Closing out the 2011 Comptel User Group

Another Comptel User Group has come to an end. Last week, nearly 200 communications service providers (CSPs), partners, industry analysts and Comptelians from around the world travelled to Helsinki to discuss OSS/BSS and the importance of marrying technology with business strategy – and to celebrate Comptel’s 25^th Anniversary.

Three major areas stood out, especially during Wednesday’s CSP presentations. First, and unsurprisingly, was managing the data and device explosion with OSS/BSS. Country host DNA Finland spoke about its application of policy control to help cope with subscribers’ demand for mobile broadband. The operator emphasised the importance of differentiation and network resource prioritisation / utilisation in order to keep its customers satisfied and come out on top in a fiercely competitive market.

Harmonizing OSS/BSS was also largely talked about during the conference. Two of our oldest customers, one from Latin America and one from Europe, reviewed their initiatives to increase efficiencies—whether in terms of cost, service delivery, etc. The first discussed its focus on migrating pre-paid customers to post-paid, while the second explained how it has been modernising its inventory system by consolidating and automating interfaces and outsourcing application maintenance.

Lastly, several CSPs shared how they were leveraging OSS/BSS to cater to specific market needs and thus grow their revenues. A Brasilian cable MSO touched upon how it is looking to mediation to help increase productivity and optimise customers’ home visit experiences (e.g. for installation and service support). In another case, a Kuwaiti operator talked about how it is enabling real-time, online provisioning and activation with Comptel Dynamic SIM Management—all to fulfill the region’s desire for vanity numbers.

There were certainly some interesting stories and takeaways this year! Attendees, should you have any additional feedback on the 2011 Comptel User Group content, we welcome your thoughts. Or if you would like to learn more about any of the above areas and how Comptel can help, please contact [email protected].

Around the World

Light Reading…
A Brief Guide to India’s Telecom Market
In this article, Ray Le Maistre gives readers an overview of India’s telecom landscape. There is an insatiable demand for mobile communications services! By the end of 2005, about 80 million mobile lines had been activated, and just five years later, mobile connectivity had grown to a whopping 750 million users. This is a clear reflection of the desire for communication services from the Indian population, which is in line with a previous Around the World blog post we highlighted detailing a Frost & Sullivan report on India’s tremendous growth over the next five years.

Additionally, Ray notes that introducing Broadband Wireless Access (BWA) services, which are likely to run over the world’s first large-scale Long Term Evolution Time Division Duplex (LTE TDD) networks, should help deliver some of the tangible growth that the Indian government is looking for. However, the Indian government is concerned that not enough local telecom companies are benefiting from the operators’ combined annual capital outlay of more than $30 billion. As a result, there have been talks of introducing local manufacturing quotas. Ultimately, legislation will play a big role in what’s to come, and as Ray states, because India’s market is changing so quickly, it’s hard to predict what market-altering new legislation or regulation might come along next.

ZDnet…
WiMAX to Survive as ‘Niche’ Tech
WiMAX seems to have lost to LTE as the dominant mobile broadband standard, but it will survive as a “niche” technology, author Liau Yun Qing reports. According to In-Stat analyst Chris Kissel, the former may find a place to survive in under-developed markets such as Latin America or Africa, where technology can still be built in areas with little or no mobile service. There could also be room for WiMAX in small markets focused on wireless DSL and in the smart grid market. Chris notes that ultimately, the problem with implementing WiMAX is that mobile operators had to build it from the ground up since it’s not backwards-compatible to any existing UMTS standard. Despite WiMAX’s decreasing popularity, LTE is thriving in China, India and elsewhere. In fact, according to a Global mobile Suppliers Association report in May, there are 208 operators worldwide investing in LTE—98 more than in June 2010. Do you believe WiMAX will survive as a niche tech with this rapid rise of LTE, and if so, for how long?

Nation Multimedia…
More Plan to Buy Smartphones: Survey
The popularity of smartphones is both undeniable and rapidly growing. According to an online survey conducted by Nielsen, almost 42 percent of online customers in Thailand without smartphones said they will definitely, or are likely, to buy one in 2011. At the end of 2010, Nielsen survey research showed that Southeast Asia’s average smartphone ownership was 25 percent. Will Wang, director of the firm’s telecom practice, states that while Thailand still awaits the arrival of a full-scale commercialized 3G network, citizens are willing to buy a smartphone so they can integrate with social networks and enjoy gaming experiences via Wi-Fi or existing data services. However, it’s important to remain focused on what will keep smartphone users satisfied, especially as smartphone usage increases. As Oliver Suard points out, it’s critical that industry leaders remember to focus on customer satisfaction on all types of mobile users, and remember to also cater to those who do not own an iPhone or are heavy users of mobile broadband value-added services.

Amsterdam Feels the Heat of Policy Control

I have just returned from Informa’s Policy Control event, which was held in Amsterdam earlier this week, and where Comptel was present as an exhibitor and as a participant in a panel discussion. It was a very good event: some excellent speeches, some excellent networking.

There is no doubt that policy control is HOT at the moment. Infonetics analyst Shira Levine, who was chairing the first day of the event, stated that she expected the market to quadruple in size by 2015, and reach $1.6 billion! The event’s presentations broadly offered three reasons for this: the growth in data traffic, regulation, and the drive to differentiate and personalise services.

The growth in data traffic, and the fact that it is outstripping revenue growth, are both well documented. Many presenters offered the “Xs”. For example, T-Mobile Netherlands said that between December 2008 and December 2010, smartphone traffic grew by 6X, volume by 5X and (maybe most interesting of all) signalling by 7X. On that last point, a number of speakers identified the growth in signalling traffic as the most pressing problem concerning congestion—even though LTE is more efficient than HSPA, this is a problem that shows no sign of going away. Overall, this traffic growth is driving operators to try and “control” bandwidth usage (more about that later).

The second driver mentioned at the conference was legislation. For example, Telefonica Germany (formerly O2) explained how it had to implement roaming cost control to comply with European Union legislation. In fact, the speaker seemed to imply that the operator’s policy control solution still wasn’t live, and that to comply with the legislation, it had to find a work around: Telefonica basically does not charge for roaming data usage over €50 limit, and just reduces the quality of service for the user. This is not done in real time, as the usage calculation is done during the billing run. Clearly, though not explicitly mentioned by Telefonica, this is a source of revenue leakage (in the form of uncharged usage). Nonetheless, the communications service provider (CSP) explained that while revenue per MB went down as a result of this legislation, overall revenue for data went up, because users no longer suffered bill shock.

The final driver for the adoption of policy control is differentiation and personalisation. There was a lot of discussion in particular around the move from punitive and “blind” bandwidth control towards intelligent bandwidth management as part of tiered offerings. The BT speaker put it succinctly: “policy control is”, she said, “the last gasp of a centralised control approach.” She argued that operators should be providing what customers want, and that means Skype, Netflix, etc. The walled garden approach is dying, and over-the-top services are here to stay.

Other speakers talked about offering application-aware bandwidth (e.g. for video or gaming) and tying that closely to price plans with policy control and charging. Zain Kuwait, for example, explained how it offers two plans, eeZee for average users and e-Go for heavy users.

U.K. ISP PlusNet did sound a note of caution though: customers don’t always understand tiers. The operator shared the result of a survey it commissioned—what consumers want, in order of importance, are reliability, price, speed and multiple use. Value-added services and usage were not factors consumers cared about. For that reason, NetPlus offers just two simple price plans, with the tiered offering being an add-on rather than a plan on its own.

So what about lessons learnt in terms of implementations? Many operators talked about focusing on specific use-cases rather than tackling a generic policy control deployment. Polish operator Play also said that, when looking for a solution, “flexibility and performance” were key. The CSP also mentioned that operators need to build redundancy; as it unfortunately found out, if PCRF fails, the network goes down! The BT speaker once again put it very straight: operators should be looking for “a vendor who plays well with others” and “delivers on its promises”. A number of operators, such as the U.K.’s TalkTalk, also emphasized the importance of being open and honest with customers about what operators were doing, especially as far a “fair usage” was concerned.

Finally, I was particularly pleased to hear Comptel’s very own mobile broadband survey mentioned by three speakers, including one Comptel competitor!

Keeping a Finger on the Telco Pulse of Eurasia

Russia, Turkey and all of Eurasia have great potential for growth, especially in the area of mobile broadband. In general, mobile penetration is significantly lower here than in Western European markets. Since fixed networks are often less developed in these countries, they are depending more heavily on mobile networks. As a result, mobile broadband has the potential to surpass fixed broadband as soon as this year,  and CSPs in the region are looking for solutions for convergence, new revenue streams from value-added services and how to adopt LTE.

One interesting Eurasia telco fact to note: the markets of Central Asia and the Caspian region are often lumped together as “the stans”; however, there is a striking difference between these countries. According to the CIA World Factbook, mobile phone penetration in Kazakhstan is as high as 96 percent, while in Turkmenistan, it is only about 40 percent.

The exciting opportunities in this region have not gone unnoticed. In fact, as a result, Comptel has integrated a new operating structure and divided our European business into two areas, Europe West and Europe East. This move will allow us to focus our efforts on new growth areas, especially in Eurasia, while actively maintaining large customer accounts in Western Europe.

To further immerse us into the Eurasia market, we will be attending this year’s EurasiaCom, Eurasia’s only commercially focused telecoms event, in Istanbul, Turkey on March 29-30. Comptel is looking forward to being a part of this changing environment, as well as learning from and sharing ideas with other leaders in the industry at this year’s EurasiaCom. Will you be attending?

Around the World

FierceWireless…
Sprint Increases Unlimited Smartphone Data by $10 Per Month
Sprint announced last week that it has raised the price of its unlimited smartphone data service by $10 per month.  The communications service provider’s (CSP) spokesperson, Cristi Allen, told FierceWireless that the change is “reflective of where the mobile data market is going.  It’s just not that customers are buying more smartphones, which they clearly are, but they’re using more smartphone features.”  Allen also stated that Sprint is committed to its unlimited pricing philosophy—unlike other U.S. carriers, such as AT&T, who last year scrapped its unlimited data pricing for smartphones in favour of two usage tiers ($15 per month for 200 MB and $25 per month for 2 GB).  Sprint believes that the change will allow it to meet customers’ needs, maintain simplicity in pricing and continue to invest in its network to meet subscribers’ growing demand for data. What do you think about the CSP’s move?

Total Telecom…
Bharti Airtel Sees 3G Stabilising ARPU, Adding to Earnings
Despite Indian telecom operators’ low average revenue per user (ARPU), Bharti Airtel sees its third-generation services helping to stabilise it. The CSP’s 3G service will allow multimedia capabilities on mobile networks and is likely to improve Bharti’s operating performance since it can charge higher tariffs—which is especially important for a market like India where cut-throat competition has impacted not only ARPU but also revenue growth, margins and profitability. Bharti expects its 3G offering to attract customers from rival networks, especially after mobile number portability, which lets users change operators without changing numbers.  Do you see 3G being a game changer in this region?

Light Reading…
Telcos Shift Their Focus
Light Reading kicked off its Service Provider IT (SPIT) event in London this week, and international managing editor Ray Le Maistre found that CSPs are “finally starting to practice what they preach.”

As Ray noted in his video, Heavy Reading analyst Ari Banerjee was also at the event, where he asked CSPs about their areas of focus and plans for the future. Ari found that by 2014, carriers want to deliver a much better customer experience and get services to market more quickly—and many CSPs are beginning to do this by delivering better networks and better services—in different ways—so that they can be disruptive in the market like competitors, such as Google. Ari also saw CSPs put an emphasis on services that tie into people’s social networks and noticed that CSPs are thinking about customer experience before services are brought to market—rather than after. Were you in attendance at the event? If so, do you have any other observations to share?

Mobile Broadband Billing or Charging: Where’s the Market Headed?

By: Dan Baker, Research Director, Technology Research Institute

Call it the big payments divide.  Depending on what country of the world an operator is in, it will favor one or two mobile broadband payment models—either a prepaid / charging or a postpaid billing / contract.

But what’s the trend?  Will the saturated mobile markets, like the U.S. that favor the post-paid billing model, adopt more on-line charging for smartphones?  Likewise, when operators in developing telecom markets like India adopt smartphones in a big way, will they launch mobile broadband services using a prepaid, postpaid or hybrid payment approach?

Since this is a big strategic issue for folks in the billing department, it’s worth laying out the advantages of the approaches.

The Advantages of Billing

Market success – A billing contract for all-you-can-eat data has been a winning formula for AT&T with the iPhone.

Contract-based sales – A subscription contract locks your customer into a long-term relationship that you can cultivate, renew and upsell against.

The magic of the word “free”– Customers instinctively feel that they are getting a better deal when network usage can be sold as essentially free (even though there are certain restrictions written in fine print).

Actual charges are out of sight and often out of mind – If you’re trying to promote mobile broadband as an addicting habit, having a billed plan is convenient because the user worries less about the ultimate charges.

An annuity the customer budgets for – Paying a certain fixed rate per month is something a customer budgets for, and it becomes an annuity for the operator.

Simplicity – Batch billing is technologically simpler than setting up network-based charging.

The Advantages of Charging

It’s how we buy things – Charging matches the way we live. If you want to buy content, it’s a simple matter of ordering it and paying down an on-line balance.  There’s no mystery over what the actual cost will be.  With charging, you always get a “receipt” for your purchase.

Convenience and impulse buys – We live in a world of convenience purchases.  If you, as an operator, don’t make it easy for subscribers to charge things on the spot, you may be losing wallet share to over-the-top providers.

Bill shock – With a charging platform, bill shock becomes a mute issue because your customers can constantly track their purchases. This, of course, is further enhanced with policy control, which enables operators to inform the customer when certain limits are reached as required by the EU’s roaming cost control legislation).

Expense control – Charging becomes a convenient way to control your expenses, especially if your teenager is addicted to buying music.

Broadens the market – Not everybody qualifies to get a bill.  Plus, a user’s low usage may make billing an impractical option from the operator’s point of view.   In addition, you can offer service to teenagers and other high-risk user groups that the billing model can’t support at all.

Avoid bad debts – Charging eliminates one of the biggest operator headaches—collections, the losses and big expense required to chase down subscribers who don’t pay and outright fraudsters who had no intention of paying in the first place.

* * *

So which way are we headed?  Toward more charging or more billing?

I think mobile operators will mix these strategies quite a bit in the year ahead.

Business customers will certainly favor billing because it’s what they’re accustomed to.  Yet every business customer sees the value of being able to charge for something out of the ordinary.  Maybe the business traveler wants to upgrade his airline seat on-the-spot or buy a meal on the plane.  Charging that by swiping a handset becomes an attractive choice.

And we’ve yet to see all of the innovative apps that real-time charging and network policy control will give birth to.  Ordering high QoS to see a television show in HD is a simple example.  Thousands of other apps are on the drawing boards until LTE comes and charging/policy control technology matures in the network.

I predict that the countries with saturated mobile markets will move slowly but steadily towards more real-time charging—or billing and charging running in parallel.  The fuss over “network neutrality” will get neutralized as people realize you can’t operate a first-class mobile network without controlling the five percent or so of bandwidth hogs who are spoiling the QoS for everybody else.

Billing or charging?  You need both in your payments portfolio.

Dan Baker is the research director of analyst firm Technology Research Institute, or TRI, which has recently launched a new community website, the Revenue Assurance Roundtable.  Since 1994, Baker has authored dozens of research studies in the BSS/OSS market.  He contributes articles to VanillaPlus and writes a regular column for Billing & OSS World called Dan Baker Blog.

Around the World

Inside Track…
Management World Americas 2010: A View from the Sunshine State
Management World Americas is over for another year…  TM Forum recaps this year’s Orlando conference in this Inside Track newsletter article.  According toe TM Forum, more than 1,200 attendees participated in discussions, conference sessions, debates and networking opportunities.  One particular theme that permeated the event was cloud services.  Martin Creaner, president of TM Forum, commented, “Last year here in Orlando, we had a major launch of our involvement in the cloud space, and this year, the cloud sessions [were] standing room only.  It’s not only due to a growing importance of cloud services, but also the fact that service providers get the concept of cloud as an important part of reducing costs and as an enabler of this transformation to a new business model.”  As Comptel’s recent Comptel User Group survey showed, Cloud certainly offers a great opportunity for service provides, but like any other service, it needs to be closely managed.  If CSPs can’t define and deliver services efficiently, charge appropriately and keep customers satisfied, cloud will not be profitable.

Zippy’s Telecom Blog…
Smartphones Generate Nearly 65 Percent of the World’s Mobile Traffic
According a recent Informa report, smartphone users generate about two-thirds of total mobile cellular traffic worldwide (this excludes mobile broadband traffic generated by laptops and other portable devices, as well as Wi-Fi traffic offload that make up most mobile phone traffic).  Yet, only 13% of mobile subscribers use smartphones.  Moreover, as smartphone users spend more time on the Internet, the traffic that each individual generates—or average traffic per user (ATPU)–will increase over the next five years by 700%.

What’s interesting to note is that other reports, like this one from Analysys Mason, suggests that there is no ‘mobile data tsunami’.  Analyst Rupert Wood notes that mobile data growth is around 30 percent per year—not 100 percent like some of the wilder estimates have suggested.  Rupert point out that it is still the PCs that gobble up the bulk of mobile data in Europe—not smartphones; This was confirmed by various service providers, including Vodafone, speaking at this week’s Broadband Traffic Management conference in London. However, this proportion is rapidly changing, as smartphone uptake continues to boom and PC mobile data flattens.  Which figures do you think are the most accurate?

Connected Planet…
GSMA: The Time Has Come for More Connected Devices
The GSMA changed its rules to allow for embedded SIMs that can be remotely activated.  The wireless industry is a bit surprised by this announcement because GSMA decisions are driven by its mobile operator members, who, with the decision, may lose some control, such as locking people into their networks or having influence in the retail chain.  Rob Conway, CEO and member of the board of the GSMA, believes that embedded SIMs will provide security and portability for consumers, as well as additional functionality for enabling new services, such as such as e-Wallet and NFC applications. This news may also allow OTT players, like Apple or Google, to embed SIM cards into their phones and cut operators out of the retail chain, since phones would be remotely activated for a carrier network via stores and points of sale.  However, the announcement focused on the flexibility and innovations that its new “taskforce” (including includes AT&T, China Mobile, Deutsche Telekom, France Telecom Orange, KT, NTT DOCOMO, SK Telecom, Telecom Italia, Telefonica, Verizon Wireless, and Vodafone) can develop.  What do you think of this change?

What’s in Store for the Comptel User Group

Comptel is hosting its annual User Group (CUG) this week in Windsor in the U.K.  In its 13^th year, the meeting provides Comptel’s customers and partners with an opportunity to exchange information with the company’s fulfillment, mediation and policy control experts and executive management—and most importantly, with each other.

Networking and social interaction are among the key goals of this event.  Supporting this initiative, we’ve developed a dynamic agenda that includes:

• A welcome speech from CEO Sami Erviö, followed by a presentation by CTO Gareth Senior, who will provide insight on the company’s direction and introduce a demo of the company’s cloud offering.
• Presentations from Comptel customers, such as TeliaSonera, SmarTone-Vodafone,Movistar Argentina and others, on hot topics like policy control, generic user profile (GUP) and mediation.
• A keynote from Rob Van Den Dam global telecommunications industry leader with partnerIBM Institute for Business Value, on the changing face of telecoms.
• An interactive session that will explore key telecoms trends, including mobile broadband, LTEand cloud computing.  Stay tuned for the feedback!

We’re excited about the CUG and our ability to keep an active forum for our customers and partners.  Comptel invites both those attending and those unable to make the event to participate in discussions on the blog, as our staff posts on some of the activities.

Around the World…

Connected Planet | Unfiltered Blog…
CTIA vs. FCC in Bill Shock Dust-Up
BSS/OSS reporter Susana Schwartz gives us her take on the recent back-and-forth between the Federal Communication Commission (FCC) and CTIA regarding the former’s survey on “bill shock”. As brief background, the CTIA started a dispute by calling the latest FCC data on bill shock “inflammatory,” with the FCC responding in a blog post that the CTIA is “denying bill shock by distorting the facts.” Regardless of who’s right or wrong, Susana raises an interesting point: “If the CTIA’s concern is well-founded—if only 30% of the respondents in the FCC bill shock survey said they were over 18—then where are we? Let’s pay attention to the perception of even young customers, as they are the near-future purchasers of services and plans. They will graduate and get jobs and pay bills, and they are the ones most savvy with social media and apps, etc.” Undoubtedly, these services will shape the future and certainly influence the telco industry. It is more important than ever for CSPs to be innovative and dynamic, and offer personalized services to subscribers at a price they are willing to pay for.

For more on the FCC-CTIA situation, Matthew Lasar of Ars Technica also covered bill shock and analyzed the FCC’s survey data in his article, “Fear and Loathing over Mobile Phone ‘Bill Shock’”.

Business Intelligence Middle East…
Africa & Middle East Mobile Broadband Adoption Will Grow Faster than Global Average over Next Five Years
According to a recent report from Pyramid Research, the future growth of broadband in Africa and the Middle East will be driven by mobile broadband. This is largely due to poor wireline services and innovative branding and packaging from mobile operators. It is expected that the total number of subscribers will reach 38 million by 2014, which is slightly faster than the global average. The report examines the current and forecast broadband landscape in the region in terms of subscribers and revenue, and looks more closely at the technologies that will enable fixed and mobile services. It also examines three key markets in more detail—the UAE, which exemplifies the most-developed parts of Africa and the Middle East; Nigeria, which illustrates the underdeveloped, sub-Saharan region; and Turkey, which represents the region’s middle-income markets. You can check out the report in full here.

TM Forum Online Community…
BSS Is Dead, Long Live BSS!
A TM Forum online community member contributed a blog post that looks at the “great BSS/OSS divide”. The terms BSS and OSS have traditionally been differentiated in the telco industry, yet with the combination of all-IP network transformation and service convergence, these have been more frequently blended together. This particular blogger raises an insightful point—“We have all heard this, but is it actually happening in the real world? If it is, how do we now define the functions that traditionally fell in the BSS camp…?” What are your thoughts on this topic? Do you think the BSS/OSS gap is closing?

Mobile Broadband in Fragrant Harbour

It is always a pleasure to visit the busy and booming Hong Kong, even though at this time of the year, it is a hot, rainy and humid place, with summer monsoons pouring waves of hot clouds over the South China Sea.  For Comptel, it is also a pleasure because of the hot and steaming telecom environment; Hong Kong is a market crazy over the latest gadgets, services and bargains.  It is no wonder that some of the leading operator groups like Telstra, Vodafone, Hutchinson and China Mobile have operating companies there and are seeing it as a field lab for new service innovations.

The “Fragrant Harbour” (what Hong Kong means in English) has become the place with one of the highest population densities, bank densities, mobile phone densities and mobile data consumption rates.  People there are enthusiastic about technology and eager to try out new services…and chat, download, browse, stream, tweet, play, gamble, listen, watch, comment…in a sense, it’s an ideal market for an advanced mobile operator.

But at the same time, this market is also price and quality conscious, demanding good service and fast responses with affordable prices. Operators need to be flexible and customer-focused, and willing to listen to their customers and try out new business models.

In Hong Kong, mobile broadband is THE thing right now. Smartphones are representing 80% of traffic (and this is growing fast!), and the need to meet the huge growth in cell and transmission capacity is the main concern of all operators.

But it seems that this is not enough.  On top of sheer capacity, it is becoming more and more important to put that capacity in the right places and to control the use of it in a way that helps to cope with user expectations: “If I’m paying more, I want better service and faster connections.” Stating that the offered service quality class is “best effort” is an insult.

Mobile operator business is becoming more like broadband business; all new network building decisions need to be based on data traffic growth. Advanced capacity forecasting, planning and monitoring are becoming critical as data transmission cost is becoming the key success factor—no wonder that Hong Kong was the place where Comptel delivered the first policy control and cell capacity management system.

This new mobile data market is also turning some basic assumptions upside down.  For example, the peak data rush hour is after midnight (I’m wondering what the applications are…); this is affecting the network operating procedures, as the maintenance window is becoming shorter—traditionally, all network changes have been done in the early hours of the day.

Comptel has had a very long presence in Hong Kong and worked closely with several mobile operators there.  In fact, SmarTone-Vodafone, one of the leading communications service providers in the region, has been a Comptel customer for almost 20 years, and we have found that in that kind of small, technology-driven, business-focused market, it is very easy to see what the key market drivers currently are.