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Mobile network operators (MNOs)

2012 witnessed an incredible surge of activity in pushing forward both the technical and commercial developments of international Wi-Fi roaming, and this momentum has only been increasing through 2013. In fact, given the number of ways that operators can create business value from international Wi-Fi roaming, there is an extreme sense of urgency underpinning the rapid pace of change.

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How can operators create business value from international Wi-Fi roaming?

  1. Interoperator-tariff cost reduction
  2. If the wholesale cost of Wi-Fi data is lower than the equivalent cost of wholesale cellular data bought from roaming partners via interoperator tariffs (IOTs), operators can reduce their IOT costs by creating integrated cellular/Wi-Fi data bundles and boost profitability at the user level by exploiting the fact that users prefer to consume (lower-cost) Wi-Fi data before using (more expensive) cellular data. Learn more

    When asked how subscribers would consume the data quotas of an integrated cellular/Wi-Fi roaming service (e.g., a bundle including 300MB of cellular data and 400MB of Wi-Fi), respondents revealed an overwhelming preference to use Wi-Fi first whenever it is available and to reserve inclusive cellular-data quotas for occasions when Wi-Fi is not available.

    Likely behaior of international travelers subscribed to an integrated cellular/Wi-Fi data-roaming bundle

    Their preference to use Wi-Fi as the primary form of connectivity whenever possible is a strong validation of the potential to use integrated cellular/Wi-Fi bundles as a strategy of reducing costs linked to IOTs, an important and emerging business model for operators developing advanced strategies for international data roaming.

    Since every megabyte of cellular data consumed when roaming incurs a wholesale cost to the domestic CSP, a roaming user becomes less profitable the more data is consumed. If operators are able to maintain the same level of spend while finding ways to reduce use of the inclusive data allowance, they have a clear opportunity to increase profitability at the user level.

    It is important to note, however, that this is a strategy that is viable only in cases where operators do not dilute incoming spend – through maintaining the same (or a higher) price for an integrated cellular/Wi-Fi bundle – and, most crucially, in cases where the wholesale cost of Wi-Fi roaming data is lower than the wholesale cost of cellular data.

  3. Drive sales of high-value integrated cellular/Wi-Fi roaming plans
  4. The bundling of an inclusive amount of Wi-Fi data in an integrated cellular/Wi-Fi data-roaming proposition adds perceived value. If such bundled propositions are priced higher than stand-alone cellular data-roaming options, operators can use Wi-Fi as a value-added service to upsell customers to more-expensive plans. Learn more

    When presented with a range of data-roaming propositions that include both stand-alone cellular data and integrated cellular/Wi-Fi bundles, users show a clear preference for integrated packages. What is more, when packages were presented without any associated pricing, respondents expressed a clear preference for a larger amount of inclusive data – a clear sign that there is underlying demand for tariff plans that permit considerable consumption when overseas.

    International data roaming Wi-Fi preferences

    There is also strong evidence that users not only value the inclusion of Wi-Fi in an integrated roaming bundle but are prepared to pay a premium to acquire such a service. According to the survey, almost 40% of international travelers would be prepared to pay a premium of 10% or more for a bundle that included a limited volume of Wi-Fi data in addition to the cellular-data allowance.

    International data roaming Wi-Fi preferences

    People are clearly willing to spend on Wi-Fi when roaming, albeit to varying degrees, a fact that is underlined by respondents’ opinions about the maximum they would be prepared to pay for Wi-Fi access during a typical international trip. Almost one-third of travelers (32%) are prepared to spend a maximum of US$10 per trip, and four in 10 (39.3%) are prepared to commit to US$40 or more, with just over 15% willing to spend above US$50.

    International data roaming Wi-Fi preferences

    The survey results also quantified the variations in price sensitivity among business and leisure travelers, with those roaming for business reasons demonstrating a greater willingness to spend larger amounts for Wi-Fi access than those traveling exclusively for leisure purposes.

  5. Capture wallet share from Wi-Fi-only devices
  6. Operators typically generate zero incremental revenue when their subscribers use Wi-Fi-only devices when traveling overseas, given the tendency of users to search out and spend on locally provided hotspots. This equates to a major missed monetizable opportunity. By creating propositions for their customers that can be used across both cellular-connected and Wi-Fi-only devices, operators have a major opportunity to capture wallet share from a previously closed-off market segment. Learn more

    There has been rapid growth in the adoption and usage of Wi-Fi-only devices (such as tablets) among international travelers. According to Informa Telecoms & Media forecasts, more than 162 million tablets will be shipped in 2013, of which around three-quarters (74%) are expected to ship with Wi-Fi as the only form of connectivity.

    The emergence of cheap, Android-based tablets has served to increase the proportion of tablets that are solely reliant on Wi-Fi for connectivity, as has the uptick in the cost of adding cellular connectivity due to the emergence of LTE.

    This market is currently a major missed opportunity for operators, since they have not established an effective means to monetize usage on Wi-Fi-only devices. The opportunity is especially notable because the emergence of commercially available technology to authenticate users on Wi-Fi-only devices and enable usage to be measured, billed and charged by the operators opens up the possibility for operators to capture a share of spend for Wi-Fi-only devices and, given the size of this segment, open a potentially significant new line of revenue.

    Operators should also be wary of the potential future cost of not supporting these devices if subscribers choose to seek out competitive offerings from players that are able to bundle all device types, including Wi-Fi-only devices, onto a single roaming plan.

  7. Improve roaming-centric customer experience
  8. Operators are battling years of entrenched negative perception of the cost and general experience of cellular data roaming. “Bill shock” caused by the high cost of cellular data roaming is a major source of customer dissatisfaction and, consequently, churn. Affordable Wi-Fi roaming options can give customers peace of mind when traveling and help prevent bill shock, greatly improving the customer experience.

  9. Drive customer acquisition through service differentiation
  10. Operators that capture first-mover advantage can claim a position as an innovation leader and use it to differentiate their service propositions from those of competitors. In highly competitive domestic markets, any possibility to create genuinely different propositions can be an effective tool to drive customer acquisition.

  11. Generate incremental roaming revenue via Wi-Fi access fees

Operators can generate stand-alone revenue streams for international Wi-Fi roaming by tapping into user willingness to spend on Wi-Fi when traveling overseas and charging one-off or recurring fees for access to an aggregated global footprint of Wi-Fi hotspots.

For more insight on winning strategies to construct Wi-Fi/Cellular data-roaming offers, please download the entire white paper.

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