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Article

Up Your Game, Not Just Your Network

Understanding the centrality of billing to success in 4G

4G represents a significant challenge and opportunity for CSPs. The opportunity to drive revenues by enriching the customer experience can only be realised by meeting the challenges that 4G poses head on. And these challenges are numerous, spanning technology, finances and user experience as CSPs strive to meet the ITU-set timescale of 2012-15 for global commercial roll out.

When writing this report, 156 CSPs in 64 countries had announced they were investing in LTE and 113 of these had made commercial commitments, according to the Global Mobile Suppliers Association (GSA). 4G-badged services are currently operational in several countries including Sweden, Norway, Germany, Uzbekistan, Hong Kong, USA, Poland, Austria, and the list is continuously increasing.

These commercial commitments are multi-billion dollar investments coming at a time when many have yet to reach profitability on their 3G investments. An assessment of CSPs’ return on capital investment, when compared to cost of capital, reveals several of them are eroding capital value. And now, they will be investing considerable sums deploying new packet switched transmission networks and launching 4G devices, innovative services and content made possible by 4G’s high speed data.

Unsurprisingly, excitement among users is palpable, because 4G promises the delivery of high definition movies and videos, 3D experience, graphic intensive games and a host of other such services on their mobile devices.

What does 4G mean for CSPs’ businesses? Some of the key implications are on:

  1. Speed-to-market
  2. Scalability
  3. Costs
  4. Customer experience

Meeting customers’ service expectations and reducing time-to-market
Compared to its predecessors, 4G delivers much higher levels of data speed and reliability. On 3G, consumers trying to access bandwidth hungry content such as movies and games while on a train or at the beach, continue to struggle with download speeds. Experiences like these constrained the average revenue per user (ARPU) CSPs could generate. 4G is set to overcome such hurdles by maximizing revenue through providing a truly reliable service.

To leverage such network enhancements, CSPs will need to be quick in:

1. Launching a host of 4G compatible mobile devices (smart phones, tablets, etc)

2. Bringing innovative services and attractive bundles to customers, and

3. Incentivizing purchasing through customer and time relevant promotions

CSPs with smart billing infrastructures that support rapid introduction of new devices, services and promotions will gain clear competitive advantage in a 4G world. They’ll be able to respond to customer demand and technology innovations with new products and services within hours or days, rather than months (some CSPs take as long as 13 months to launch a new service on a host of legacy systems).

Scalability to meet higher number of 4G transactions
Infonetics has forecast 165 million LTE subscribers by 2014, and Informa research suggests smartphones account for almost 65 percent of mobile traffic (average traffic per smartphone user will increase 8-fold by 2015).

These statistics are clear indications of the potential increase in scale of operations contributed by 4G. In a world where all-you-can-eat is on the decline, and pay-per-use type of business models on the rise, CSPs with legacy revenue management systems have a cause for concern. Such systems are not designed to handle fast scaling up of operations and will be unable to handle the pace of incremental change in transaction volumes or handle mechanisms to alleviate these transaction volumes such as smart aggregation.

Better cost control and lowering operational billing costs
Executive boards, along with their shareholders, are wondering if they will see a return on 4G investments and hoping it will be sooner than 3G.To avoid the 3G episode of struggling to hit profitability, CSPs will have to get a tighter grip on costs in all business areas, including revenue management.

Billing systems with low operational costs are key in controlling 4G spends. Such systems offer a high degree of automation alongside minimal manual intervention, as well as speeding up processes that would otherwise consume major resources within billing departments.

Billing teams are able to focus on ensuring their systems support newly emergent personalized and self-managed services, rather than micro-managing the bad debts that result from the input errors, over and under charging, and bill disputes inherent in systems with a lesser degree of automation.

In a survey of CSP marketing and technology executives earlier in the year, Yankee Group identified expense reduction as the top priority for 2010 and among the top two priorities by 2014. The survey report said, “The drive to reduce opex sits above all other sources of investment motivation, so much so that it crosses all boundaries of CSP type, wireless generation, or geographic region.”

Delivering superior customer experience
4G markets are already showing intense competition. Already three CSPs in Sweden have commercially launched 4G services, and this is just an indication of the competitive road ahead. Ensuring customers have a good service experience is critical to justifying large scale network upgrade investments.

Revenue management or billing systems can help CSPs deliver a superior customer experience. Accurate billing delivered by smart systems is one way; another is by giving customers the control of their subscriptions. In a 4G world, where networks support the delivery of a wider variety of services and content in the hands of customers, parents and employers will want to control what their children or employees have access to and when. Hence making PCRF (Policy Charging and Rules function) a critical component in the 4G delivery engine.

PCRF with its bandwidth tracking and throttling capabilities, not only provides operators the opportunity to offer and monetise tiered internet access, but also ensures high ARPU customers receive quality of service they are promised. All this is extremely critical in a 4G context where capacity issues can quickly run the risk of slowing data access or even terminating voice coverage to subscribers.

The smart way to optimise revenue management
All these revenue-generating options are feasible alongside tight cost control. CTOs and CIOs are already fine tuning their business models with smarter billing systems that:

  • Are technology agnostic and scalable
  • Have low ongoing operating costs
  • Offer agility, flexibility and real-time intelligence
  • Support service customization and self-management
  • Support any combination of bundles and tariffs
  • Allow sophisticated retailing and branding experiences
  • Enable new launches in hours and days, not months

Convergys has a track-record of delivering smart revenue management solutions for CSPs around the world in retail, wholesale and enterprise environments, surpassing agreed service levels and developing strong ongoing relationships with providers.

More Stories By Mohammed Sha

Mohammed Sha is the Director of Product Marketing at AsiaInfo-Linkage, the supplier of the world's most advanced software solutions and IT services to the telecommunications industry.