times, the cost of data-roaming – by 3.5 times (over a regulated period), and the cost of incoming calls – by 4.5 times. At the same time the realization of ‘all incoming calls for free’ principle is not obligatory (Fig. 2).
Reform also stipulates defining of unified conversion rates for currencies used within Eurozone for simplification of billing process.
It is expected that internet roaming reform that is currently conducted in the EU countries will allow to enhance connections between operators, reduce tariffs, extend integration of Eurozone telecommunication area as well as increase networks penetration and use of new generation of mobile services which will become more available for subscribers and, as a result, will become more popular. But the main question remains the same – will be possible to avoid sufficient losses from the operators with such approach to regulation?
Consequences for Russia
According to research of tariff plans of foreign operators conducted by J'son & Partners Consulting in February 2011, it was determined that a call within the network of one operator has a fixed cost and this cost does not dependent on geographic distance of a callee. Thus, the concept of intranet roaming in countries under research does not exist ( research was conducted in 7 countries: USA, France, Canada, Spain, Germany, Poland and Great Britain). At the same time the average price per minute of an outgoing call within the network of one operator appeared to be significantly higher (from 2.67 RUB in U.S. to 9.34 RUB in France ( local currencies were converted to RUB using Central Bank exchange rates as of the date of research)) compared to average price in Russia. It allows foreign operators to compensate existing costs.
To date, largest Russian mobile operators have introduced a wide range of tariff options, allowing customers to significantly reduce their costs in national roaming. This reduces the attractiveness of the idea of removal of intranet roaming for subscribers. However it does not question the necessity of reforms of sectoral legislation, which may result in gradual removal of internet roaming under the pressure of market forces without further intervention from the part of regulator.
Research conducted by J'son & Partners Consulting showed that the phenomenon of intra-network roaming does not exist in countries with large territories such as U.S.A., Canada, India, Turkey, as well as in Eurozone. It is very likely that intranet roaming will be removed in Russia as well; it will be preceded by the sectoral legislation reform. According to J'son & Partners Consulting, loss of the largest Russian mobile operators because of removal of intranet roaming may comprise, on average, 3-5% of their total operating revenue (excluding sales of customer devices) provided that base tariffs will remain the same. However, in practice revenue reduction will not likely be so significant, or will not occur at all as reduced revenue will be partially or fully compensated by increase in user activity.
It is also likely that the removal of intranet roaming will cause reformation of subscribers base (active SIM-cards) due to the decrease in sales of ‘vacation’, ‘travel’, ‘student’ and other SIM-cards.
Content of the full version of report (51 pages) containing results of research ‘National (internet) and intranet roaming: world practice’
1. Description of a problem
1.1 Historical and regulatory factors of national roaming in Russia
1.2 Initiatives on removal of intranet roaming in Russia
1.3 Possible scenarios and consequencies of removal of intranet roaming in Russia
1.3.1 In the context of existing regulations
1.3.2 In case of regulations reforms
2. Cost of national roaming services in Russia
a. Intranet roaming
b. Internet roaming
c. Tariff options
3. International experience
d. European Union countries
4. Summary and conclusion
Terms and definitions
Annex. Summary table on national roaming in Russia and in the world
List of Figures
Fig. 1. License and roaming area of GSM coverage of Vimpelcom in Russia
Fig. 2. License and roaming area of GSM coverage of Tele2 in Russia
Fig. 3. Estimation of revenues of ‘big three’ operators from intranet roaming
Fig. 4. Positive effect of reform of regulations.
Fig. 5. Internet roaming areas of the largest mobile operators in Russia
Fig. 6. Development of mobile connection standards in Canada on 2000s
Fig. 7. Structure of mobile market in Canada
Fig. 8. Structure of mobile market in India
Fig. 9. Coverage area of Mobile First alliance
Fig. 10. Penetration of mobile communication in European Union
Fig. 11. Dynamics of tariffs on internet roaming for subscribers and operators of Eurozone, EUR
Fig. 12. Mobile market structure in Turkey
List of Tables
Table 1. License coverage of largest operators in Russia by communication standards
Table 2. Key initiatives on removal of national roaming in Russia
Table 3. Tariffs of intranet roaming of Megafon
Table 4. Tariffs of intranet roaming of MTS
Table 5. MTS tariffs on intercity calls from home region
Table 6. Tariffs of intranet roaming of Tele2 in Russia
Table 7. Areas of internet roaming of Megafon
Table 8. Tariffs of intranet roaming of Tele2 in Russia
Table 9. Tariff options of national roaming of Vimpelcom
Table 10. SMS-oriented options of Megafon
Table 11. Tariff options of Megafon by regions
Table 12. Tariff options of MTS for intranet roaming
Table 13. Connection standards used by largest US operators
Table 14. Canadian mobile operators
Table 15. Connection standards and intrastandard roaming in Canada
Table 16. Regulation of agreement terms of internet roaming between operators
Table 17. Tariff limits for internet roaming for subscribers in EU countries
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.
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T.: +7 (495) 625-72-45
J'son & Partners Consulting company presents the results of the research ‘National (Internet) and Intranet Roaming: Global Practice’.
Market reviewTelecom, 3G, 4G, 5G, TETRA, DMR, Wi-Fi Open
Market reviewTelecom, 3G, 4G, 5G, TETRA, DMR, Wi-Fi Open