Clarity is best: why neutrality might actually help introduce new tariffs

Welcome to the Spring edition of Evolve. The latest round of soul-searching for the mobile industry probably started at Mobile World in Barcelona in February, where Google wheeled on its CEO, Eric Schmidt, for a spot of telco-schmoozing. Eric did his job well and, despite a heckle or two and some obvious hostility, the industry attitude to Google was more thoughtful post-Eric than it was before.

Rather than resent Google mobile telcos are now looking to how they can get a share of what Google & Co earns by providing them with services, rather than by competing directly over the same things.

That now appears to be a settled view, albeit one soured slightly by some operators' insistence that Google & Co be taxed and the proceeds given to them. That's not going to happen, but from the telco point of view it's at least a hard-line negotiating position on net neutrality: they may not get the tax, but they might be allowed to manage traffic and to offer some forms of tiered service, as long as these are not too obviously discriminatory to content providers.

And those neutrality guidelines, when they come, will provide some certainty going forward for many operators, particularly convergent service providers such as GO of Malta which is that rare thing - 4-play provider.

In this edition of Evolve, Dominic Smith talks to GO's CIO, Alan Zammit, about his company's BSS/OSS challenges and the need to stay flexible as conditions change.

We have news of some Cerillion wins too: our new projects include a billing system implementation for an established MVNO in the UK; deploying Cerillion Express for a large prepaid operator in West Africa; and an end-to-end CRM and Billing solution for a multi-country Cable operator offering a full suite of Television, Voice and Data services.

As we point out in our main article on the demise of flat rate tariffing, operators need room to move on tariff structures if they are to have any sort of viable network business model going forward since smartphones from Google and others - and the applications they run - are consuming far more mobile broadband capacity than envisaged. Tariffs which reflect those costs and are capable of attenuating that consumption will likely not be popular with all users, but there is a sense in which a clear net neutrality regime will actually help operators introduce the new tariffs.

How so?

Because the likelihood is that the net neutrality we'll likely get on both sides of the Atlantic and beyond won't be as restrictive as both advocates expect and that operators fear.

A close reading of the comments from the FCC and the European Commission, for instance, shows that net neutrality is not about ISPs treating users the same - it's about treating providers fairly and not manipulating the network to favour one over the other.

It should allow differential tariffs and perhaps even classes of service for users who want to pay for them, as long as the classes are assigned on an 'application type' basis (say for all VoIP services) rather than on a discriminatory basis (to kill Skype, for instance).

That sort of devilish detail will make all the difference to what neutrality will and will not mean in practise and - once the principles are in place - will make it easier for ISPs/telcos to introduce volume-based tariffs, service tiers and various sorts of traffic management without being shouted at by users on the basis that they're outraging 'neutrality'. Clarity is always best.

Speaking of which, we also have a link to a new Webinar on Total Convergence - Delivering the Solution for Next Generation Convergent Services. Don't miss it.

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The Flat-Rate Debate – Part 2

At February's Mobile World Congress in Barcelona, the dreaded words 'dumb pipe' were uttered once again as several keynote speakers raised concerns about Operators becoming purely an access mechanism for a plethora of 'over-the-top' service providers. Becoming a dumb pipe is widely (and quite rightly) regarded as being bad news for Telcos, however over the last few years it seems that the behaviour of many Operators has accelerated this slide towards commoditisation of their network services.

The insistence on trying to lock-in users to a limited range of proprietary value-added services has only helped Apple, Google, Facebook and the rest, to gain a greater foothold in the battle for who 'owns the customer'. Where Operators struggle with these services is that they simply do not have the resources to try and be all things to all people. So, for example, an Operator's instant messaging application is always going to be second-rate in comparison with MSN or Skype, which are network independent and already have the online user base which is so critical to their success.

Also, the huge all-you-can-eat packages, followed by the inevitable price war amongst Operators, may have helped drive take-up of data services, but at what cost? Many Operators have been topping up their margins through exorbitant usage-based roaming charges, but now the regulators have stepped in and are imposing a reduction in data roaming charges the business model requires much closer scrutiny.

Mobile Data Explosion

Two years ago, I wrote in the original Flat-Rate Debate feature about the increasing load on the fixed broadband networks as a result of bandwidth intensive services like the BBC's iPlayer. This situation today has moved on from being predominantly a fixed broadband issue, to one that now affects all mobile broadband offerings too.

There is much talk of smartphones, and the iPhone in particular, being the main driver behind all this data growth. In fact I've heard suggestion that the average iPhone user is the equivalent of around 400 plain old voice / SMS users in terms of network usage. However, the latest industry figures indicate it is the mobile broadband 'dongles' and 'tethered' mobile data connections that are causing much of the network congestion.

Ericsson has just reported that in December 2009, mobile data traffic surpassed voice for the first time. A landmark moment for the industry. This is further explained that 400 million mobile broadband connections are generating more network usage than 4.6 billion mobile subscriptions. However, there is no comment as to the revenues generated by the mobile broadband users compared with the traditional subscriptions, but it's probably safe to say that data user ARPU is not ten times voice ARPU.

As this data usage continues to grow (Ericsson are forecasting that it will double every year for the next five years), it is going to dictate a radical change in how the mobile networks are designed and dimensioned, and this in turn means more network investments. But with the current 'all-you-can-eat' business model this is simply not sustainable.

Customer Experience

In the billing industry, we have been explaining the merits of value-based billing and 'real-time' for many years now. However, it seems that the rest of the industry is finally waking up to the need for a more sophisticated approach to pricing services.

At this point I should clarify that sophisticated should not mean complex – simplicity for the consumer remains absolutely critical – but it means providing an intelligent mix of convergent charging and dynamic policy management tools to control, engage, and reward consumers for their data services usage.

The most often cited examples involve throttling bandwidth on high users who abuse a service, or applying premium charges above certain usage thresholds. However, there are many more examples that can be used in a more positive and proactive way to incentivise and reward users for a particular type of activity. For example, offering a cross-service 'booster' to increase broadband speed when a user reaches a certain level of voice usage, or upselling increased bandwidth on demand for special high-value events.

Engaging customers with real-time information on consumption, pricing and promotional offers will all be key elements in building the 'customer experience' that has become the telecom industry's new Holy Grail.

Changing Attitudes

Though the dumb pipe has reared its ugly head once more, there is some light at the end of the tunnel.

Previously, the solution was seen in the applications and value-added services that an Operator could provide. In fact, many Operators have spent millions on trying to build specialist applications that will secure their share of the content and applications market. But as we have seen, this strategy is fraught with danger due to the volatility of the consumers and the rapidly changing applications ecosystem.

There now seems to be a significant shift in Operator attitude and a recognition that billing, charging and policy management are all critical components required to create value in the customer relationship, and to realise the return on the investments that are being made in the networks. Leveraging their customer billing relationships and making it easy for trusted third parties to access billing services will be key ingredients for Operator success in an applications-centric environment.

Flat-rate is unlikely to disappear completely, but it will need to be carefully positioned and smartly combined with other value-based pricing schemes and policy controls that will deliver on the customer experience promise to the end-users. The big challenge then is to either re-educate customers who have become accustomed to all-you-can-eat plans and over-the-top services, or to entice the advertisers to fund all or part of their services.

Dominic Smith
Dominic.Smith@cerillion.com

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On-Demand Webinar – View Now

Cerillion recently presented a live webinar with the TM Forum: Total Convergence - Delivering the Solution for Next Generation Convergent Services.

Most of today's communications service providers have business support systems that have evolved separately for their prepaid and postpaid customers. These systems run completely independently and yet carry out very similar functions. The approach is neither efficient nor cost-effective and makes it very difficult to implement new services quickly and consistently.

Driven by the necessity to develop and sustain their customer base, grow average revenue per user (ARPU) and lower capex and opex, operators have reached the critical point where they must embrace the convergence of their prepaid and postpaid platforms in order to survive.

Featuring Simon Matthews, Cerillion's CTO, and Karl Whitelock, Senior Consulting Analyst OSS/BSS Global Competitive Strategies at Stratecast, a Division of Frost & Sullivan, the webinar explains how Cerillion's Total Convergence Architecture (TCA) provides a blueprint to clearly identify convergence challenges and quantify the benefits that can be achieved through implementation.

Watch this webinar now, and learn how to:

• Understand the challenges of unifying prepaid and postpaid infrastructure
• Find out the benefits to be achieved
• Identify convergence goals
• Define clear strategies for achieving convergence and prioritizing BSS investments

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Interview with Alan Zammit

In this issue of Evolve, Dominic Smith talks to Alan Zammit, CIO of GO, Malta, about the BSS/OSS challenges they face, and how working with Cerillion is helping them to achieve their goals.

Alan Zammit CIO, GO

DS: Hi Alan, tell me about GO, what market(s) are you in, what products and services do you provide and what is the company's vision?

AZ: GO has been providing telecom services in Malta for more than 35 years, originally as the fixed line incumbent, then introducing the first nation-wide dial-up services in the early 90's and subsequently adding broadband in 2000. The mobile arm of the group was set up in 1999, with the most recent addition to our business being TV in 2007, making GO the first and only 4P (quad-play) provider. However, like other operators in our position, this is not the end of the line. We are not limiting ourselves to those 4Ps only, and will certainly be looking at ways to provide additional value to our customers and add any other potential revenues streams that come our way in the next 3-5 years. GO is by far the largest communications and entertainment provider in Malta with well over 480,000 customer connections.

DS: And can you tell me about your role as CIO? What's a typical day in the life of Alan Zammit?

AZ: My role as CIO is to balance the operational needs of today with setting the IT strategy to support our business plans for the future. I begin and close the day looking at commercial priorities, and trying to figure out how we rationalise or optimise our BSS/OSS systems to make sure that the challenges we currently face in bringing new offerings to market are made easier in the near future.

IT must be applied to a specific context. I believe that in telco, specifically, there is a very significant accent placed on IT serving the commercial purpose. What I mean is that if GO was operating in a different industry, then for example, the importance of an advanced ERP solution would be a main focus. Whereas, in the context of providing telecoms services, our capability to go to market in commercially viable time frames and our capability to review and enhance the way we operate on a regular basis is critical. We must also position ourselves for multiple future technology streams.

Taking LTE, for example, there is certainly a huge potential for that to become the dominant mobile technology within a fixed-mobile convergent environment, but no operator like GO can make that assumption at this point. So you have to work on LTE in parallel with WiMax, whilst supporting fibre-based initiatives, simultaneously. From an IT perspective, this means we need to have the base platforms, the CRM solutions and the end-to-end solutions to cater for all of these, but without knowing which wave of these technologies will be dominant in the next 2-3 years. The underlying necessity is to be as flexible as possible, and being able to switch gear within a 12-18 month timeframe.

I think GO like many other operators has its share of legacy systems, and the legacy is the main contributor to our time-to-market challenges. A key aspect to my role is to make sure we are as nimble as possible. The main issue is that if you focus on product development and accelerate your time-to-market without putting in the necessary IT considerations then that's just a recipe for failure. So it is about trying to pin point the ideal trade off between improving time-to-market and resolving past issues, whilst not building up issues for the future.

DS: Can you tell me about the competitive landscape in Malta and the challenges you face?

AZ: Malta is a special market, with a core domestic customer base of around 400,000 customers. Although it's quite seasonal in nature, and the actual target audience can go up to around 1m customers.

For the past two decades, the two main competitors have been Melita and Vodafone Malta. Melita was the incumbent TV operator but more recently has introduced mobile and data services; whereas, Vodafone provides mobile telephony and data services. The first of a number of virtual mobile operators was launched in 2008.

The wide range of service offerings available to domestic customers, typically offered in larger and mature markets, in addition to the complexity of lower economies of scale dictated by such a small market, tend to put GO in a challenging but rewarding position.

DS: How does all this translate into your BSS / OSS strategy? What current initiatives or projects are you undertaking within GO to retain your leadership position in the market?

AZ: We use the best-of-breed approach for BSS / OSS applications. This means having the best solution possible for the rating, tariffing and core billing activities, and the same applies to the way in which customers are managed – be it an integrated CRM solution or a portfolio of CRM related applications.

Starting in 2009, we have embarked on a process to identify and where applicable consolidate and/or replace existing system components with the best solution available for specific GO business processes – in particular for our engineering systems and commercial business units. For example, if you want to be able to rate prepaid and postpaid usage across the 4Ps then you definitely need the downstream postpaid billing engine – in our case Cerillion – but you also need SOA-based integration components which interwork with the network's real-time call control / session control systems. I believe that in the best of breed approach, at this point in time, session control is best provided by network control systems and not IT. Tying in a postpaid system with a real-time environment, and the integration between postpay and real-time payment methods is particularly relevant to us, because as a 4P operator you would like to provide a combination of different products, some of which require real-time elements and some do not.

So we have defined a systems architecture which ultimately spans and services the whole 4Ps across all BSS / OSS functions. We believe that the implementation of these highly specialised systems is the only way to reduce legacy and also to be able to go to market in much more realistic timeframes – reducing from a couple of months for a specific feature to significantly under one month.

One of the major projects today is the migration of our mobile services onto the Cerillion 5 platform and the retirement of the legacy mobile billing system. This will enable us to realise all the benefits of managing a unified product catalogue and billing for all 4P services on a single platform. Once completed, we will be able to re-organise ourselves in such a way that we can focus all our energy on our systems of choice, and I'm sure that the quality and timeliness in coming up with new products will go beyond what people are normally expected to see.

DS: GO has been working with Cerillion since 2001, how has the relationship developed and how is Cerillion helping you with your current initiatives?

AZ: We started working with Cerillion on a project to migrate fixed line customers onto Cerillion which was very successful. This was in 2001, well before GO was reorganised into a 4P operator, so that is what made sense at that time. We have undergone a number of upgrades since 2001, but the key point in time where we really started to consider Cerillion as the best-of-breed for billing is when we upgraded Cerillion to the latest release, Cerillion 5, in 2009.

Though we had previously undergone a number of minor upgrades, the main reason for making a significant upgrade to Cerillion was to allow us the opportunity to consider Cerillion as the strategic billing system for the future. Based on the very smooth and successful upgrade to Cerillion 5 last year, that was the realisation point where we decided that it was viable to have a single billing system for all products and that was the launch pad.

In the meantime, TV and broadband services were also merged onto the Cerillion 5 system, and we also upgraded to the latest Interconnect Manager system which was also a very successful project. So it has been a fairly rapid succession of upgrading to the latest system, bolting on the TV and internet services, being able to produce single bills and reasonably complex bundled offers on that single platform. And that in itself put us in the perfect position to start this new project at the beginning of 2010 to migrate mobile services onto Cerillion, and we are expecting to cutover in Q3 this year.

DS: And finally, what is it like working with Cerillion?

AZ: I've seen a change in the nature of our relationship, particularly in the last 12-18 months, and a much greater alignment between the two companies as a result. Cerillion is now very receptive to understanding what GO's strategy is and where GO wants to be in 3 years time. Cerillion has made a significant effort to adapt to GO's needs, rather than just pushing its own products and modules, and that encourages me a lot.

The second change is more organisational. There is realisation in both GO and Cerillion, that even if you have a solid, fit-for-purpose product, you still need to match the right people at GO with the right people at Cerillion, and that matching is the healthiest thing that I have seen in our relationship. For the Cerillion 5 upgrade and then the Interconnect Manager upgrade, we used a particular Cerillion team, and then with the appropriate account management we realised that we needed a different team for the mobile project – because this needs more mobile expertise. And that type of flexibility I see as being very positive. If the relationship continues to be based on flexibility both in terms of product and relationship then we are just fine.

And this is the reason we selected Cerillion as our strategic billing partner. I see many vendors who just push their standard 'cookie cutter' product which is OK for you, but in practice every market has its own sensitivities so there's no standard template ever that will work. Adaptability and flexibility of the vendor is critical – and that is where Cerillion meets our needs.

DS: Alan, many thanks for taking the time out from your busy schedule to talk to Evolve.

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Three New Customer Wins for Cerillion

London, 11th February 2010 – Cerillion Technologies, a leading provider of next generation customer management systems, today announced it has been selected by three new clients for major CRM and Billing projects in a very successful first fiscal quarter of 2010.

These projects include a billing system implementation for an established MVNO in the UK; deploying Cerillion Express for a large prepaid operator in West Africa; and an end-to-end CRM and Billing solution for a multi-country Cable operator offering a full suite of Television, Voice and Data services.

Cerillion's Total Convergence Architecture (TCA) is creating significant traction in the market, and these new customer wins further underline the flexibility of the Cerillion product suite in supporting an extremely diverse range of services and business models.

"Following our strong results for 2009, I am delighted to report continued success at the start of this year with these three new customer wins," commented Louis Hall, CEO, Cerillion Technologies. "Operators are recognising the need to upgrade their BSS and OSS infrastructure as they seek to gain a competitive edge in their respective markets. And our pre-integrated product suite is proving once again to provide the time-to-market advantage and is helping to create new opportunities for revenue growth."

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