Telecommunications Architecture Corner

Operators have a golden opportunity to increase revenue streams from new  data services by delivering the personal services subscribers want. Application management is driving a new wave of mobile technologies.

In the mobile world, users are the ultimate arbiters of which applications and services are useful to them. Regardless of what is delivered pre-installed on a particular device, users will only embrace and use those applications and services they need and want. Consumers are demanding a more personalized, customized mobile data experience, while enterprises are mobilizing business-critical applications.

At the same time, mobile operators and service providers are looking to deliver a wider set of services to users - promoting increased mobile Internet activity is one route to meeting increasingly diverse customer needs and creating new revenue streams. Mobile operators are working with Internet service providers and others to help them build and deploy new and compelling services: services which can be tailored to the diverse requirements of both consumer and enterprise customers.

This should be a win-win situation for all. Consumers get the personalization they crave; businesses get the applications they need to be more efficient and effective and operators continue to increase their revenue streams. However for this to become a reality, it is critical for operators to have the flexibility to customize the handsets and services delivered to customers. These services depend on applications, all of which need to be deployed to and managed on subscriber devices.

Until recently, mobile operators have pre-packaged selected applications onto the devices they supply, hoping to capitalize on the mobile application opportunity. However, a number of factors have restricted this opportunity, including: limited operator control over the handset build; the need to define service requirements as much as 24 months prior to device launch; limited ability to adjust pre-loaded applications or services during the device lifecycle and the fact that specific applications can generally only be deployed onto a few handset models, representing only a very small proportion of the user base.

Mobile operators are now starting to overcome these issues by working with partners to provision new services and applications on subscriber handsets after they are deployed. In doing so, they have opened the door to a cost-effective way to improving and personalizing the individual end-user experience.

Application management systems deliver applications or application updates over the air to mobile devices. The ability to dynamically enable new services and applications on subscriber handsets after they are deployed is effectively changing the rules of the game. Service provisioning can be ‘de-linked’ from the handset development cycle, enabling operators to distribute applications at the point of sale or while the handset is in use. As market conditions and subscriber preferences change, services can be optimized through over-the-air updates to the applications. The usage of services can be monitored, tracked, and used to determine trends and preferences.
Most importantly, application management can be applied to every device in the marketplace, enabling a proactive ‘push’ model for offering new applications and services. This drives a more diverse set of mobile propositions for users, giving a whole new interactive dimension to the relationship between operators and their subscribers. Service providers can flexibly tailor packages of services to groups of subscribers across device platforms at any point in time. These packages can be heavily targeted, combining specific applications together with such things as a customized look-and-feel and menu structure.

In addition, the ability to dynamically enable new services and applications reinforces the role of the mobile operator as service provider by offering a central point of management for subscriber devices. The operator ensures that the device and services are optimized; this underpins a great user experience and ensures that the operator can retain primary control of the mobile customer relationship.

On the enterprise side, the dynamics are different. The enterprise is mobilizing but until recently, the most commonly mobilized enterprise applications have been a small percentage of corporate email in-boxes and one-off enterprise applications (e.g., CRM), for specific groups of employees. A more general mobilization of enterprise applications is underway. Illustrating the point, ABI Research recently forecast that mobile application revenue will grow at a CAGR of over 102 percent to reach $5 billion by 2012.

To underpin this increasing mobilization, IT organizations need the ability to manage and secure the mobile environment remotely. Application management is a critical capability, enabling IT departments to support the initial distribution and subsequent update of mobile applications, change application policies and settings, enable application audit and inventory and provide visibility into the applications and versions on the device when there are problems.

However, most enterprises do not currently have these capabilities and until they do any business wide mobilization efforts will be fraught with problems. Without these capabilities most organizations will struggle to get things like sales force or CRM applications onto the diverse range of handsets used by their employees. Even if they do, they then have the problem of maintaining and updating them. They won’t be able to use the systems management tools they have typically used in their IT environments, not least because these mobile devices are unlikely to be connected to their corporate networks in the same way as laptops and PCs.

It is for these reasons that enterprises are looking for management solutions to support their mobilization efforts. A recent survey of top-500 CIOs highlighted a significant increase in both the number of enterprise users of high-end mobile devices as well as a significant increase in the number of mobilized applications.

Growing usage will undoubtedly lead to a need for more management. Furthermore, it is clear that enterprises are looking for help in managing an increasingly complex and business-critical mobile environment. For mobile operators this represents a significant opportunity, especially when you consider that 92 percent of the CIOs surveyed indicated that they are looking to mobile operators to be involved in the provision of management and security services. Operators should be creating value-added device and application management services tailored to the specific needs of the enterprise. Not only does this satisfy a critical need for one of the most profitable customers segments for any operator, it creates new revenue steams while also deepening the relationship between operators and their enterprise customers.

This is an exciting time for the mobile industry. The advanced mobile services market is burgeoning and long-awaited technologies for delivering and managing mobile  applications are now available.
Application management technologies support top-line strategic objectives to expand the revenue streams from new data services and enable a more customized experience for subscribers. These technologies also help strengthen the operator’s service provisioning role. For operators, the execution of application management strategies in the enterprise segment will differ from the consumer segment. In either case, the market is crying out for faster mobilization of applications and services and the mobile operator has a golden opportunity to lead and make it happen.

Reference: mCube Digital

With net additions to the wireline subscriber base on a decline, operators, pretty much following other regions, are moving to the wireless segment, striving hard to find a place there. Though relaxed regulatory policies and declining call tariffs contributed considerably to subscriber growth, operator margins have shrunk considerably with declining ARPU. The broadband Internet market segment, with an impressive subscriber base at the end of 2007, is expected to push WiMax growth in all the emergent regions.

The only segment to show some formidable growth is VAS or the content segment, with analysts projecting revenues of $348.8 mn by 2009 at a 50% CAGR. As operators look to tap this market, there are content value chain players who have simultaneously bloomed with this segment. Many of these vendors have been able to find a global market for their services. Nevertheless, the emerging consumer markets still has to grow from the current low-value services like SMS contests, wallpaper downloads and ring back tones to more high-value services like games, video or TV in the future, in order to see any substantial increase in their ARPU.

To provide all these services not with standing QoS, SPs need to have a robust and scalable OSS/BSS System.

Changing Landscape
The BSS/OSS or Operations and Business Support Systems industry is undergoing explosive growth. Various areas witnessing high growth rate are mobility and broadband. This is coupled with the evolving richer content services and applications. The other significant development changing the telecom landscape is the strong competition in the market with the coming of new players as a result of de-regulation of the industry. Convergence has enabled the embracement of technologies: WiMax to deliver services over increased bandwidths, IPTV to provide quad-play services; and launch of DTH services for the masses.

The competition is further intensifying with service providers continuously rolling out new services, making huge investments in upgrading to new technologies, and expanding their networks for growth and stability. They are innovating their branding and marketing efforts to retain the wallet-share of their customers, maximize ARPU, and fight competition.

However, the global scenario is a bit different. Most incumbent players in global markets have already made their strategic moves with partnerships, organic and inorganic growth to provision triple-play and quadruple-play services to their customers. Majority of these are currently trying to differentiate their services.

While operators in emerging markets are concentrating more on customer acquisition, operators in the developed markets of the US and Europe are striving to retain and up-sell services to their existing subscriber base with innovative loyalty programs, bundles and pricing plans.

WiMax is yet to make in-roads in these regions, as it has seen more easy adoption in less developed markets. The latest services like number portability, location-based services, mobile TV, IPTV, VOD, and HSD are gaining traction in these markets. Nevertheless, ARPU is still not very impressive and its general decline continues. The need of the hour is of technologies that enable the operator to leverage revenue from the content segment.

Mired by Traditions
Most communication service providers have traditional architectures that usually consist of different sets of OSS and BSS systems, each designed to support a particular type of service like mobile, fixed line, SDH, and ATM. In most cases, these systems have become huge applications that comprise several processes and integration points, making them inflexible to cater to current business requirements such as single view of the customer, point of contact for improved customer service, bill for the customer, and launch compelling services and offerings, business agility, etc.

To survive in an intensely fierce and an uncertain business environment, it is obvious that service providers would need to evolve to the new OSS/BSS architecture that comprises standards-based horizontal applications that are open and modular, providing flexibility to evolve as per changing business requirements. This will in turn make businesses competitive and drive the business from a customer centric perspective, rather than service centric. The challenge, though, lies in executing an approach to evolve to new OSS/BSS architectures so that it delivers business value early, while mitigating risks, costs and complexity.

A “Big Bang” approach is fraught with high risks and carries a significant chance of failure, whereas traditional approaches of evolution, often spanning several years, have taken too long to deliver business value and have resulted in very high costs. The ability to evolve to new OSS/BSS architectures while simultaneously being able to manage day-to-day business operations, challenges imposed by introduction of new services/technologies, and possible retirement of applications within predictable costs of ownership are the biggest challenges facing service providers today, as they move toward convergence. And being technology ready to rollout VAS services is where the other challenge lies.

The presence of multiple billing systems is surely a challenge that operators face, especially the bigger ones. The best way to go about it is to deploy a billing system that can not only cater to their IP services but also take bill lines from various service specific systems to generate a consolidated view and convergent bill for customers. Another clever way to take care of the content services is to go for the content aggregator's billing system and get the bill lines back to their systems to arrive at a convergent bill for their customers. In more mature markets, OSS/BSS systems are used mainly as a point of differentiation. The operators use them to enable creation of effective bundles, pricing plans and loyalty programs to retain their customers.

Promising Growth
Much of the growth in the OSS/BSS segment will be with operators deploying billing systems to cater to the NGN rollout. As mentioned before, IP-transactions require a different perspective, which is usually not supported by the operator's existing billing systems. Due to this, large operators are also looking toward a single system across their line of operations to enable them to cater to these new services, cut costs, and have an integrated view of all the service subscriptions from a customer.

As per analysts, the OSS/BSS 2007 external spend is estimated at $26 bn. The market has experienced a CAGR of 6-7% for the last five years with OSS estimated to be at 10-12%, alone. The OSS/BSS market is growing much faster than the global CAGR. While the industry is driven toward the Next Generation OSS (NGOSS) and other standardization across the integration layers, converged offerings will be the focus, as it contributes to directly reducing ownership costs for operators.

As new networks move toward 3G/4G, VoIP, WiMax, etc, more concentration will be on the OSS part specifically, in the areas of network planning, template creation, visualization and management-areas different from traditional circuit switched networks. On the BSS front, the focus will be on convergent billing and order management infrastructure.

Buying Tips
Telcos must seriously look at interoperability of products they buy. Other equally critical aspects are scalability and performance of products, and credibility, financial stability and support infrastructure of vendors, etc. While investing in these products, telcos must carefully study and document their real requirements and assess products accordingly. Extensive vendor and product evaluation, complete with reference checks and site visits, must be instituted. More specifically, telcos should evaluate solutions against the following parameters:

Ability to Address Problems: Today, telecommunications operators must do more with less. Despite drastically reduced budgets, they must continue to deliver new services, build customer loyalty and improve operational efficiencies. They must find ways to incrementally increase their profits while also keeping churn rates at bay.

In order to ensure that operators maximize revenues in the current climate, vendors must address today's emerging business models as well as the business models of the future, transparently and seamlessly.

Vendor Responsiveness: One most important attribute of a billing solution is to be agile when responding to new and changing requirements. Persistent innovation and rapid time-to-market have always been major challenges. It is important for the billing solution provider to be very closely tied to the service provider, in order to understand their current and future requirements clearly, including any regional implications. If needed, then to the extent of having a say in planning of services and guiding the service provider toward future services.

Best-of-suite Solutions: The current trend is that the best-of-breed software products are being replaced by best-of-suite applications in the complementary BSS and OSS areas. By providing a common architectural framework that requires little up-front work or investment to tie the billing and customer care systems together, operators can lower operational costs while having the ability to handle a wide range of tasks-from providing customer support to billing the customer to generating new revenues. This is one dominant trend where operators want to be assured of the depth of functionality and breadth of options, and at the same time ensure ease of integration and interface to third-party systems.

So operators should look for integrated ordering and customer management, billing and balance management, and revenue enablement coupled with an extendible and flexible architecture.

Integrated Approach: The platform should seamlessly link three main solution sets together.

Customer management solutions-Front-end customer care applications should be visible within the platform that focuses on increasing customer satisfaction and retention as well as the value of each customer.

Billing engine-At the core of the framework should reside a billing engine that is able to rate and bill for any service offered in the telecommunications industry.

Revenue enablement-In order for providers to capture revenue streams from evolving next-generation services, they must be able to manage complex multi-party content and partner agreements as well as provide a single view of the customer to deliver quality service.

Connecting these three pieces with the over-arching framework brings together the power of the platform. Placing the business logic directly into the framework allows for easy and low-risk integration when adding new solutions to the platform. As such, billing and customer care vendors can take the initiative to step up in the service providers' enterprise so that the enterprise doesn't have to step down to them. Providing a clear, single view of the customer-from the billing to customer care perspective-service providers have the advantage to speak to their customer in the language they demand.

Differential Billing: While there is an imminent need of a robust and scalable rating engine, this has to be thought through very carefully as the ratio of prepaid to postpaid subscribers is quite disproportionate (7:3). Clearly, there is a requirement of a differential billing platform, and there are innovative solutions from various vendors to cater to this. Other than the rating engine, this solution will also require probes for the IP network as well as mediation system.

The Currency of Content: Content has created a new value chain where content providers, advertisers, clearing houses and network operators all play a role and retain a portion of a single transaction value. As such, a new business model has emerged where the simple one-to-one operator-to-customer relationship is now a many-to-many relationship. The business model based solely on profitably processing customer contracts involving relatively static portfolio tariffs and discounts has been replaced. Business now demands the management of complex multi-party partner agreements that are dynamic and partner tailored.

A business solution is needed which can manage these agreements and settlements with the appropriate parties. This emerging business model finds network operators responsible for the distribution of shared revenue to partners from a content event that occurred using its network.

Network operators are partnering content providers, content aggregators and portals. The portal is most often responsible for creating and managing agreements with the content providers while the network operator manages the settlements system. If operators do not initiate partnerships and arrange revenue-sharing agreements with content providers, they could be cut out of the revenue loop. Managing the end-to-end agreements with all parties is key to the operator's success.

Electronic Bill Presentment & Payment (EBPP) and Self Care: Two major business drivers are seen to be the key toward an increased demand for EBPP and self care systems-the continuous challenge to reduce operational cost and the market shift toward an electronic lifestyle. EBPP and self care enable operators to reduce cost of operation in generating paper bill and delivery of paper bill, in routing more customers away from the call center into Web-based customer self care also improving the revenue collection. The rise of the electronic or digital generation also meant a shift toward self care, which will put great control into the hands of these customers as well as increase the quality of customer service.

Dynamic Balance Management: Dynamic balances as opposed to monthly bill will become the order of the day instead of monthly bills. For example, a subscriber may have a credit balance on their mobile voice charges through an external loyalty scheme, which could be offset by the debit on their mobile data charges. Operators are known today to facilitate micro payments, but there is a huge opportunity for operators to capture the revenue pool via facilitating macro-payments as well.

Focus on Prepaid Data and Prepaid Content: In most Asian countries, the growth of prepaid subscribers has outgrown that of postpaid systems. The prepaid sector is a very lucrative and powerful segment that cannot be ignored. The ability of operators to be able to extend data and content services to prepaid customer and capture those revenue would be critical.

Today, we stand on the threshold of a new Internet era, with information services holding vast potential to enhance the lives of billions more people. It will be a journey of discovery, with mobile communications paving the way to the Internet.

The spread of voice communications continues its dizzying rise, already shooting past three billion mobile users. The next stage in the evolution of world communications is widespread information services. People need to be taken on a journey of discovery, to learn how to use services and explore the rewards for themselves.
The welfare of billions across the world will be improved by universal access to relevant, practical ICT. In  healthcare, education, agriculture, business and public services, information offers a myriad of ways to help people in their daily lives. However, the route to the sources of information everywhere in emerging
markets is not straightforward.

Mobile Internet for the masses

Access is, of course, fundamental. The sheer cost-effectiveness and convenience of mobile technologies will prove decisive. Mobile devices are pervasive, with penetration growing at a rapid pace. They also offer great interactivity and are highly affordable. Yet that is only part of the story. Conventionally, the industry has talked
about the technologies needed to provide connectivity, as though simply giving people access to services is
enough. We now know that we need to go further, involving new thinking at all levels. This is a journey that involves
the entire industry and beyond: operators, local communities, governments, content creators, local businesses and communities, as well as the individual consumers themselves. Even the best connected countries have much scope to improve how well the Internet and information services are being used. In emerging markets, that essentially boils down to building the competence and motivation to use information services, as well as rolling out the infrastructure.

New types of services will be needed

People intuitively understand the value of voice communications. Telephone conversations are natural, their content is user-generated and in the local language. It is easy to learn how to make a telephone call, even for people who are illiterate. However, little of this applies to existing information services. “The Internet for the next billion consumers will be very different to the services prevalent in advanced markets, says Mr. Jawahar Kanjilal, global head of emerging market services at Nokia.
“The mass of consumers in emerging markets lives in semi-urban and rural areas. Villages are far apart. A trip to
the city is a big event in many people’s lives. We need to understand that their context is highly local.
“Many of these potential customers do not know what the Internet is and what it can do for them. Rather than
talk about the technologies involved, the industry needs to turn this around and take the consumer’s point of view
as our starting point.”

Affordability is crucial to success

For consumers, affordability translates into total cost of ownership (TCO). TCO is the total amount needed to buy and use the service. This includes the price of the mobile device, the price for the service and the tax levied on both. Recent years have seen a 33 percent reduction in mobile handset prices across emerging markets, yet TCO has decreased by only 1 percent. “We estimate that 2.7 billion people earn two US dollars or less per day, and have a budget of three US dollars or less per month to spend on ICT,” says Mr. Frank Oehler, head of business
development at Nokia Siemens Networks. “To meet this market need, it is important that operators can offer affordable services. And they must keep operational and capital expenditure per subscriber very low to create sustainable business.
“All this means that providing mass access to information services is a major challenge for operators. It demands
a mix of innovative technology and novel business models that focus on major issues such as reducing the
power consumption of base station sites, sharing site infrastructure to reduce capital costs, and solutions that
cut backhaul costs. One solution that meets these criteria is Nokia Siemens Networks Village Connection, which is extending mobile and internet cover-age into rural areas,” continues Oehler.
Lowering costs for consumers will encourage greater mobile penetration and accelerate the adoption of services.
This will inevitably lead to productivity improvements and social enhancements that help to drive up economic activity.

Costs must be easy to understand

Transparency and simplicity in pricing is also vital for building confidence among consumers. While developed
markets have experienced tremendous growth in data use driven by flat rate pricing tariffs, these are typically
pitched too high for lower income consumers in emerging markets. Operators and service providers need to find
new and innovative pricing models that suit consumers in the lower-income segment.
Costs can be reduced further through schemes in which a mobile device is shared. Or Internet kiosks
can be set up to provide on-demand access within a village and for smaller settlements in the local area. This
enables consumers to use services for themselves, see how the services work and understand the value that they can bring into their lives.

Learning the skills and value of ICT

Through a shared experience, consumers can create competence and motivation, which are two further steps along the journey towards mass adoption of information services via mobile communications. “Building consumer awareness and capability takes time. Ease of use is essential,” explains Kanjilal. “SMS-based services have the potential to open up the market because of their simplicity
and the ubiquity of GSM mobile networks. There are also opportunities in using voice-based services, which is important to overcome the illiteracy barrier.” As well as matching people’s income patterns and competence, information services need to fit their needs. Consumers will only be motivated to use services that they can see bringing immediate, tangible benefits and improvements to their lives.
Recent Commonwealth Telecommunications Organization research on local e-content discovered that people
in emerging markets welcomed information services, especially about job opportunities, markets, education,
banking, health and travel. Livelihoodbased services, as well as popular entertainment services, will be key areas for future services.

Enhancing quality of life

It is early days, but new services are already popping up on the radar. In Kenya, for example, Safaricom’s M-PESA service, which offers mobile-based payment, is generating much interest, with registrations surpassing 6,000 per day. The service is aimed at prepaid mobile subscribers without bank accounts. “People with lower incomes will not part with any money unless they see intense value from a service,” says Kanjilal. “Services must focus on enhancing people’s income and quality of life. Meanwhile, they have limited entertainment options. A mobile device incorporating FM radio brings a personal music experience as well as access to information. Even a low-end mobile phone is a good media device. And personalization, such as ringtones, is also important, helping to satisfy people’s aspirations.
“With a simple mobile device you can access a huge range of services, from banking to celebrity gossip,” continues Kanjilal. “Services must be relevant, in the local language and tailored to the many different local markets that exist in each country.” Creating and bringing the right services to people will involve all
stakeholders in a new ecosystem that encompasses operators, Internet service providers, infrastructure vendors, handset manufacturers, local companies, healthcare providers, banks and educational establishments.
“Mobile operators are big stakeholders and it is in their own interest to create business models that help to sustain the local content ecosystem. Revenue sharing arrangements must encourage more local content producers to create locally orientated services,” comments Kanjilal.

Regulatory niceties and necessities

One of the most important partnerships in the local ecosystem will be that between governments and the private sector. “Regulators must ensure a level playing field with easy access to the market, it is key to everything else,” explains Mr. Erkki Ormala, vice president, technology and trade policy at Nokia. “Global experience shows that the TCO for consumers is dependent on lowering or eliminating additional costs, such as handset and infrastructure equipment import duties and taxes on services. When this prerequisite has been achieved, other issues such as adopting global network standards and technologies can be addressed. Ormala points to India as a shining
example of what can be achieved by emerging markets through deregulation: “Today, we see India as one of the
fastest growing mobile markets enjoying some of the world’s lowest tariffs. Without regulatory reform this success
would not have been achieved.” Yet telecom's deregulation is no longer enough. As mobile access expands
to encompass advanced services, other issues will come to the fore. “A major disruption comes with the rise of mobile broadcasting services such as delivering TV over 3G networks,” comments Ormala. “With very few exceptions around the world, telecom's and broadcast regulatory authorities are separate. With the convergence of technologies, no longer can we make a clear distinction between services. There is a huge opportunity for emerging markets to leapfrog mature markets to create a regulatory environment more advanced than anything
seen in Europe and the United States.” Clearly there is a lot to think about, and many twists in the road ahead.
But on the journey towards improving people’s lives with information services, there are two things we can be sure of: that the potential for socioeconomic betterment is huge, and that the services themselves will be very different to
the established Internet model seen in mature ICT markets