Going for Value

Welcome to the Winter edition of Evolve. In this issue we’re wrestling with the value concept and we’re asking: why do some politicians and regulators seem obsessed with turning telecoms into a commodity? We think that’s the direction of travel indicated by the detailed meddling in telecoms tariffs currently being pursued by the EU Telecoms Commissioner, Viviane Reding, in her quest to reduce roaming and termination rates across Europe.

We say, instead of applying the dead hand of ‘cost-plus’ accounting to the highly successful European mobile industry, we think the Commission should recognise how important value-based pricing has been in establishing innovations like seamless roaming. It’s a telecoms miracle and is one of the reasons GSM is a world-beater. We don’t think the industry’s value-based approach should be thrown away and we explain why in this issue.

By the same token the ability to innovate and refine services is central to a customer-focused, value-based communications business. We introduce our readers to Cerillion Service Manager. This Service Lifecycle Management product is a way of applying structure and automation to service delivery - from design, service creation and provisioning through to ongoing management and personalisation, it’s an important way of really getting to grips with the increasing complexity of the services environment.

And we bring news of one of our latest customer wins. Not only is start-up mobile communications provider, Econet Wireless Kenya, set to go live with our Interconnect Manager solution, but it will also be deploying our new pre-integrated and pre-configured CRM and billing solution, Cerillion Express. This provides all the elements required to support a communication provider’s ‘value-based business’ in an off-the-shelf package, from initial sales and order handling to billing and collections.

Which brings us neatly back to the importance of pricing for value in mobile and why we think it’s crucial to avoid the commodity trap. Let us know what you think about the role and track record of regulation in this issue’s reader opinion survey.

The results of our last survey on FMC highlighted the importance of designing the right business model if that technology is to succeed - preferably a model which produces well-designed, appropriately-priced propositions focused on a specific target markets.

That’s the best route to delighted customers - slugging it out on a lowest-cost commodity basis isn’t.

Roaming with the Regulators

Barely a week goes by without EU Telecoms Commissioner, Viviane Reding, making the headline news in the industry. Since being named “Most Influential Person in Telecoms” at the World Communications Awards 2007, she has continued to champion the consumer and feel the wrath of the telecom operators with a raft of changes and proposals to the regulatory regime across Europe.

Last year’s big news item was of course the slashing of roaming rates within all 27 EU states. Seamless roaming is a major factor in why GSM has become the most widely used standard for mobile communications. The ability to arrive almost anywhere in the world and turn on your GSM phone and it “just works” is something of an engineering miracle.

This ubiquity of service has been a key driver behind the growth of mobile and has led to it becoming an integral part of society in the 21st century. Originally the preserve of international business travellers, it is now entirely normal for consumers to rely on their mobiles whilst travelling the world over.

Eurotariff

The so-called “Eurotariff” came into force in the summer of 2007 setting price caps at €0.49 per minute for making calls and €0.24 per minute for receiving calls anywhere across the EU member states. A year on and the limits have been dropped to €0.46 and €0.22 respectively, with further reductions to €0.43 and €0.19 set to come into play by next summer.

But whilst consumer groups will be happy with the reduced prices, what has been the impact on the operators?

Roaming has traditionally been a very significant source of revenue for mobile operators, so it was no great surprise that this was an area to be targeted by the regulators. However, the case was made that whilst the price per minute was being forced down, the increase in minutes of use would more than make up for the damage done.

Earlier this month, the mobile operators in Austria united to release the results of a study of the impact of the Eurotariff, conducted by the Helmut Schmidt University of Hamburg. And the results make pretty grim reading. Having reduced their tariffs by an average of 43% to meet EU price caps, they have only achieved growth in minutes of use of 3.7% for calls made and 10.3% for calls received. The net effect of this is a reduction of roaming revenues of 41.4% for calls made and 37.4% for calls received within the EU.

Analysis of the impact of the Eurotariff in other countries is yet to emerge. However it would be something of a surprise if operators elsewhere reported it as a resounding success. So are the EU lawmakers in any way accountable for the results of their policies? Their initial analysis pointed to roaming prices being relatively elastic – i.e. the change in price would be more than made up for by the increase in minutes of use. But the experience of the operators in Austria indicates this is not the case, so far.

Roaming Shortfall

Clearly in a commercial enterprise, you can’t take away with one hand without expecting to give back with the other. So whilst consumers travelling within the EU have benefitted from lower prices, those from EU states travelling to non-EU countries have been faced with significant price rises as operators look to make up for the Eurotariff shortfall.

Research conducted by Informa shows EU roamers are now paying much more to call home when roaming in non-EU countries. For example, German roamers in Africa are now paying up to 160% more than two years ago, whilst Spanish mobile users have been hit with 30% price rises across many non-EU destinations.

Following the “success” of the Eurotariff for voice roaming, SMS and Data tariffs are next in the firing line with rates set to fall dramatically from summer 2009. It would seem that the EU Commissioner is keen to emphasise that current prices are disproportionate to the actual cost of delivering the service and this must be rectified.

Commoditisation

Having worked in the telecoms billing industry for nearly 15 years I find it somewhat concerning that the powers that be seem to want to commoditise our core telecoms services. Setting retail prices based on a cost-plus model goes wholly against the concept of value-based pricing that the industry has championed for so long.

If ever there was a fast track for turning operators into the dreaded “dumb-pipe”, it would seem to be such tight regulation of the tariffs that can be offered. There’s a real danger of this stifling the innovation that operators strive so hard to achieve.

With the threat of the Eurotariff several operators took pre-emptive action by introducing new roaming packages to provide better value for money for their customers. Take Vodafone, for example, who launched (and continue to offer today) their “Passport” service giving preferential roaming rates within the Vodafone family of operators. For a UK subscriber, the service works by setting a fixed fee for every call made and received whilst roaming and then applying standard UK tariffs including use of bundled minutes.

Looking outside the EU, Zain has created the compelling “One Network” roaming proposition which offers borderless roaming in 15 countries across Africa and the Middle East. Under this service, customers pay no roaming surcharges and have the benefit of paying local rates wherever they are in the network with no charges for incoming calls. This is something that the EU lawmakers can only dream of.

Transparency

Vodafone Passport and Zain’s One Network are just two examples of the innovation that can be achieved and the benefits that can be delivered to customers. However this is not a one-way street. Schemes such as these are the way in which operators can differentiate from their competition and build loyalty amongst their customer bases but this becomes a huge challenge when the market is tightly regulated.

Clearly regulators have an important role to play in ensuring fair competition, however the very nature of the communications industry is that it is global. So whilst Commissioner Reding can tinker with pricing structures in Europe, the knock-on effect further afield is beyond her control.

Whilst roaming prices continue to be pushed in one direction, the latest EU proposals also introduce the need for operators to provide improved transparency of roaming prices. This includes delivering an “Advice of Charge” so users know what tariff will apply when roaming and the ability for customers to set their own spending control limits.

If the EU proposals are approved, this will result in online charging becoming the de-facto standard for managing both prepaid and postpaid roamers as usage must be managed in real-time. With consumers concerned about the credit crunch, the sooner operators can offer this visibility and control over roaming spend the better. This should build confidence amongst users and help drive up roaming usage without customers fearing a huge bill when they return home.

Dominic Smith
Dominic.Smith@cerillion.com

Econet Wireless Kenya Implements New Interconnect Solution from Cerillion

London, 11th November 2008 – Start-up mobile communications provider, Econet Wireless Kenya is set to go live with the Interconnect Manager solution from convergent billing and interconnect specialist, Cerillion Technologies.

Econet is part of Econet Wireless International, a well-established diversified telecommunications group, with operations in more than nine countries in Africa, Europe and the East Asia Pacific Rim. The expansion into Kenya has been made possible due to substantial investment by Indian telecoms company, Essar Communications Holdings.

Under the agreement, Cerillion Interconnect Manager will support Econet in achieving its revenue assurance goals by enabling it to bill interconnect partners accurately and to efficiently reconcile invoices received. “Cerillion stood out as providing the ideal interconnect solution for our demanding requirements,” confirms Michael Foley, CEO, Econet Wireless Kenya. “As a start-up operation, it is essential that we generate interconnect revenues and effectively manage our national and international interconnect costs from day one” he added.

With an existing customer base in West Africa, the agreement with Econet provides the opportunity for Cerillion to expand its footprint into East Africa for the first time. “The fast-growing African telecoms market offers many exciting opportunities,” says Louis Hall, Cerillion’s chief executive. “The need for efficient interconnect management is becoming an increasingly urgent issue for operators requiring revenue assurance and efficient settlement.”

Hall believes that this marks the first step in what he hopes will be an expanding and mutually beneficial relationship: “The agreement is based on a group licensing model, which will enable Econet Wireless to roll out similar schemes into other African countries in the future,” he confirms.

Econet Wireless Kenya Chooses Cerillion Express for CRM and Billing

London, 17th November 2008 – Start-up mobile communications provider, Econet Wireless Kenya is set to go live with Cerillion Express, the new pre-integrated and pre-configured CRM and billing solution from Cerillion Technologies. The news follows on from Econet’s recent decision to install Cerillion’s Interconnect Manager system.

Cerillion Express provides all the elements required to support a communication provider’s business in one off-the-shelf package. Utilising core elements of Cerillion’s bundled component product suite, the solution covers the entire customer lifecycle from initial sales and order handling to billing and collections.

“We were attracted to Cerillion Express because it facilitates rapid time to market,” says Jitendra Sharma, General Manager, IT at, Econet Wireless Kenya. “Cerillion’s solution can be implemented quickly and cost-effectively because it is pre-configured and pre-integrated. This has allowed us to accelerate our service roll-out plans.”

Cerillion Express also supports the integration of prepaid and postpaid functionality. This has enabled Econet to achieve competitive edge by offering both types of service to customers from the first day of their operation.

Michael Foley, CEO, Econet Wireless Kenya comments: “The mobile-specific nature of Cerillion Express and the ease of integration it supports has been critical in enabling us to meet all of our tight project deadlines and we are confident that it will allow us to provide all our customers with the best possible service from launch.”

Louis Hall, chief executive, Cerillion Technologies says: “The ability of Cerillion Express to grow in breadth and sophistication to keep pace with users’ expanding needs makes it ideally suited to a rapidly-growing operator like Econet. We believe that Econet’s decision to implement Cerillion Express is particularly significant not only in marking the first installation using this pioneering new deployment model but also in signalling a further key step in the growing business relationship between our two companies.”

Spotlight: Cerillion Service Manager

Cerillion Service Manager is a complete service lifecycle management solution for fixed, mobile, IP and content services.

Cerillion Service Manager – Overview

Increasing competition and the convergence of networks and devices dictates that to differentiate their offerings, communications providers must manage an evermore sophisticated and broad set of services. Whether it be fixed operators launching mobile and convergent services, mobile operators adding broadband to their portfolios, or new virtual operators re-selling a full suite of telecoms and content services, it is essential that the complex portfolio of service capabilities are transformed into easy to order and simple to use products.

Stovepiped OSS and BSS systems, designed for a single service type, slow down new service rollouts and inhibit service flexibility, leaving operators at the mercy of their more agile competitors. In this environment, being able to efficiently manage the complete service lifecycle, from network capability and service creation, to customer order and service personalisation, is one of the critical factors for on-going operator success.

Cerillion Service Manager provides a complete closed-loop service fulfilment solution, which enables efficient network resource utilisation and turns new service capabilities into new revenue streams, fast. Combining service order management and provisioning with an integrated network inventory and comprehensive product catalogue, Service Manager provides the power to reduce time-to-market for new services and deliver improved levels of customer satisfaction and loyalty.

Reduced time-to-market for new services

Service Manager quickly turns new network and application capabilities into new revenue streams. From network resource management and service creation, to product catalogue and service order management, it provides a complete closed-loop service fulfilment solution for the new generation of telecoms services. The intuitive product catalogue enables new services to be developed rapidly by assembling proven service components, reducing provisioning errors on complex products and bringing down time-to-market considerably.

Increased operational efficiency

As the industry evolves towards all-IP networks, managing an ever-increasing product and service portfolio is becoming a huge burden on operator resources. If launching a new service means deploying new systems or extensive customisation to the existing OSS, then the cost of delivery may invalidate the whole business case for each new service. Service Manager helps address this challenge by reducing the amount of customisation required to launch new services, and providing a fully integrated solution which avoids users having to switch between multiple systems to complete a customer order.

Improved Customer Services

Service Manager helps boost customer satisfaction and stave off churn by ensuring service integrity throughout the fulfilment lifecycle. Embedded workflow management controls the entire fulfilment process, linking together automated actions and manual activities based on business rules and time dependencies to ensure that promises to customers are kept. The integrated network inventory means that commercial services are based on real network capabilities, and customers are presented with the nearest alternative if their first choice of service is unavailable.

For more information about Cerillion Service Manager, please contact info@cerillion.com.