The Global Challenge

Wireless subscribers in North America can use mobile phones easily while traveling throughout the United States and Canada. Likewise, while living in Germany, I easily accessed my GSM phone across the country while visiting Berlin, Bonn and Frankfurt. But there was one major difference -- I also was able to use my GSM phone across the world in cities such as Athens, Bangkok, Beijing, Brussels, Hong Kong, London, Moscow, Oslo, Paris, Rome, Sidney, Stockholm and Vienna.

Today's GSM customers have a communications advantage over their North American counterparts. GSM customers can travel around the world without worrying about foreign network dialing plans, international calling cards or hotel surcharges for international calls. In order to roam, GSM customers don't have to provide an international itinerary and related phone numbers for colleagues or family members. GSM customers can receive calls automatically (that are made to their home wireless number) in a foreign country and can make international calls to any location around the globe. They can do this while using their own phones, and they receive one bill from their home service provider.

Today's GSM footprint includes more than 200 networks in more than 110 countries around the world. This footprint relies on procedures and practices that have been in place for years within the international GSM community. The only limitations depend on the networks with which carriers have established roaming agreements and have tested communication links.

North American wireless operators should evaluate these capabilities closely. They need to focus more time and resources on these areas. International mobile communications is a volatile market and offers significant revenue opportunities.

DUELING FOR DOLLARS After working in the GSM market and observing the daily business trends related to international communications, the isolation of the North America mobile market is evident. Outside of North America, international communications is a major portion of mobile business. Yet, for North American companies, as was the case for several GSM operators early on, doubts about the profitability of this market segment prevail.

But GSM was developed to allow for easy international roaming, and the market followed a path of its own. GSM skeptics quickly discovered that international mobile services represented a valuable business.

For example, take a look at the players in today's international marketplace. Keep in mind, it is difficult to predict and calculate the revenue that a potential roamer will generate. However, the following points prove the opportunities are abundant.

* Although GSM carriers will not disclose publicly the proportion of revenue generated from international roaming, they openly say that this is a well-established business and that the revenue opportunities shouldn't be overlooked. They also claim that international roaming revenues have exceeded their initial expectations. These claims prove that this market is generating significant revenues.

U.S. international long-distance traffic revenues, according to the FCC in the 1995 Statistics of Communications Common Carriers, grew $1.1 billion in 1995 ending the year at more than $9 billion in net revenue.

A great deal of this is generated overseas and billed in the United States (calling cards, dial-back plans) and could be moved to mobile communications. That's a lot of money to divide among service providers. And the pie still is growing.

* The German market is a good example of today's competitive international environment and proves how important it is to GSM operators. In Germany, the two major cellular providers fight to maintain the lead in offering the most countries for their customers to roam. This is critical in keeping major accounts for these carriers. In almost all countries, GSM carriers are positioning international roaming capabilities as a competitive strategy.

* Another example of this market's impact is the U.K. carrier CellNet, which recently launched an advertising campaign focusing on international roaming. CellNet used this campaign and its marketing dollars to highlight its accessibility to wireless services in North America.

* High-end users are critical to the mobile communications business and a large portion of these users travel overseas. They require international communication services. They will make and receive calls, whether using a mobile phone, hotel phone or a calling card. This in itself clearly represents a significant revenue opportunity.

MOBILE VS. FIXED Unfortunately for North American subscribers, U.S. and Canadian service providers haven't publicly displayed much interest in the international roaming arena. Many customers are looking for easy and convenient ways to communicate internationally. Yet, understanding how to make international calls from country to country is still a cumbersome task.

There is a significant market segment eager for better capabilities. For example, many North American providers sell services to large organizations. Many of these organizations are multinational and have business interests overseas. These organizations need access to simple international communications, fixed or mobile. Yet, mobile international communications just now is being offered in North America. For example, it only recently became possible for New York PCS 1900 customers to travel to portions of Europe, insert a small card into a GSM phone and roam as if they were still in the United States. That means people still can reach customers by calling their U.S. mobile numbers. Likewise, customers can make calls back home. In addition, the calling rates are competitive with other options such as calling-card calls, and the calling activity appears on one bill back at home.

This is an appealing option to the hundreds of major corporations throughout North America with international business interests. The number of international wireless calls these companies can generate represents a profitable niche market that should not be ignored.

Fixed-network operators provide international communications services to all of these paying customers, and yet a majority of North American wireless providers have yet to tap this market. Even though all North American wireless providers have the capability to support these high-end customers with economical international telecommunication services, many still have not made this service available.

One reason wireless providers are not providing international service is in part due to the negative discussions that frequently circulate among North American providers. Often, the comments sound similar to what cellular opponents said during its infancy. For example, why would an international traveler want to be reached or make calls with a wireless phone when a fixed-network phone is close at hand? Keep in mind, today there are more than 53 million U.S. analog and digital customers and more than 55 million GSM customers. Clearly, people enjoy the freedom of mobility not offered by the fixed network. This also applies to international travelers.

ELIMINATING BARRIERS North American mobile service providers should take international services more seriously, considering they are quick and easy to provide.

By establishing their mobile systems based on the GSM standard, PCS 1900 providers reap the benefits from the GSM community as gained through years of worldwide applications experience. PCS 1900 also can profit from the GSM communities' experiences as modifications are made to the continuously evolving GSM standard. The GSM community has been aggressively providing international mobile communication services to its customers. As a result, the GSM community is leading the world in providing anytime, anywhere communications. As this relates to the North American competitive mobile market, several people question the PCS 1900 operators' ability to take full advantage of the GSM worldwide footprint and to become a competitive player for the global customer. Some say that PCS 1900 does not have adequate coverage in North America, and thus high-end users will not leave their incumbent operators because service in North America is more important than international service.

However, the cost of PCS 1900 international service is quickly justified by itself. With limited North American coverage, an organization may purchase multiple mobile subscriptions until the PCS 1900 coverage in North America is sufficient. Then it probably will drop the carrier that doesn't offer international coverage. Just allow one of your employees to make a few calls from a hotel in Europe, Asia or Australia, and you will jump to a mobile subscription offering economical international services just for these trips.

Eventually, PCS 1900 will cover all major North American markets. When that happens, the North American roaming barrier argument disappears. PCS 1900 coverage soon will be adequate enough to meet the big client's requirements.

The only real detraction to this service is the requirement for the customer to have a different phone. The PCS 1900 phone will not work in the rest of the GSM world because the frequency band used in the United States is different. The dual-band (GSM/PCS 1900) phone remains a requirement that the GSM Memorandum of Understanding (MoU) Association is discussing with manufacturers. The GSM/PCS 1900 dual-band phone could be nearer than many envision.

The good news for other wireless providers is that gateway solutions provide the ability to offer international mobile roaming services to their customers today. For example, GlobalRoam service is available through cooperative efforts among GTE Mobile Communications, T-Mobil and NTT DoCoMo. It is an international gateway service supporting interstandard roaming. The gateway allows U.S. and Canadian AMPS (or IS-41) service providers to offer their customers automatic international roaming mobile communications. The current coverage for this gateway service into the GSM community stands at more than 50 international destinations including Australia, much of Europe, and portions of Asia and Africa. Plus, the gateway is bi-directional, so it also supports GSM roaming in AMPS. The service between AMPS and GSM networks has been available and commercial for more than a year, providing AMPS operators immediate access to the GSM footprint. In addition, as a result of cooperative efforts with NTT DoCoMo of Japan, this gateway soon will connect three major global cellular standards -- GSM, AMPS and PDC.

THE BOTTOM LINE Today, only a few North American wireless providers are offering international mobile roaming services to their international-bound customers and releasing these customers from the constraints of foreign fixed networks. But as mobile communications continues to grow, there is potential for all wireless providers to increase their customer base and airtime revenues by expanding their service offerings to include international mobile roaming.

Here is a quick summary of the services available to all North American wireless carriers for providing international mobile roaming solutions.

* Coverage. Service can be offered across the worldwide GSM community. Soon, one gateway service will include access to the PDC network in Japan.

* Equipment. Currently, these services require the use of a second handset. What the future holds for multimode and multiband handsets is still undetermined. Yet, even with the cost of an extra handset, accessing international mobile roaming services can be justified. The cost for calls is much cheaper than hotel calls and competitive with international calling cards.

* Call Charges. Charges are competitive for the value-added service of international reachabil-ity and communication. For example, the cost for a GlobalRoam service customer calling from Germany back to the United States for three minutes is less than using a major long-distance provider's service. And these charges are much less than the high fees imposed by hotels. The final cost of these calls will depend on future roaming tariffs charged by the visited network (GSM to PCS 1900, GSM to AMPS, AMPS to PDC, PDC to GSM, GSM to PDC) and the mark-ups charged by each home wireless provider.

* Ease of Use. These services are easy to use. With the correct handset (and a SIM card for use in GSM networks), customers are ready to roam around the world. Once off the plane, customers simply turn on the phone, wait a few seconds for registration and are able to make and receive calls almost instantly.

* Dialing. Today, the dialing process throughout the world is complicated by the fixed network. Typically, an international traveler must rely on a calling card that explains which number to call in each country. But using the GSM phone is as easy as calling from home. Only one additional digit is required. To call home, the sequence is "+1," then the number with the area code. For example, "+1 (201) 111-1111." In Japan, just replace the "+" with "001," and you have made an international call from the PDC network.

* Call Delivery. The caller dials the North American mobile phone number, and the call is routed to wherever the customer is located. Customers simply make sure the phone is turned on and registered in a serving (foreign) market. This customer can travel around the world to various GSM markets (and soon the PDC market) and make or receive calls.

* Billing. One bill in home currency is provided for all domestic and international activities whether at home or in a foreign country.

United States wireless carriers are recognizing the opportunities available by offering global roaming to their customers through various means.

AT&T Wireless Services currently offers its customers the AT&T CallCard.

"CallCard is a 'smart card' programmed with your U.S. cellular number and billing information," said Cristy Burgan, CallCard product manager. "As you travel to any of 72 countries across Europe, Australia, Asia, the Middle East and Africa, you simply insert your CallCard into a rented or purchased GSM phone and turn it on to make calls and receive calls on your normal U.S. cellular number. Charges appear on your regular cellular bill."

Western Wireless expects to offer commercial international roaming in the first half of this year.

"Western Wireless has proved the technical viability of international roaming, and we are working with international carriers to make this a commercial service in the near future," said Cole Brodman, director, technology development.

AirTouch Communications is a strategic partner in Globalstar, a consortium of international corporations, which plans to be receiving revenue from satellite telephone services by 1999. The satellite service is designed to supplement cellular service, rather than replace it.

"The premise is that customers would have a handset -- CDMA for example -- that would be used where cellular CDMA exists. If there is no CDMA, it would default to the satellite service," explained Susan Rosenberg, manager, communications, for AirTouch Cellular. AirTouch has service-provider rights in the United States and a number of other countries.