Why Is The Roaming Free?

[jeffharris]

OK, I have searched for this answer, can't find it (easily), so here goes the noob stupid question.

Effendi, or others, WHY is the roaming free in many of the countries, using these "Global SIM" resellers?

What is the "trick" involved?

For example, if I look at the Manx Telecom mobile site, they chrge (albeit pretty cheap) for roaming in the countries these resellers are allowing for free.

OK, I understand the cheap "calling out" system using the callback, but, what do they do to provide the free incoming?

And why is this "trick" limited only in IOM, Lichtenstein, and Estonia?

[DRNewcomb]

Remember that most countries charge a premium for you to call a mobile number in that country. If the retail premium you pay to call a mobile number in X is cheaper than wholesale premium the carrier in Y charges X to roam in Y, then a SIM from X can roam in Y and the carrier can pocket a small profit from the difference in the prices. The key to understanding the situation is that wholesale roaming rates are much cheaper than the carriers have let on to anyone.

[jeffharris]

In theory I understand this, but, does that mean these Global SIM companies have their own cell switch, both in the outgoing and incoming countries, and do the tricks that way? Or is it a full, say, Manx telecom SIM? Still doesn't explain (to me) why it is free to roam in countries Manx Telecom charges for.

[Effendi]

It could be free also for Manx Telecom if they wanted so. But all "normal" carriers make us pay everywhere, so does Manx too, it's just a non-written agreement among all the mobile operators.
I suppose that small countries like IoM or FL can have quite big advantages in terms of interconnection fees, so they can manage to have free calls in many countries for their users and still getting money with interconnection.

[prion]

I was also wondering about this. My sense was that incoming calls are probably free for all operators and not only for the global sims. I do not know if this is true.....

[DRNewcomb]

Originally Posted by prion

I was also wondering about this. My sens was that incoming calls are probably free for all operators and not only for the global sims. I do not know if this is true.....

I beleive that in CPP countried they pay a small (wholesale) premium to connect the call, but that's it. In CSP (Cellular Subscriber Pays) (e.g. US, Canada) countries, there is a charge back to the roaming carrier. This was one of the problems they encountered when setting up roaming with US GSM carriers. All the European carriers just paid to connect the incoming call to the roamed carrier. In the US there had to be a way to bill the roaming carrier for air time. Most European carriers had not done this before and were not set up for it.

[Przemolog]

Originally Posted by prion

I was also wondering about this. My sense was that incoming calls are probably free for all operators and not only for the global sims. I do not know if this is true.....

Hmm, I don't know what do you really mean by "free incoming calls are probably for all operators".
I think that incoming calls in roaming might be free for the receiving party but do not have to. It depends how much is necessary to call such a roaming SIM. If you have a European SIM roaming in another European country, and no matter from where you are calling, you have to pay 30 eurocents/min or more to reach that SIM, then it would be enough to cover the cost of forwarding a mobile network in another country. But think about a network which has 5 milion users, and most or all of those users have tariff plans with on-net rate, let's say 10 eurocents/min. How could they have free incoming calls in roaming when 10 eurocents is just too little to forward a call to a foreign network? It doesn't even matter that those who call to that network from "outside" (from another networks in the same country or from abroad) pay more, possibly much enough to cover the forwarding....
Of course, I think that even there must be fees for incoming calls in roaming, they should be much lower than they really are :unsure:

[snaimon]

This does not answer the main thrust of this thread.

For thought.....

The more I think about it, the more I think that most costs are simply FIXED. You made the investment for a certain network capacity, you provide and maintain the equipment, you have built the towers, have already rented the space or bought land for towers, you need a certain # of employees to keep it going, you pay the electric bills.... So what are the variable costs? Sure, sometimes rents go up and electric rates go up and wages go up, etc. The trick is to drive up capacity usage; the more usage, the more revenue opportunities the company has.

I think one really has to wonder about COSTS. For instance, some German carriers are offering 5 and 6 cents / minute INNER-NET prepaid calls. Don't know about postpaid, but it would not surprise me if there are offers with very low network internal calling. And you don't think they are still making a profit on those calls? If all calls were made within the network, would that cell company not make a profit? And even when the called party is roaming!

In Germany there is a small battle beteen industry and the regulators over the network interconnection fees (sorry, the German term escapes me at the moment), which are to be reduced over time. The carriers like to keep these high regardless of the true cost to interconnect, because they keep up their revenues (and profits). I would view this as an additional revenue opportunity.

Is the roamer REALLY a burden or additional cost on either network? I don't think so at least if you accept my line of thinking above that most costs are fixed.

In CPP countires, the price to receive the call is built in to the caller pricing for NATIONAL calls. Who gets the revenue when the national user roams? Is it split between the two parties (say Germany and France, when a German visits France and roams and receives a call from his home country)? Must be. Just another revenue raising opportunity!

The German caller is paying his regular rate, perhaps as low a 5 cents per minute inner network. The caller cannot be expected to know if the called party is roaming or at home. In terms of fairness, ideally, the caller should pay an international rate to call his buddy roaming in France, but he does not.

National carriers work out roaming agreements and share revenues. I guess the sharing arrangements are secret.

Another idea I have is that, since the free roamers are relatively small (Liechtenstein, Estonia, Iceland, IOM) with small indigenous populations, the big guys did not fear large revenue losses and granted "most favored roaming nation" status. Of course, the big guys never dreamed that the SIMs would be sold internationally. If the concept of free roamings takes off and puts a real dent into the big guys' roaming revenues, I would bet any money those most favored free-roamer nations will lose their FREE INBOUNDs in a heartbeat. Somehow, someway, the outbound calls from Liechtenstein, Estonia, Iceland, IOM and the international interconnect fees to Liechtenstein, Estonia, Iceland, IOM from the nation networks are paying for free inbounds.

Stan

[jeffharris]

OK, so now where getting somewhere in terms of an answer. So, I gather the real answer is -- it's NOT free. Someone is paying (albeit a small amount) somewhere. It's just too small a niche for the world's carries to make a deal about any revenue loss. And it is sort of a "loophole" because none of the worlds' carriers expect these small carriers would sell their services rebranded and internationally.

That is similar to, as mentioned in another thread, when T-Mobile USA did not have a billing program from 1998-2001 or 2 to charge the customers for international roaming, because, I guess, the amount of people roaming internationally, did not substantiate the capital outlay to properly track it. We all roamed worldwide for free, for years. That sadly ended.

Stuff like that always ends (or revises)

[snaimon]

Originally Posted by jeffharris

OK, so now where getting somewhere in temrs of an answer. I have gathered -- it's NOT free. It's just too small a niche for the world's carries to make a deal about.

Stuff like that always ends (or revises)

My hunch taht is too small -- at this time. Certainly not sure.

Certainly it would be silly for UM or whatever company to OFFER FREE INBOUND and then have to turn around and PAY T-MOBILE or VODA or O2 or FR TELCOM or whomever good money for every inbound call received by one of their customers? They must have agreements for the connections to work.

Sooner or later regular EU roaming rates will come down. Just a matter of time.

Stan