In a period of rapid migration to next generation IP enabled services, charging strategies are becoming increasingly important. Service providers must be able to offer flexibility in the way subscribers consume services, their payment options and the way that charges are structured. One of the biggest challenges is to recognise and evolve new business models and the associated flexibility required of back office OSS/BSS applications.
Service deployment priorities and challenges
Market volatility, cost pressures and technology advancement have left many service providers facing difficult choices. New competitors are beginning to carve out slices of the market and next generation enabled services and convergent technologies are combining to pressure incumbent service providers to accelerate the roll out of new services as cost effectively as possible to sustain their competitive position. Service providers find themselves facing major challenges in respect of product, marketing, customer management and investment decisions.
Apart from cost containment, a key focus is to create more innovative and flexible service bundles and gain a better understanding of the source of value creation. Central to this challenge is the development of a compelling service deployment and charging strategy – delivering and charging for appropriate combinations of services, across possibly mixed network environments, to a range of different customer segments, supported by payment choice.
Today, consumers can access voice, data and content using a bewildering array of access options. Quite apart from voice communications, consumer targeted content and commerce (digital downloads, digital streaming, interactive content, online information and online commerce etc) creates complex revenue streams involving multiple partners in the service delivery chain. From a charging and revenue management perspective a number of issues are apparent:
- What charging models to deploy to enable subscribers to access and pay for content and data services?
- What settlement models to deploy to ensure adequate revenue share between content partners and service providers?
- How to integrate customer experience management, as part of the revenue model?
Creating a High Performance Environment
It is important to create a high performance environment for the control, delivery and charging of advanced services over multiple networks – ensuring value to the consumer, adequate margin for suppliers/partners and a healthy operating margin for the service provider itself. To succeed service providers must evolve and adapt to meet the content-centric needs of customers. They must dramatically reduce the time it takes to get new products to market and activate those services in real time to ensure customer satifaction. They must also evolve pricing schemes, offering flat-rate tariffs, volume-based tariffs, QoS based charging, innovative bundling and discounting as appropriate. Indeed, charging parameters now become part of the service itself, with real-time transaction management, improved customer interaction and active marketing strategies, driving on-demand consumption and interactive options to encourage usage and raise ARPU and AMPU (Average Margin Per User).
Embracing Service Innovation
Service innovation often involves creating a broad eco-system, which may include hundreds of content delivery partners. The proliferation of content, both re-mastered and new digital content from creators such as games publishers, film studios, music publishers and related media providers, offers the opportunity to create compelling new services for subscribers. Consumer behaviour is also changing, from passive consumption to being involved in the creation and production of digital content itself. For service providers to capitalise on these opportunities, requires a highly flexible infrastructure to deliver customised services to ever-smaller consumer micro-segments in real time via automated interactions and efficient service management options:
- Enable real-time transactional control and charging of all data, content and commerce services
- Introduce charging of services based on event type, data volume and customer experience
- Ensure bi-directional management of user-generated service requests (i.e. real-time interaction between OSS and BSS elements)
- Mitigate financial risks with variable, real-time credit supervision for all subscribers
- Introduce new charging services, flexible rating and customer loyalty schemes to reduce churn
- Offer transparent charging models, providing ease of interaction and confidence for partners
- Introduce dynamic account selection options to improve choice and reduce the operational costs associated with separate Prepaid and Postpaid charging systems
New Business Models
It is in the business models that service providers adopt that success or failure will be determined, rather than the enabling technology. Service providers must embrace new business models that can offset the price erosion of legacy services and compete against new innovative market entrants. For many it will be difficult to make far-reaching changes to established cultures and operating methods. For example, it can take months or even years for service providers to launch some products to market because of complex processes and inflexible infrastructures. These products become vulnerable to changing customer needs and tastes, new technologies, shortened product lifecycles and increasing competition. However, new media, entertainment and internet-based competitors are establishing new cultural paradigms that encourage and reward innovation and can accommodate faster development times and shorter product lifecycles. New business models will need to be created to address issues of user acceptance of content services as well as the more technical and creative considerations such as different advertising formats and techniques1.
If service providers are to deliver combinations of fixed and mobile voice communications, television, and broadband services over IP they will also need to adopt a more collaborative approach to the integration of services and technologies and manage a dynamic portfolio of services, while continuing to maintain all the necessary controls and best practices associated with revenue assurance and settlement.
IP Charging Practices
When introducing high-value data services, new complexities and risks for technical environments and charging models are added. For example existing IN platforms and Service Nodes supporting traditional pre-paid voice services often suffer from shortcomings when addressing next generation packet based services. Typically these systems lack functionality around multi session service management and non duration/data (bit based) event data records. Traditionally these sorts of platforms are responsible for charging and maintaining pre-paid balances. In many cases a service provider may want to continue using this platform for charging and balance management, but also find a more holistic approach to service management.
The management of premium content services has become complex primarily because the diversity of services available has introduced a large number of retail pricing models. Traditional flat-rate or volume-based pricing plans need to be re-thought and complemented to enable the uptake of new emerging data services. Service providers must offer new types of pricing models, tailored to more specific user groups (families, organisations, small businesses, students, pensioners etc). Well defined distinctions and choices associated with different services and even the types of subscriber micro-segments accessing these services, are more likely to attract and retain customers. This requires incredibly sophisticated business intelligence, as well as an understanding about how to extract granular information (event types, volumes, QoS , time of day, source, destination, discount structures, loyalty schemes, etc).
In addition to the need for more sophisticated business intelligence, another challenge is the extension of inter-activity to subscribers. New services introduce new pricing challenges with several media contributing to the cost, creating an uncertainty for the customer as to the actual price he/she may actually be paying for a particular service. Quite apart from offering 'Advice of Charge' options, other service control aspects may be necessary to manage access rights or usage thresholds (e.g. parental control over the amount and type of usage of their children's sub-accounts). Therefore it is necessary to offer the end user as much control as possible over their spending and consumption of services, whilst reducing the risk of exposure to fraud. Many legacy BSS/OSS do not support these new interactive requirements.
To overcome legacy shortcomings a real time bi-directional capability is required to sit between the network, OSS and BSS domains to manage and control access to services based on user profile information, and invoke an interactive dialogue with the user, offering choices about service payment and delivery, and maintaining a user context throughout the communications session. This can be achieved using a specialist IP adjunct mediation rating and charging application, to manage high availability and minimal latency for service delivery, which complements existing BSS infrastructure investments. This sort of approach delivers several advantages:
- Enables IP and content services to be easily offered to Prepay and Postpay customers
- Integration with current BSS/OSS infrastructure to reduce CAPEX and protect investment in existing infrastructure
- An adjunct approach allows the system to be independently managed and configured, so it does not disrupt other processes
- The approach should not require extensive CSR re-training
- An adjunct system should be capable of full integration with existing customer care systems
For this approach to work the adjunct solution must obviously be able to work with existing OSS/BSS (e.g. platforms holding the master prepaid balance, customer profile applications, rating & billing systems and content partner management systems etc) but it does remove the risks associated with protracted and costly infrastructure replacement projects.
In Summary
The delivery of new IP enabled services offers service providers the potential to create and develop new revenue streams and also reduce costs. To succeed, they will need to address the challenge of managing a diversity of business models and a multitude of partners. As they develop an IP enabled service portfolio they will require advanced real-time IP Mediation, Session Management, Rating and Charging elements that fill existing gaps in their OSS/BSS architecture, but do not unduly disrupt existing BSS/OSS infrastructure and revenue streams.
For many service providers, a pragmatic approach will be taken that accepts that a mixture of services will continue to be provided to customers and across a mixture of traffic types and networks for some time to come. In order to support this pragmatic model, service providers can deploy an adjunct IP mediation and charging approach, allowing either the gradual deployment of IP services, or even the launch of a complete portfolio of exciting new services. This model is also entirely consistent with the approach being taken by 3GPP in terms of IMS charging, thus opening the door to full scale adoption of IMS, an option which doubtless features in the strategic planning of many service providers.
Author: Simon Dadswell, Advanced Solutions Marketing Manager, Intec.
1Informa Telecoms & Media Research Report for Intec Telecoms. May 2007