The IoT market is an international business, and, as such, roaming continues to be critical. Operators are seeking to formulate new commercial strategies to maximize the IoT opportunity, but this is not an easy task.
The COVID-19 pandemic and the dramatic fall in tourism and business travels revealed that IoT roaming devices contribute to a small, but not insignificant, amount of data consumption across global mobile networks. Since then, there is a global trend growing in the mobile telecom community around detecting these hidden devices. On average, 40% of all inbound roaming IMSIs are IoT, but the most shocking realization is that a few operators reported that 70% of them consume less than 2MB and generate less than one cent of a single Euro per month.
Operators are managing IoT as a separate line of business, and therefore, negotiating individual agreements per enterprise customer or IoT application. In most cases, the devices are identified based on their IMSI ranges or Access Point Name (APN), which defines the type of network connection they will get. A few operators are discussing the introduction of segmentation based on presence rules (based on the number of roaming days) or even usage behavior; however, there are no common business practices yet, not even among regulated countries that prohibit permanent roaming. Operators must rely on sophisticated analytics systems to properly identify and split this traffic accordingly. This flexible segmentation option can be a good alternative to protect operators’ domestic enterprise market from the reselling of connectivity services.
As discussed, operators are looking for flexible charging models that don’t rely solely on the usage but rather on the value of the connectivity. Despite several proposals around the different options, finance teams will take the heavy lift to adapt their current financial and accruing processes accordingly. Some reported that with the current TAP billing and its inability to support the low level of detailed billing required, it’s very labor intensive to generate invoices that count the number of IMSIs, especially when a dispute arises. This poses a risk to the profitability of any business, especially if manual settlement is required.
Operators are also worried that the rising global inflation will impact the IoT roaming business, especially considering the current long settlement cycles. Very frequently, the payments are only received 10 months after the traffic is generated, which means that the money received values less than 10 months before. While the new GSMA’s Billing and Charging Evolution (BCE) settlement process is underway, there is an expectation that it will improve the situation by reducing cost overheads and shortening the settlement timeframe and cycles, perhaps from yearly to quarterly or so.
To get the latest market insights and learn more about how existing roaming services must evolve to enable MNOs to effectively manage future IoT roaming connections, download The Future of IoT Roaming white paper.