« Ring! Ring! Hot News, 20th April 2009 | Main | Telco 2.0 Exec Brainstorm - Distance Participation »

Enabling Telco 2.0 Transactions ~ a pragmatic approach

As a follow up to Openet’s last guest post on integrated billing and policy management as a key enabler of ‘Telco 2.0’ business models, Joe Hogan, their CTO and Founder, provides below an elegant articulation of the need for operators to exert much more intelligent real-time control over networks, subscribers and services. (Joe will be will be discussing the practicalities of monetising partner-based transactions at the 6th Telco 2.0 exec brainstorm in two weeks’ time in Nice):
Joe_Hogan.jpg

As a regular reader of Telco 2.0 research and analysis and participant at the ‘exec brainstorms’, I am always struck by the central premise of Telco 2.0 and how it contrasts with my own experience in the OSS/BSS trenches. The Telco 2.0 model is essentially built on two inter-related points, that an operator’s networks is intelligent (i.e. subscriber and service aware) and broadband will continue to be ubiquitous and cheap.

However, operators have struggled with subscriber and session awareness for their IP-based networks. For operators to add value to the traffic going over their networks, this capability is a prerequisite for third-party subsidization of access and usage for end-users.

The simplicity and attractive price point of flat-rated data plans has encouraged mass adoption of high speed internet connections. Maintaining low end-users prices has now become essential to the business models of content providers, device manufacturers, and aggregators, who rely on high speed data access for their products and services.

The maintenance of an attractive access price point will become increasingly dependent on each member of the ecosystem receiving a fair economic rent for their services. If the costs of distribution are to be shared, this will require more intelligence, scalability and flexibility than is currently available from existing billing systems, if network transactions are to be monetized.

Is the Network Subscriber and Session Aware?

The networks of operators have undergone, and continue to undergo, a huge transformation. While legacy networks still exist, IP-based networks are now the default. But where services are increasingly delivered over IP-networks, being able to identify, measure, manage and apply an appropriate price in real-time is not a given.

While this information is somewhere in the network, it is not necessarily available or useable, even for a communication service provider’s own services.

Typically this data is silo-ed across multiple systems, requiring operators to bridge network-focused operations support systems (OSS), IT-focused billing support systems (BSS) and CRM systems. To deliver a more intelligent network, one will need to combine subscriber-specific information from the BSS layer with network resource information from the OSS layer. Bridging these layers will enable policies to be controlled at an individual level (subscriber or third-party) to enable:

• Profiles to be seamlessly and securely shared across access networks, applications, devices and locations
• Orchestration of service delivery, to support revenue-sharing partnerships with third-party providers e.g. the prioritization of traffic to and from specific sites
• Application of personal policies based on privacy, identity, cost and payment preferences
• Subscriber configured controls on features, content, time-of-day, location and presence
• Service Level Agreements to be met. By ensuring the availability of appropriate network capacity and application of terms and conditions
• Automated customer friendly notifications and self-care mechanisms

If operators are to exert intelligent real-time control over networks, subscribers and services, for its own or third-party services, next generation policy management capabilities are needed. Policy management subscriber-aware information can be used to base decisions on: individual location, billing plan, usage history, contract terms and personalized usage and spending limits. Additionally, session-aware information can be used to base decisions on: time-of-day, current network capacity, traffic source internal or third-party application and traffic type, such as by protocol or service type.

Monetizing Partner-Based Transactions

Today from an internet access perspective, many of the basics appear to be in place for a Telco 2.0 model: high quality network, simple pricing model and an increasing availability of smarter, useable devices. However, we are at the dawn of high speed internet access, if these conditions are not to be throttled (pun intended) before the industry matures, the mechanisms for paying for new services must be addressed or at the very least the foundations established.

Operators generally agree that flat-rated data plans are essential to their marketing efforts. Assuming flat-rated data plans are here to stay, how - or should that be who - will pay for future network investment to meet the network capacity of new video services, new devices, and machine-to-machine communications. Research conducted by Openet with Yankee last year, points to supplementary business models such as: protected tiers, advertising, premium priority etc., to provide opportunities to earn more revenue.

Communication service providers have latent assets that can be deployed to the mutual benefit of upstream companies and subscribers. It makes sense for operators to package the so far latent assets and intelligence of their networks to find compelling value propositions to subscribers and saleable asset to upstream companies.

Some commentators have ridiculed operators’ attempts at innovation, the money and resources operators have invested in their walled gardens, data services, and promoting convergent devices. Nevertheless operators have learned a lot from these exercises, and these innovations have created the conditions for an environment that can support new business models and flexibly monetize their various transactions.

Operators already sell basic connectivity both directly and indirectly to end-users through third-parties. Deals have been struck with companies such as TomTom and a host of others to bundle access with their products, while Amazon’s Kindle is an example of access being sold indirectly via Amazon to the end-user. It won’t be long before different types of quality of service and other network add-ons will be sold indirectly.

For example, it is already possible to target cash rich, time poor subscribers with data plans that always promise best internet speeds, such that when they are uploading photos or downloading movies they have the best connection speeds available. It is only a small step to packaging this capability to third-parties. Such that HBO will pay operators to ensure their premium customers will receive preferential treatment when viewing content from its internet site, by designating it as premium class traffic during periods of congestion.

Most front and back office systems support simple post-paid subscription and pre-paid payment scenarios. In order to support partner-paid services, service providers must be able of integrating a more flexible set of billing models. If network-based capabilities are to be packaged and sold for third-party services providers and applications, the operator’s billing environment must be able to make a real-time decision based on the:

• Transaction type - what kind of request is this?
• Subscriber preference - is this a subsidized or subscriber paid for usage
• Service-specific balance - is this purchase part of a service plan, on-demand purchase, pre-paid balance, sponsored, a trial etc.
• Real-time management by balance types. Is the subscriber balance based on: time, number of accesses, monetary amount, unlimited
• Context, is there a SLA associated with this transaction e.g. does a high Quality of Service apply to this transaction
• Need for a notification or advice of charge required with the transaction
• Enforcement of usage terms and conditions
• Auditing and reporting to support multi-party billing and customer service

Conclusion

The network is a highly prized asset. Talk of network service prices being rapidly commoditized shouldn’t distract from the competitive advantages it confers. The increasing ubiquity of high speed internet access has made it essential to the business of a whole eco-system of content providers, device manufacturers, and aggregators.

Innovators such as Sprint, by necessity point the way to how it can be monetized. Rather than talk of displacement by content providers, distributors and other players, service providers should re-package their latent assets, to share in the monetization of the services that ride over the top of their networks. Policy decisions when combined with flexible billing options, gives operators a tool-box to dynamically control network activities based on subscriber- and service-specific information and decide who pays for the service.

[Ed. - Joe will be discussing the practicalities of enabling these concepts at the Telco 2.0 exec brainstorm, on 6-7 May in Nice]

To share this article easily, please click:

Comments

Hi Joe,

Good article as always and I definitely agree with the main thrust.

But do you really see content/website owners like HBO paying telcos for "preferential treatment"?

Is this not just the same approach that was labeled "discriminatory intent" and comprehensively shot down a few years ago when tentatively raised by some telcos?

There followed a sometimes justified drubbing of the telcos for their inability to find viable revenue models and the ensuing miasma of Net Neutrality twisted knickers...

Post a comment

(To prevent spam, all comments need to be approved by the Telco 2.0 team before appearing. Thanks for waiting.)

Telco 2.0 Strategy Report Out Now: Telco Strategy in the Cloud

Subscribe to this blog

To get blog posts delivered to your inbox, enter your email address:


How we respect your privacy

Subscribe via RSS

Telco 2.0™ Email Newsletter

The free Telco 2.0™ newsletter is published every second week. To subscribe, enter your email address:

Telco 2.0™ is produced by: