Roaming services provider Syniverse is acquiring its direct rival, Mach, in a cash deal valued at €550m ($694m), aiming to boost its scale and revenue potential. Together, the companies will provide a wider range of services to enable carriers to handle roaming agreements and to generate the associated revenues. The development indicates the complexities of roaming in the 4G era, when carriers will need to handle interoperability between a wide variety of IP-based services ‘ and will have to generate revenues from that process.
Syniverse, with its roots in SMS and MMS interworking, has been expanding its activities in LTE and IMS roaming and interoperability, placing itself at the heart of a particularly critical issue for carriers as they move towards 4G. It claims to support 900 operators worldwide, while Mach has 650 customers ‘ these include enterprises and wireline providers as well as the core base of cellcos.
Last month Syniverse announced its LTE Hub, which provides a portfolio of 4G roaming services, including customer care, billing, clearing and settlement. This is built around its Prime IPX Network Solution, which connects operators to the firm’s global all-IP network and a suite of 4G solutions. These include Diameter and SIP signalling to support LTE and IMS interworking and roaming, as well as compatibility with legacy networks; real time tracking of all the data travelling over the IPX system, which can be harnessed to optimize the customer experience; clearing and settlement; and interoperability for all kinds of messaging including video and RCS.
However, Syniverse knows it will need even broader capabilities to demonstrate to its customers that it can enable a profitable IP roaming model. Mach’s cloud-based portfolio will bring its new parent additional functions for its hub, including fraud prevention and revenue assurance, plus increased real time intelligence capabilities. It also says Mach will enable it to extend its support for Wi-Fi offload, local break-out and multi-SIM roaming.
Barclays, Deutsche Bank, Credit Suisse and Goldman Sachs will provide debt financing for the transaction, which is subject to regulatory approvals. Luxemburg-based Mach itself acquired revenue assurance specialist Optel Informatik a year ago, while Syniverse was acquired by the Carlyle Group for $2.6bn in January 2011.
The mobile interconnect hub that the combined firm will support will be critical to future LTE revenues, as carriers grapple with the challenges of providing international coverage within the increasingly stringent controls on roaming fees, as imposed by the European Union and other jurisdictions. The main competitor to handle the rise in cross-border 4G traffic, as well as existing 3G services, is Comfone. But firms with previously narrower scope, such as KPN’s iBasis or Transaction Network Services, are expanding into full roaming ‘ iBasis launched its LTE Signalling Exchange earlier this year. And there are new approaches emerging, including the almost inevitable ‘as a service’ offerings. Recently, wholesale carrier services firm BICS partnered with mobile data services specialist Aicent, to interconnect their IPX communities and support hosted, IP-based interworking and roaming services. The resulting managed network supports mobile data, VoIP and LTE roaming.
From 2013 there will be rising demand from consumers to be able to roam onto partner networks, and this will not just be about coverage, as in earlier generations, but the subscribers will also demand the same quality of experience as on the home system ‘ an experience for which cellcos increasingly hope to charge. Those drivers, combined with broad IMS deployment ‘ much delayed, but finally given its fillip by LTE ‘ will see operators embarking on a major change of approach to roaming, partly because they will be using IP-based standards like IPX and Diameter, rather than their familiar frameworks like GRX and SS7. That will create challenges, especially with regards to 3G integration, voice and fragmented spectrum bands. It will also open up opportunities to support different classes of service or to boost the user’s speeds by keeping their traffic on the remote network.
IPX is the next generation, all-IP successor to GRX (GPRS Roaming Exchange, the key roaming framework for 2G and 3G data). IPX was designed to support consistent user experience even on partner systems, and so can support the rising use of service level agreements in mobile, and the introduction of tariffs tiered by QoS levels. It does this by guaranteeing enough bandwidth to keep services running at optimum speeds. It is increasingly being adopted as a standard for interconnecting fixed and mobile carriers, MVNOs and over-the-top providers, enabling international giants like BT to work with large numbers of partners and deliver common services across vast networks.
IPX in the mobile world lives within a GSMA-defined communications ecosystem which supports multiple services – voice, data and signalling – over a single IP connection and provides many other benefits, including enhanced voice quality, cascaded billing and payments and ‘ because an IPX is physically and logically separate from the public internet – security. Within this, IPX enables the use of Diameter signalling for the exchange of policy, authentication and mobility information between networks as users roam, and for local break-out (LBO), a more efficient approach to handling roaming traffic, which reduces latency and boosts data rates.
The move to IP not only provides for a wider variety of interoperable services, but simplifies the topology for greater efficiency, with a distributed pattern closer to that seen in wireline broadband. IPX backbones and Diameter signalling enable LBO, in which data traffic is offloaded to the roaming network, rather than being routed first back to the home system. This was demonstrated last November by Australia’s Telstra and its Hong Kong arm CSL, using Telstra’s GRX (GPRS roaming exchange) to transport network signaling using the Diameter protocol between the two networks. Telstra LTE customers roaming on CSL tested apps like HD videoconferencing and video streaming, and using LBO delivered the same speed for roamers as local subscribers, and reduced latency by 90% compared to 3G roaming. Christian Daigneault, CTO at CSL, pointed out a key benefit of IPX/Diameter: ‘With 3G, there is no local break-out because operators want the traffic sent back home to them so that they can charge for it. LTE brings signaling into the picture, so you can still charge for data even with local break-out.’
There are other hurdles to effective roaming ‘ regulatory pressure on roaming fees, which carriers say will deter them from investing heavily; the fragmented nature of LTE spectrum bands, and the need for more multiband devices; and specific issues surrounding voice roaming in a mixed VoLTE/fallback environment. But LTE uptake is driven by users’ desire for better data rates and quality of experience, improvements which operators hope to be able to monetize ‘ which means that consistent QoS is perhaps the most vital challenge of all for roaming systems, and one which will drive growth for vendors of IP equipment, and also for the roaming providers which can offer the most profit-focused hubs or managed services.