John Aalbers is chief executive of Volubill, the provider of sophisticated policy and charging systems to CSPs. Here he tells George Malim how, after a frustrating couple of years, CSPs’ understanding of the capabilities of policy and charging combined have matured. The advanced use cases that systems like Volubill’s can support enable CSPs to differentiate, compete and monetise their networks.
VanillaPlus: How has demand for policy and charging systems changed in the last 12 months? Are CSPs’ approaches maturing?
John Aalbers: There has been a very dramatic change in the way CSPs approach policy and charging. 12 months ago we were in a mode where people were looking at policy from a PCRF (Policy and Charging Rules Function) perspective. That was the standard, networkdriven approach and CSPs didn’t want to talk about how they were going to use policy beyond network protection use cases.
Two key things have changed. One is that we’re seeing a lot more activity – we’ve seen a doubling in the number of inbound policy and charging requests since last November than we did in the previous six months so there’s a very marked upturn there. Another is that all that inbound activity has been for a combination of policy and charging. We don’t see any more pure PCRF requests out there. Either you have charging requirements with policy in the specification or you have policy being the lead requirement with a need for charging capability as well. We don’t see any policy or charging only requests.
A further change is that policy and charging is more and more driven by the IT and marketing departments rather than the network department. The industry has put huge effort into educating marketing departments as to what they can do and they have now cottoned on to that.
VP: So has the mature market really arrived?
JA: This is about how to create deeper market segmentation and offer differentiated packages and that understanding has really taken hold since last November. Two years ago we assessed that this is where the market was going to go. Admittedly, early last year, we were starting to get a bit nervous that it wasn’t really happening but now it definitely is.
We’re also finding it quite interesting that there are CSPs that have purchased PCRF from a network vendor for network-oriented policy management and have realised that by itself it isn’t going to achieve what they want from an IT and marketing perspective. That’s an opportunity for us to provide a ‘thin policy’ add-on. We’re providing add-ons to deliver charging and subscriber management over the top of the network equipment vendor’s policy system. Politically that’s far easier for a CSP to accept than having to replace recently deployed PCRF.
Mobile World Congress this year was significantly different in terms of demand and the requirements for policy and charging compared to last year’s event. Last year, we had lots of people just trying to find out what policy and charging was, this year we had prospects coming to us with projects and specific use cases – demonstrating that this space has definitely matured.
VP: Are CSPs now coming to vendors with a specific list of problems they are looking to policy systems to solve rather than vendors attempting to sell policy to CSPs that don’t have a clear fix on their problems?
JA: A lot of our salespeople have reported to me that they are seeing approximately eight to ten use cases that everybody is asking for. The operators are coming to us with an increasing set of use cases they want us to address off the shelf. We find that evolution and maturity significant. Operators now know what they want much more than they did six to 12 months ago. They’re not 100% there yet on knowing what they want but the number of use cases they require is increasing and that is a good sign and bodes well for companies like us and the traditional BSS vendors. When you put charging in the mix you automatically create much richer use cases than you could with policy alone. The CSPs will become much more sophisticated as time goes on.
VP: Is there such a thing as a standard approach to policy and charging? How do requirements differ from CSP to CSP?
JA: If you look at mediation platforms and pretty much billing systems as well these days, they are pretty much standard solutions. For policy and charging, we’re not at that point yet. At the moment it is less than 50% the same, in terms of approach, from CSP to CSP, they’re still working out what works and what doesn’t. Realistically it will still take another two or three years for the industry to learn how the market responds to certain packages and policies.
To what extent do requirements differ according to geography? What has been your experience of CSPs’ demands in different regions?
JA: It is very different from geography to geography. It depends on how much experience the CSP has and whether the base internet experience is mobile or fixed in that country. For example, if you take the UK, everyone has fixed line internet and mobile is used only for specific internet activity. In comparison, in Egypt, for example, mobile is the internet experience because the fixed line infrastructure was never in place and the mobile internet performance is better. Those different dynamics obviously change how policy and charging are approached in those markets.
You can also see differences in the types of CSP that have the greatest interest. We’ve traditionally focused on pushing the mobile market because we felt that in the short to medium term this was where the biggest pain point was going to be. In the more mature markets it is clearly mobile providers that have the greatest interest but fixed line operators are emerging. They want to be able to offer similar packages and bundles so there are lots of RFPs and RFQs and general interest coming through. That’s less so in Europe than from north America, probably due to the economic cycle.
In Africa, we have around 12 Orange affiliates as customers, however, because of the geography, we have seen increasing demand in this region from satellite and WiMAX providers. 4G Africa is one such customer already on our books. The lack of copper or any other infrastructure calls for policy for capacity management or usage policy controlling WiMAX services.
In the US we just announced Viasat, the satellite provider, as a customer. The pull in the US is the demand from people requiring broadband in both urban and rural areas. Interestingly, we also received another three enquiries at Mobile World Congress around the satellite market as European satellite companies look to move from B2B services, to residential service in countries like Italy, Spain and France.
In the Middle East, I would say there are two types of countries. We have customers in countries like Saudi Arabia, Senegal, Egypt and Tunisia which are rolling out more and more advanced data services because people have come to expect them for business and social use. The more developed countries are at the stage where they want to apply parental control, or family plans using policy and the emergence of QoS based models. But we’ve also had several enquiries from war-torn, underdeveloped countries, including Afghanistan, which are seeing a huge demand in data usage because of social networking. Social networking being a key way for people to get their message out in countries where there are restricted communications.
VP: What about the use cases? Where do you see the most sophisticated being trialled?
JA: We still see what I’d consider the more sophisticated use cases coming from the more sophisticated markets in Africa and the Middle East. QoS-based offerings are still largely emerging market driven rather than appearing in North America or western Europe.
We’re not seeing the use cases we’re seeing in Africa and the Middle East in North America or Europe just yet. We’ll see that change in the next couple of years. AT&T, with its open throttling, is quite interesting and provides the first sign that CSPs are becoming more sophisticated in their usage models. North American CSPs are certainly very interested in learning about what we’re doing with CSPs like Orange Tunisia but most of the innovation is still coming from emerging markets.
VP: How is business for Volubill?
JA: The Volubill business has really kicked on since the second half of last year. Even though we had a PCRF product, there were probably others who could do that low end play more cheaply – our play has always been about deeper segmentation and what it can do for revenue generation. We’re seeing a number of companies who are just doing PCRF beginning to stall, as that business has slowed. As the market has matured, it’s come towards our sweetspot and as a result we have experienced an encouragingly strong start to 2012 and are increasingly upbeat about the next few years.
VP: What new opportunities do you see arising in telecoms- adjacent and associated markets such as M2M?
JA: We see M2M as a very big driver. Last year the world reached 7 billion mobile connections so on average there’s one mobile per human. The expectation now is that will jump to 25 billion connections on the back of M2M connections. There’s a lot of talk about how CSPs can encourage M2M users to do transmission off peak to make it very cost effective. All that will drive another layer of sophisticated use cases in the policy and charging sphere. A lot of discussion is going on and the next two years will be very much about M2M connections. Another interesting area will be the fixed line CSPs. The tier one operators are getting very interested in policy and charging combinations, traditionally there has been a divide between the two but they are coming together now. That’s very interesting to Volubill.
