This post is by Peter Nas, Senior Solution Architect, F5 Networks
For over ten years, the technology to offer local breakout (commonly known as LBO) has existed, allowing data use by roaming customers to be supported by the visited operator’s network. This is in contrast to the scenario in which data requests are sent back to the roamer’s home network, which of course, results in higher costs. However, despite the obvious fact that many people would like to get lower data roaming rates, a wish not limited to Europeans traveling in the EU, sadly it is not offered yet.
I can definitely understand some key arguments why mobile operators are not inclined to offer LBO, particularly when it applies to their subscriber. I also understand (to a certain extent) that visited networks don’t want to offer LBO, but let’s see if we are about to see a change. After all, roaming has been a significant source of revenue for operators on both sides for some time now.
When I worked at an MNO over 10 years ago, I did some testing myself to see if and how LBO works. At the time, I became very enthusiastic and never expected it would take so long before this technology would be deployed at a large scale. In the early days of GPRS, indeed data roaming rates were also very high. However in those days, roamers used their mobile phones for data much more infrequently than when in their home network. And if you have been observing the investments that have been made by mobile operators and GRX operators (GPRS roaming operators) to allow good quality data roaming, I can understand that these investments need to be earned back before the business could consider offering LBO.
In the meantime, I believe that many things have changed and surveys have shown that customers consider data roaming far too expensive. As a result, roamers typically switch off their data while traveling abroad (some recent figures show 73% of the roamers as silent roamers, meaning while abroad but disabled their device for data roaming).
Now the EU Roaming Regulations, in effect since July 2014, are explicitly mandating EU citizens to have the right to use LBO (when offered by the visited EU network), and VoLTE (Voice over LTE) is expected to be available. Therefore, we are approaching the inflection point during which LBO will be a realistic option for roamers.
If I were an IPX carrier, how should I approach LBO?
Today, all users’ data is backhauled via IPX carriers to the home network. IPX carriers have various sources of revenues and transporting users’ data is one important source of revenues. Currently, the main advantage to use IPX carriers seems to be the ease of connectivity among MNOs. However, people expect prices for pure transport to decrease making new and differentiating services the way IPX carriers can stay competitive and valuable.
It is simply a matter of time that IPX carriers will offer a wide range and the right destinations of roaming agreements that will bring prices down. Thus, while anticipating that operators are willing to pay less per transported bit… and remaining confident in the escalating trend of high data growth in the future, would I advise MNOs to invest heavily in more transport capacity or try to be innovative by leveraging wide-scale LBO usage?
Let’s look at it this way. Assume an MNO can achieve service differentiation by looking at what opportunities LBO would bring. Well similarly, there are opportunities around LBO for IPX carriers which must be looked at as LBO will reduce revenues from backhauled data.
This is the end of Part I. Stay tuned for Part II, in which I will offer concrete suggestions for new revenue sources by using LBO.