The swing from traditional communications services to digital services provision is rapidly gaining momentum, as we see weekly in new partnerships between communications service providers (CSPs) and media providers, and over the next few years we expect a growing number of similar alliances to form, as CSPs move more deeply into Internet of Things propositions such as Connected Home and eHealth.
Services innovation is not a new thing. CSPs have regularly added new services to their portfolios since industry deregulation initiated a rush to build the biggest bundle of services on the market to demonstrate customer value and create customer stickiness. But this time it’s different: the services, the competition, and the consumers are different, and the CSP response needs to be different, too.
Of course, CSPs have extended their portfolios before – triple-play and quad-play combinations of fixed, mobile and broadband have long been the new normal and have driven the development of convergent BSS/OSS to support ever-expanding service bundles. But the move into digital services is different. The traditional model of revenue management – primarily, billing the customer and settling with other communications carriers – is being disrupted by the diverse business models that are surfacing as we move into the uncharted waters of the new digital economy.
Most significantly, this isn’t about adding new network-based services, where CSPs have excelled for decades. BSS and OSS have long delivered network and business operations in efficient and scalable ways, and the corresponding processes for service creation, delivery, customer management, billing and settlement were extensions of the central mission to ensure quality, reliability and accuracy. Services that live exclusively in the digital realm rely on an extensive range of third party players who come from the creative side, the technology side, or from industries that are transforming their own consumer interactions and services to digital. These players will expect customer and revenue processes to be much more tightly coupled with retail sales and end-user activity than was typical of yesterday’s inter-carrier partnerships.
Digital services address different customer expectations too. While consumers may regard communications as a utility purchase, they approach online media with a retail mindset. They must be persuaded to buy, they will look for the best value for their money, and they will choose not only from other CSP offers but from OTT players too. Having made their choice, they will expect the service to be made available for use immediately, not just at the time of transaction but over an extended lifecycle.
For evolving CSPs, the key requirements are to make the digital service accessible wherever and whenever the consumer seeks it; to know, if not anticipate, customer needs and preferences; to make the product easy to buy, consume and manage across multiple channels, devices and customer touch points; to respond rapidly to competitive offers; and to get new propositions to market fast, whilst remaining competitive on price and assuring a high-quality delivery – in other words, to think just like a 21st century digital retailer.
On the partnership side, the picture is changing just as quickly. Broadband providers are increasingly adding entertainment services to their catalogues through aggregator or reseller relationships. Delivering this content requires an understanding of how, where and when content can be consumed. To manage these digital rights the CSP must accurately monitor and account for all usage, and ensure that the rights holder is reimbursed. It is in this arena that business models are evolving most rapidly, with new monetisationmodels being adopted for gifting, ad subsidies, loyaltypoints, digital payment methods and complex bundling across services from multiple parties.
The hit on BSS?
The digital economy is advancing two-sided, three-sided and multi-faceted business models, including increasingly sophisticated revenue attribution and settlement, and the CSP needs to support these alongside the more conventional delivery of communications services. Convergent BSS/OSS systems are table stakes – to deliver a slick and frictionless customer experience, CSPs need a commanding view of their customers which will also help them to create propositions that are as personalised to the customer as possible. That’s difficult to achieve when services and supporting systems exist in silos.
A unified platform also brings the agility needed to develop new services and on-board supporting partners quickly, and provides a strategic view not only of customers but of overall business activity and profitability. Beyond agility, the new BSS/OSS realm must deliver the operational and cost efficiencies that will maximise margins, given the increasingly competitive telecoms market place and the escalating cost of sourcing and delivering premium content.
Convergent customer and billing platforms are more cost efficient than many disparate systems, requiring less integration overhead and fewer indirect costs related to skills and software licenses. With digital services, real-time operations are critical. CSPs are competing with digitally native organisations that have built their business operations online from scratch. To compete, CSPs must deliver the same dynamic customer interactions, supporting contextual promotions, offers and discounts. And in this ecosystem their partners will expect the same: clear and immediate visibility of consumer transactions and short-to-instantaneous settlement cycles.
Finally, the need for efficiencies and increased agility is driving many CSPs to seek managed services partners with the skills, resources and experience needed to take over their legacy BSS, reduce its complexity and gradually consolidate their systems holdings. For many, this is part of a naturally evolving strategy: simplify existing operations, adopt cloud-based digital capabilities on top, substantially reduce operating costs and clear the decks to focus on innovative service development.
The move from CSP to digital service provider is pushing CSPs to the limits of current BSS capability. The systems that have served them well to date can only be stretched so far and the demands of digital services will take them to breaking point. Many legacy BSS/OSS systems do not have the agility or responsiveness needed to support the delivery of digital services, the expectations of the evolved customer or the requirements of the digital partner ecosystem.Their choices are:
- To replace legacy BSS with flexible, service-agnostic solutions
- To overlay existing platforms with a layer of digital capability delivering agility and innovative processes
- To outsource to a partner with the appropriate skills and experience not only to run it but to enhance it for the digital economy
All of these approaches may be viable, though each carries differing degrees of risk, cost and delay. CSPs will need to focus hard on which option minimises this downside and frees them as quickly as possible to focus on a new digital future.
The author David Heaps is head of strategy at CSG International
