Around The World

GigaOM…
Why Are MVNOs So Hot Right Now? Thank the Carriers

The number of mobile virtual network operators (MVNOs) nearly died out in the past decade due to over-segmentation. Today, however, they are making an astounding recovery by reselling bundled voice and data services at affordable prices. According to GigaOM journalist Kevin Fitchard, “MVNOs are thriving because the big network operators are letting them.”

Historically, the larger operators made it difficult for MVNOs to take advantage of their data networks. They would charge prohibitive rates and force partners to pay for megabytes up front. But the market has recently changed, and operators like AT&T and T-Mobile are selling more airtime, while others are working directly with MVNOs to craft plans in exchange for a percentage of revenue. There are pros and cons to working with each operator, but it’s clear this shift is benefitting MVNOs.

The trend, however, hasn’t been as good for operators who risk losing their competitive advantage. The article points out that they, most likely, either feel forced to cooperate or are trying to reap the wholesale benefits of selling to MVNOs. Ultimately, these types of customised offerings and bouquet of service options benefit customers that now have more choices when it comes to selecting their network operators.

Pipeline…
Moving Customers to Tiers

Data capacity and bandwidth constraints continue to be a major concern for communications service providers (CSPs).  According to Cisco, the consumption of over-the-top (OTT) video is predicted to quadruple by 2016, at which point more than 1.2 million minutes worth of video will be travelling through the Internet every second. Additionally, as smartphone quality increases so too does their use for bandwidth-intensive activity, like video streaming. And as users are increasingly becoming data-centric, CSPs must figure out the most effective method for implementing controls on usage.

Some operators, like Comcast, are offering tiered data services to manage the network. While this may be a viable option, it’s also likely that subscribers will push back on this change in plan. However, keeping customers satisfied could simply come down to the variety of tiers a provider is offering like charging based on the type of data used instead of the volume, or paying more for priority data during peak hours. Ultimately, CSPs have the ability to differentiate diverse types of data in ways that they never have before. This means more targeted services and the potential to really stand out in the market.

What options other than tiered pricing do you think can be effective?

MarketingLand…
Airlines & Telecom Companies Are Best At Facebook Page Customer Service

A recent study revealed telecom and airline industries are tops when it comes to providing customer service on Facebook. T-Mobile and Sony Mobile were the most active brands in responding to customers and prospects, while telecom companies showed their customer-centricity by replying to 60.4% of user posts between March and May of this year.

This is crucial as Conversocial, a social media tracking site, indicated in a recent study that 88% of consumers are less likely to buy from companies that ignore complaints on Facebook. It’s clear customer service should play a key role for CSPs not just on social media channels, but also as a standard practise throughout the business. For instance, CSPs can tap into the customer data they have on hand and determine – at an individual level – who to engage with, the right message to use, and the right time to do so. They can also monitor for issues within the network and proactively reach out to customers– before they head to Facebook to address the issue, the CSP has already responded. Now that’s customer service!

Reflections on LTE Advanced – Part One

When following the hot industry trends, I found a lot of excitement around LTE-Advanced (LTE-A) and wanted to share my thoughts on this emerging technology.

So what is LTE-A?

Well, in the simplest of terms, it’s the latest advancement in radio technology that will put one Gigabits/s bandwidth (or 1000 megabits/s) to your mobile device of choice, whether it’s a laptop, dongle, tablet or smartphone (and eventually feature phone). Network rollouts will occur once the technology is proven in trials and compatible devices are available.

For comparison, you can get up to 100 megabits/s through LTE technology and up to 24 megabits/s with ADSL technology. The bandwidth that LTE-A enables is similar to the fastest speeds from Fiber-to-the-Home (FTTH) technology and about three times faster than that of cable. It is also approved by the International Telecommunications Union as the true 4G technology irrespective of what industry marketing and some communications service providers (CSPs) are saying about LTE and DC-HSPA. Globally, we are just deploying LTE infrastructure, and thus, LTE-A will have its first major deployments sometime in the future.

Some Perspective

While the maximum speed will most likely be very theoretical, at least in the beginning, the technology promises to provide all of the bandwidth we need without wiring everything together physically, allowing for true mobility. To put that bandwidth into perspective, one HD quality video stream can consume up to tens of megabits per second depending on the encoding/decoding technology used. This would then decide how much of the CPU and graphics chip on your device would be used and how much battery life they consume on decoding the video feed. The less bandwidth that is consumed (and hence tighter compression used in video encoding), the more work the CPU and graphics chip will have to do, and more battery will be consumed. In theory, you would not need much video compression with LTE-A, as there is plenty of capacity and hence less demand on battery, CPUs and other chip development needs. Think about several HD video channels being streamed to your device and having the ability to use other services in parallel. It would also enable higher upload speeds, so your multi-megapixel DSLR pictures could be streamed to your cloud storage or photostream of choice in near real time.

Is there really a need for this much bandwidth?

I’ve witnessed first-hand that once more bandwidth is available, it will get used. Remember the times of MS-DOS and the famous statement that 640 kB of memory is enough for everything? I’m feeling a bit old here, but seriously, we are masters of consuming 97% of our hard drives, for example, no matter what the capacity is—and the same applies to bandwidth. With recent advancements in HD displays in relatively small form factor (e.g. retina display in the new Apple iPad), it’s almost guaranteed we will consume available bandwidth. I’d think, however, that with such bandwidth, the need for large local storage on devices becomes less important, especially as cloud storage is becoming more affordable. Hence, we will see more video-enabled devices with minimal, built-in storage capacity.

LTE-A sounds promising, right? In my next post, I’ll discuss this technology further and highlight some areas where there’s room for improvement.

VanillaPlus Policy Control Features – A Sneak Peek

Policy control is near and dear to us here at Comptel, and we’re very excited for the upcoming February / March issue of VanillaPlus that will have a special focus on this area. In fact, Comptel has contributed some thoughts for inclusion in that issue, and we’d like to provide you with a sneak peek.

In one feature, Comptel CEO Juhani Hintikka weighs in on policy management as a means of bandwidth conservation and as a way to create upsell opportunities. Juhani explains how this is becoming a reality as policy concepts evolve and mature, and discusses additional opportunities available to communications service providers (CSPs) if they can take advantage of this function. This becomes especially relevant with the rollout of LTE, where almost every user transaction must travel through the policy control engine. As such, the Policy Charging Rules Function (PCRF) must be able to both handle the scale and complexity of these transactions—calling for a need to combine OSS flexibility and support to fit CSPs’ business models as well as provide network-level transaction processing.

In another article, Comptel’s policy control solutions manager, Joonas Ojala, shares his thoughts on how policy management will allow CSPs to better control their bandwidth to best provide a package that fits customer needs. To do this, CSPs need to steer away from technical attributes and focus more-so on use cases and analysing customer behaviour in order to differentiate service packages appropriately. For example, those who surf the web randomly should have a different option than corporate customers who may have a higher priority allocated to them in terms of speed.

To learn more about Comptel’s thoughts on these topics, check out the upcoming issue of VanillaPlus!

Around the World

Connected Planet…
The First of the Top Trends for 2012, Including: Micro-Transactions for Everyone
With the New Year right around the corner, Alex Leslie provides an overview of what private equity firm M/C Partners sees as the top 10 communications trends for 2012. Dealing with capacity issues is expected to be the biggest trend, according to the company; communications service providers (CSPs)will likely accelerate the build out of fiber to the tower in order to keep up with bandwidth and quality of service demands.

What Alex notes as most interesting from an OSS/BSS point of view is the expansion of the micro-transaction business models into massively multiplayer online role-playing games (MMORPGs), console games, video, communications services and social networks. With the majority of this money being paid as subscriptions, Alex says this opens an opportunity for pricing and billing sophistication.

Do you agree with M/C Partners’ list of the top 2012 communications trends? Is there anything else you foresee having a major impact on the industry in the New Year?

Microsperience….
Making the Impossible Possible (A Fishy Tale)
Analyst Teresa Cottam begins her blog post with an anecdote about a U.K. supermarket chain. In the midst of the recession, the supermarket was able to sell its Alaskan salmon at an incredibly low price, creating a truly competitive advantage. There was much speculation about how it was able to do this, but the answer was as simple as finding a new shipping route, which enabled the store to shorten the journey from Alaska to the U.K., and therefore, reduce the cost of the product.

Teresa’s main point is that almost nothing is impossible if you put your mind to it. CSPs can innovate if they have a clear vision and sufficient imagination to prevent challenges from holding them back.

Teresa goes on to explain that she sees billing and charging as the next big opportunity for innovation, and believes that visionaries will see the opportunities CSPs now have to differentiate themselves and create new revenues. To achieve their business goals, CSPs need to bring their operational team members together, understand their customers and work with partners to deliver the right product at the right time.

In the end, the analyst challenges readers with the following question: “Are you, as a service provider, happy to risk falling behind when the leap comes, or are you one of those already preparing their run up?”

Gulf News…
Telecoms ‘Must Focus on Doing What They Do Best’
Should operators look to Google and Facebook to share advertising revenue? Panelists at the Smart Handheld Summit 2011 in Dubai say no, arguing that CSPs should instead tighten operational efficiency and stick with what they do best—providing Internet access.

Venture capitalist Paul Doany warns that straying into commercial operations, such as new platforms and mobile apps, will be harmful for revenues. On the other hand, Osman Sultan, CEO of du telecom, thinks operators should take part in third-party advertising-based revenue streams, and believes this is possible if telecom operators across the Middle East work together.

Matching the tremendous growth of Internet giants will certainly be a challenge. However, Dr. Bassam Hannoun, CEO of Wataniya Mobile, says operators can drive the telecoms industry forward through management and protection of revenue. In the coming year, Bassam believes the operators who will find success are those who can turn a disconnected value chain into a seamless solution.

Strategies for Coping with Mobile Data Consumption

By Samantha Tanner, Telecoms IQ, IQPC

Figures released by U.K. regulator Ofcom in August show that mobile data traffic has increased 40 fold over the past three years, with 27% of adults and 47% of teenagers now owning smartphones.

In the regulator’s Communications Market Report, it stated that “the recent adoption of smartphones has been accompanied by an increase in the volume of mobile data transferred over the U.K.’s mobile networks. This increased 40-fold between 2007 and 2010.”

The report also showed that 27% of U.K. adults accessed the Internet on their mobile phones at the start of 2011, up 22% from 2010. Additionally, social networking has overtaken email as the most popular use of smartphones.

This is just one example demonstrating the exponential growth in mobile data and the need by operators to do something about the increases in the amount of data being crunched, especially when they start trialing LTE. Customers are demanding more bandwidth in order to run faster, interactive services, but at the moment, most networks just simply can’t cope.

With Cisco projecting that, by 2015, 66% of global mobile data will be taken up by video streaming, what is the solution in order to optimise mobile networks so that they can cope with the huge increase in mobile data being consumed?

Increasing bandwidth and spectrum is playing a part in how operators are attempting to accommodate increasing data usage. This is why the push towards LTE has gained such incredible momentum, especially in the U.S. The value of spectrum can be seen in the AT&T merger with T-Mobile. While the merger makes the network the largest in the country, it also gives the operator far more spectrum to play with than its closest rival Verizon. More spectrum also allows AT&T to give their customers exactly what they want, meaning more LTE coverage.

Operators are also coping with mobile data consumption by using a variety of pricing and promotional strategies to strike a workable balance between encouraging use of data where resources are plentiful, deterring it when resources are scarce and ensuring maximum payback on their network investments. However, they require the right OSS solution to give them the levers to control this service, encourage customer demand and create profitable new business.

If mobile data grows as much as it is predicted to over the next couple of years, operators are going to have to act fast in order to maintain the bandwidth speeds that their customers will be demanding, much like what AT&T has already figured out.

Telecoms IQ will be running three events in the coming months that will examine the role of LTE and mobile network optimisation: LTE Deployment Strategies, Data Offloading Strategies and Mobile Network Optimisation.

Around the World

CommsMEA…
Customer Acquisition
Consumer demand is forcing operators to look for new and creative ways to expand their businesses and generate profit. Some operators are increasing their network capacity to capitalize on the growing popularity of smart devices, such as the iPhone and iPad, and uptake of data services, while others are rethinking how to create loyalty and reduce churn through close customer focus.

As journalist Nithyasree Trivikram writes, in the Middle East, “where there are low-end subscribers and high penetration levels, there is more of a focus on strong distribution and active promotions” that target different customer segments. In comparison, with higher-end, mobile broadband services, operators will brand dongles and bundle them with value added services; for example, Vodafone Qatar offered free Facebook access to acquire customers and are also enhancing customer service by speaking over five languages in their call centres.

Moving forward, Nithyasree predicts that telcos will veer away from the primary role of network operators, and instead increase their focus on developing partnerships, digitizing the economy, and improving customer experience.

Total Telecom…
India May Auction More Wireless Broadband Spectrum
India’s Department of Telecommunications stated that it may auction more bandwidth for wireless broadband services. The main goal may be to boost the government’s finances; last year, the auctioning of two slots of wireless broadband brought in $8.23 billion. But, the operator benefits include the ability to provide high-speed Internet access as well as Internet telephony and television services. Auction winners can eventually use the bandwidth for voice and high-speed data services, as well. This is perhaps even more important as the future of more 2G and 3G bandwidth remains uncertain.

It will be interesting to see how this plan unfolds throughout the coming months. In a previous Around the World blog post, we highlighted India’s telecom landscape and the country’s insatiable demand for mobile communications services. This article is proof that legislation will play a big role in India’s future growth.

Computerworld…
Telco Cloud Providers Must Partner with IT Services Players: Ovum
According to a new report from analyst firm Ovum, telcos face operational challenges when it comes to offering cloud services. Ovum analyst and report author Mark Giles believes that operators have focused on getting cloud services to market quickly rather than on the complex and timely process of adapting their existing OSS/BSS to fit a cloud delivery model. But, the analyst notes, telcos can truly make their mark in the cloud by bringing internal network and IT teams together and collaborating with IT providers.

However, not everyone agrees with Ovum’s views. Alex Leslie of Connected Planet thinks that the analyst firm “missed the mark” and over-generalised in its report. He argues that telcos have invested in OSS/BSS technologies like real-time charging and policy control in order to support cloud’s on-demand service delivery model. Which opinion do you agree with?

Around the World

Gulf News…
Mobile Broadband on Growth Track

A recent Informa Telecoms & Media report indicates that mobile broadband growth in the Middle East and Africa will outpace that of fixed broadband. In fact, mobile broadband subscriptions are set to multiply more than 16 times to 430.7 million by the end of 2015, up from 25.39 million in 2010.

These numbers are a bit deceiving though, as the high incidence of multiple SIM use means that the number of unique users is markedly lower than the number of unique subscriptions. As the article points out, this will continue to be the case in the coming years because users want to take advantage of promotions and on-net tariffs, and due to the varied quality of service and extent of network coverage offered by different operators.

Mobile broadband growth is also causing claims that bandwidth hogs will make it difficult for operators to profitably run their networks, and leaving consumers wondering about how much bandwidth they are actually using. Like we’ve previously discussed, policy control can give communications service providers (CSPs) the levers they need to control service/resource supply, encourage customer demand with a more intelligent approach to bandwidth management, and see revenue growth.

The Wall Street Journal…
EU Roaming Data Caps Could Help Mobile Industry

This article discusses the European Commission’s plan to regulate the mobile roaming market, lower the data and voice charges incurred when traveling abroad and ultimately reduce bill shock. Currently, Europeans are paying an average of €2.2/MB. The proposed plan will dramatically reduce that number to 90¢/MB starting July 1, 2012 and falling even lower to 50¢/MB by July 1, 2015. As Neelie Kroes, vice president of the European Commission, stated:

“Competition is still very weak. Customers still get a raw deal when they cross borders. Operators still enjoy outrageous margins, particularly on data downloads.

Within a single market, there is simply no justification for huge mark-ups, just because you’ve crossed an invisible internal border that is supposed to have disappeared. And just because customers have little or no choice in the matter.”

Although this strategy would seemingly have a negative impact on CSPs’ revenues, these cuts may actually work in operators’ favour since high prices may be preventing people from using their phones while abroad. What do you think the new regulations will mean for the industry’s future?

Telecom Asia…
Innovation Requires Collaboration

Ovum’s Innovation Radar series highlights telco innovation in the second half of 2010. After tracking 300 new service launches across the fixed and mobile market segments, the analyst firm found a major trend—telcos are now innovating more collaboratively. They are carving a niche for themselves with adaptable structures that can support innovation rather than seeking to simply create the next best application. The telcos that did this, while leveraging their networks, brands, customer relationships, partnerships, etc., made significant strides at the end of last year. Analyst Emeka Obiodu also noted that, “the pre-eminence of the adaptable structure is going to become more pronounced as telcos move towards the future of SMART (operators that provide services, management, applications, relationships and technology) and LEAN (low-cost enablers of agnostic networks) players.”

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!