iBasis and Tele22 both announced recently that they would work together on a multiservice IPX interconnection to support LTE (News - Alert) roaming for service providers. The arrangement would allow customers to remain connected to LTE connections when they are outside their provider’s service area.
Burlington, Mass.-based iBasis (News - Alert), Inc. provides an international voice service to mobile service providers. Its LTE roaming network covers 70 countries around the world.
It is a wholly-owned subsidiary of KPN (News - Alert), which was formerly the national fixed line phone service for the Netherlands. KPN provides Internet, fixed and phone service in the Netherlands and mobile service to other countries. This relationship also gives iBasis an MPLS presence in the U.S., most of Europe and parts of Asia.
Stockholm-based Tele2 is a retail provider of fixed-line, mobile, Internet and television service in Scandinavia and parts of Eastern Europe.
In a recent statement, iBasis explained that it “offers mobile operators the shortest route to securing LTE roaming revenues and achieving a global LTE roaming footprint” (emphasis added). While the iBasis-Tele2 relationship should be a great benefit to providers from a technology standpoint it won’t be as great from a revenue standpoint—at least not after a year from now.
In April, the European Parliament voted overwhelmingly to outlaw roaming fees within the EU, a sizeable portion of iBasis and Tele2’s market. The regulation will go into effect Dec. 15, 2015.
The move to reduce roaming fees is not limited to Europe. Japan opened talks last summer to reduce roaming charges with other Asian countries. Singapore and Malaysia signed an MOU about reducing roaming fees back in 2011. A similar agreement between Singapore and Brunei goes into effect Jan. 1.
This would appear to be bad news for the iBasis-Tele2 arrangement, but it probably isn’t. Tele2’s service spans multiple countries in Europe. Although it would not be able to collect roaming fees a year from now, Tele2 would be able to provide LTE service across its network. This shifts the revenue model from collecting roaming fees to providing LTE continuity.
Although roaming will still exist outside Europe a year from now, political momentum continues to reduce its ability to generate revenue. The global market is squeezing out providers that are heavily dependent on roaming charges and rewarding providers with larger coverage areas that support higher speed connections.
Edited by Alisen Downey