Bigger flat-rate problems just mean bigger Policy needs
The second reason is that most operators don’t have the required systems to support more granular data charging models properly today. If you are going to launch innovative packages that are more usage-based and be able to make them stick, you need the three key functions of charging, policy management and policy enforcement working in tandem and in a real-time loop, with each feeding into the other. The complete set of infrastructure is only now starting to be deployed.
VanillaPlus: Are some operators relying entirely on PCRF systems (Policy & Charging Rules Function) as a solution?
JA: I don’t know of any operator who is only relying on PCRF. That would be a bit foolish as there are great things happening in the network to support greater volumes/speeds at lower cost. But what is clear is that growth in demand will outstrip all of these network-only advancements.
At CTIA in March, we were told that LTE will provide about a sevenfold increase, but at the same time we heard that last year the demand for bandwidth grew tenfold. This year the expectation is even higher. So PCRF, and more importantly the Charging/Policy ecosystem, is a crucial part of the solution as operators must get the revenue side of the equation right too.
VP: In view of this capacity crunch what answers are there for operators caught between falling voice revenues and the dwindling profitability of their broadband data services?
JA: Broadband data is clearly where the growth opportunities are going to be. In fact, I experienced a HD (high definition) voice service the other day, and it dawned on me that voice has now just become another broadband service anyway.
So, the focus needs to be on how to ensure the broadband data services are delivering profit to operators – it’s a bit sad to think that the telecommunications industry is experiencing probably the biggest growth in demand for a service out of any industry on the planet and operators are seemingly unable to turn it into a profit engine. The answer is to make the commitment to getting the business model right, and take the necessary steps to price these services in a way that is both interesting to users and profitable to service providers.
VP: We can probably all agree that basic fixed and mobile broadband service charging needs to evolve. But is better customer segmentation and personalisation the sole key to greater profitability – enabling premium charges for targeted services?
JA: I wouldn’t say it’s the sole key, but it’s a tremendously powerful way to reconnect the revenue model to the cost model. At the moment the industry has capped revenues on the one hand, and out of control, insatiable growth in demand for bandwidth and hence cost on the other.
This is no way to run a business, it’s simply not sustainable. The work that’s being done to make core networks more efficient, offload through femto and WiFi, as well as techniques like content caching are very important. But they only partially address the cost aspect. Profitability is about the relationship between revenue and cost, so it has to be addressed holistically.
VP: What is the full range of policy management challenges for CSPs that Volubill is now addressing?
JA: If you look generically at the PCRF standard, it might read as a network tool. Some operators are doing just that and unfortunately are missing a very big opportunity.
Policy is not only a network tool, it is a business tool as well. When you start to bring subscriber data and real-time usage information to bear as an input to Policy Decision you are creating the most powerful marketing tool that the industry has seen to date.
So at Volubill we do all the basic PCRF stuff that you would expect, dynamic policies for fair usage limits, time of day limits, etc., etc., but then we go two steps beyond that and enable more sophisticated policies and rules to be configured that represent very personalised, very targeted, subscriber centric packages and segmentation that can then be offered and enforced. Beyond, that we enable users to upgrade their packages based on their real-time needs, which thus far has been missing from the market.
VP: This is becoming quite a hectic market place. What advantages can your CONTROL-IT and CHARGE-IT suites deliver?
JA: Yes, indeed. It seems every morning when I wake up I read about three more companies claiming they have a policy management solution – and that’s before breakfast. It’s mainly nonsense, of course – what’s happening is that all the vendors recognise Policy has become a ‘must have’ platform for operators and their marketing departments are telling them they must have a story to tell.
But a Policy platform takes multiple years to develop if it’s going to be carrier grade. It takes a lot more than a well-spun press release. Our advantage is that we have been at this for over two years now and have a full set of Charging, Policy Management and Policy Enforcement capabilities that work as a whole or integrated with components from other vendors. We also have the experience from our customer deployments.
However, the real advantage is our people and the knowledge we have built up about how to make these three components work in unison. And that’s not trivial, because it requires in- depth network knowledge and skills as well as OSS/BSS (operations/business support systems) and IT skills. A working solution requires a real-time, feedback loop to be created that crosses the network boundary and links in the charging elements and hence requires tight integration to work effectively.
VP: Assume that I’m a CSP needing to control network resources, services and subscriber activity, can a single product manage it all? And what if I already have a policy enforcement tool, can I drop in your policy management alongside it?
JA: I wouldn’t go for a single product because there is diversity in the system characteristics that are required – instead I would suggest a suite of products that are proven to work together effectively. So, for us that means either all three products from Volubill, or one or two products from Volubill and tight integration with some of the other guys. For example, we are working with Sandvine who are providing DPI (deep packet inspection) and Policy Enforcement at three joint customer sites.
VP: Where have you implemented your offering so far?
JA: We have just signed our twelfth policy customer. Implementations have been completed in Western Europe, the Middle East and Africa thus far. We have deployments ongoing in the USA, Venezuela and The Caribbean, to name a few. We are currently signing between three and five new Policy customers each quarter, and we expect this trend to continue to grow over the coming years.
VP: Do you have any metrics to demonstrate the turnaround in profitability following real- time monitoring, policy control and charging system deployments?
JA: It’s still relatively early days but the results are very encouraging. Operators who have used this model to create deeper segmentation have typically found a number of things. Firstly, at least 60% of the new market segments they create are considered popular as reflected by users’ uptake.
This is an important point as it shows that users can be tempted away from flatter rate charging models if the quid pro quois attractive. In one case the quid pro quo was higher priority for packets relating to games usage. Gamers loved this package and were willing to sign up.
The way to measure the benefit is to look at the increase in revenue relative to the notional cost of providing the bandwidth consumed. In the cases we have experienced this has so far ranged from a 7% to a 25% increase. We believe that as more experience is gained with these models, even higher increases are going to be possible.
The second thing that operators are reporting is a general increase in overall satisfaction by users who are taking up these new packages, often linked to a better quality of experience in the services they consume.
VP: Are deployments coming first in the most competitive markets? And are Tier Ones, Twos or Threes most likely to be interested at this stage?
JA:Policy deployments are now coming thick and fast. The good news for vendors like us at Volubill is that it applies to operators of all tiers in pretty much all markets. We’ve won policy management deals as far afield as the USA, Egypt and Venezuela, with the Tier 1 market leaders and with the innovative smaller carriers who are trying to get an edge over the big guys.
One thing is clear and that is that the players in Western Europe and North America where flat-rate charging has been entrenched for a long time have the biggest problem, and the bigger they are, the bigger the problem. That’s certainly reflected in the amount of interest they are showing in Policy solutions.
category: Talking Heads