OSS/BSS Explained, Part 2: Seizing new business opportunities

OSS/BSS Explained, Part 2: Seizing new business opportunities

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  ▶The use ofmobile broadband continues to skyrocket. Ericsson’s most recent Traffic and Market Data Report, published in June 2012, states that in the second quarter of this year, mobile-broadband subscriptions surpassed the 1 billion mark, and that data traffic rose by 14 percent during the first half of 2012. Between the second quarter of 2011 and the second quarter of 2012, traffic doubled. Ap- proximately 40 percent of all phones sold worldwide in the second quarter of 2012 were smartphones, although only about 15 percent (about 945 million) of the worldwide installed base of subscriptions comprised smartphones as of that date – indicating that there is considerable scope for further growth in this segment. This formidable growth illustrates that the shift toward the networked society is con- tinuing – and is gaining momentum as more and more services, as well as things, get con- nected. Two trends first, the embedding of mobile broadband in things and second, the rapid uptake of smartphones – are ­challenging the existing norms of the tele- communications industry in several re- spects, as explained below. 1. Introduction of new business models In the past, communications service provid- ers (csps) had very simple, consumer-­ focused business models and offered a small set of services. Today, communications is be- coming linked to almost everything, and the way in which both consumers and industry in general are using communications is forc- ing a change in business models. The most significant change in csp business models is the transition from a one-sided (consumer- focused) model to a two-sided one facing both consumers and businesses, in which the csp is becoming part of the business of oth- er enterprises, such as companies operating in the mining industry. This two-sided business model involves a combination of retail and wholesale elements and a scenario in which partners are also cus- tomers. Furthermore, it means that the csp becomes a channel for other services because it has a relationship with nearly all of Next generation support systems «« business development EBR #3 2012 • 49 OSS/BSS explained, part 2: Seizing new business opportunities The first article in this series focused on user experience and how the mobile-broadband trend is making existing OSS/BSS systems obsolete. Here, in the second part of the series, the crucial role of policy control and real-time charging is explained. iStockphoto
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  50 • EBR#3 2012 business development »» Next generation support systems the world’s consumers – it would be dif- ficult to find a better opportunity for busi- ness growth. 2. Changes in value chains csps are becoming part of the value chains for enterprises as communications begin to be part of the services offered by these en- terprises. As mentioned above, communica- tions services are not only for connecting people, but also for connecting things. For example, suppliers of mining equipment have started to embed communications de- vices in sensory and measurement solutions – which they in turn sell to mining compa- nies. Suddenly the csp has become part of the value chain for mining and processing raw materials. This means the csp has the opportunity to develop specific products and packages aimed at the mining industry, en- abling the latter to maximize the possibili- ties offered by connecting things. In addi- tion, the csp may even be able to take on a greater responsibility as an ict provider in the mining industry. Consumers using wcdma- and lte-­ connected smartphones can now utilize speeds that are becoming equivalent to those available on fixed networks. This applies es- pecially to users located outside of major cit- ies. This means that many services that were formerly available only for pcs with high- speed fixed-internet connections are now also available on mobile devices. This in turn means the csp is part of the value chain for these devices – and because it owns the con- sumer relationship for them, it can be an ac- tive party, taking on the roles of channel pro- vider and value-adding provider in relation to what are often referred to as over-the-top (ott) service providers. Many analysts agree that, in the near fu- ture, 90 percent of the data traffic in global networks will be video. It is thus safe to as- sume that video on demand (vod) will make up a large proportion of this video traffic – and that a fair share of it will be ott. This is already evident given the number of ott vod offerings currently available, such as Voddler, Netflix, Hulu and film2home, to name but a few. In terms of the relationship between the ott service provider and the csp, the for- mer wants to reach the latter’s mobile-broad- band subscribers, and as a result, the csp ­becomes a channel for the ott service pro- vider. Being a channel means being part of the value chain and having an active role in it. The csp’s role is to make its subscribers and resources available to the ott service provider so that the latter’s users benefit from a simpler and more predictable expe- rience when browsing and consuming avail- able ­video content. This requires integration between the csp’s oss/bss and the systems of the ott service provider. This integration makes it possible for the ott service provid- er to use the csp as a channel so that the csp provides value to the ott service provider and the latter’s users – who are also the csp’s subscribers. 3. New go-to-market models In the 1980s and 1990s, csps had a very sim- ple go-to-market model, and even though some mobile csps also used companies known as service providers (a model that was popular in the uk), the models employed were simple. In terms of the mining exam- ple above, it is plausible to imagine a scenar- io in which the mining equipment provider and the csp have a partnership that enables them to serve the mining segment efficient- ly. The csp thus uses the mining-equipment provider to enable it to target the mining seg- ment, supplying that segment with machine- to-machine devices. In the consumer segment of the market, a variety of cases already exist that demon- strate how csps have embedded communi- cations functions in consumer devices. For example, the Amazon Kindle e-book tablet includes a 3g subscription bundled with the device. This example is especially relevant because the Kindle user has no formal cus- tomer relationship with the csp for this em- bedded communications function. 4. A greater variety of service offerings Points one to three above indicate that csps are increasing the number of offerings they provide so that they can target a wide range of new users and partners. Specifically, csps are targeting industries they have not served to a significant extent in the past, and pro- viding them with devices targeted to their needs. All of this must be enabled by the csps’ oss/bss systems. In the examples above, the csp is using a basic set of communications services in “Combining policy control and real-time charging enables csps to provide ­competitive differentiation and maximum flexibility without having to make significant changes to the way they do business.”
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  EBR #3 2012• 51 Next generation support systems «« business development ­various ways to exploit the potential of the emerging networked society. The csp must be able to use its oss/bss to create and man- age a variety of offerings both to consumers and businesses. The business support functions within oss/bss play an essential role in providing the flexibility that csps will need in the fu- ture. Policy control is used to control access to various services, create virtual networks, and control the flow of traffic through mo- bile, core and fixed networks. It is also used to make sure devices and their subscriptions are utilized and receive service according to the terms and conditions defined in the sub- scription package. For example, a user whose subscription is intended to be utilized in the mining industry should not be able to watch videos on a tablet. Similarly, a tablet user (as in the Kindle example above) should be iso- lated from the network used by mining-­ industry subscribers. Finally, when a device used in the mining industry and a Kindle are served by the same communications infra- structure, one device should not affect the service supplied to the other. All this is made possible with policy control. Spending control Asmentionedinthepreviousarticleinthisse- ries,anincreasingnumberofconsumerswant to control their spending. In addition, opera- tors are clearly making the shift to differenti- ated mobile-broadband offerings targeted at smartphones,tabletsandpcs respectively.Al- though the industry is still at the beginning of this journey, it is clear that online real-time charging is required for most users to assure them of a positive user experience and give them control of their spending. Combining policy control and real-time charging enables csps to provide competi- tive differentiation and maximum flexibility without having to make significant changes to the way they do business. Consider, for example, a case in which the sim card for a user employed by a mining company is in- serted into a tablet. First of all, the tablet should not be allowed to connect to the in- ternet. As a result, when the tablet is switched on, the service provider’s policy systems will deny internet access, but the tablet’s browser will also be redirected to the csp’s portal, where the user will be informed that the subscription does not include ­internet access for tablets. It is important to recall that the sim card is an asset for the csp and that the latter should always be prepared to up-sell in relation to it. In this example, the csp should attempt to up-sell on the sim card by giving the user the opportunity to change the subscription. If the user is inter- ested, they should be presented with a set of offers to consider. If they then select an ­offer, the subscription will be changed from a mining-­industry subscription to a consum- er subscription. The policies and charging parameters must be updated in real time so that the user can start surfing. Although the above example may seem far-fetched, this kind of situation may very well happen in many business constellations in the future. It illustrates the importance of ensuring that policy and charging functions work together – to protect the interests of the csp and the mining-infrastructure pro- vider, and to ensure that the csp has the flex- ibility needed to seize new sales opportuni- ties as they arise. In this example, it is also essential that the subscription contract as well as the parameters in the device and net- work can be changed immediately. The ­user’s expectations should be the factor determin- ing when a subscription can be changed. These changes are made by what are known as fulfillment functions in oss/bss. These functions will be covered in the next article in this series. ● References • OSS/BSS explained, part 1: It used to be simple; now a massive ­transformation is required, Ericsson Business Review No. 2, 2012 • EricssonTraffic and Market Report, August 2012: www.ericsson.com/traffic-market-report Author ▶ Jaco Fourie is Senior Expert Business Support Systems at Ericsson’s Business Unit Support Solutions. He focuses on the evolution of the company’s Operations and Business Support Systems portfolio to meet the demands that the Networked Society will impose on next-generation support systems. Fourie began his career in data communication in the 1980s, working with the X-Series Standards for packet-switching. In the early stages of the introduction of GSM, he joined MTN South Africa and focused on value-added services and charging. He joined Ericsson in 1999 as Head of Product Management for Charging Systems. ([email protected]) Part 3in the upcoming issue of EBR (No. 1, 2013) will address the fulfillment functions in OSS/BSS.