Telecom Mediation: Time to Move Back into the Limelight?

By: Dan Baker, Research Director, Technology Research Institute

I imagine there are quite a few mediation fans out there reading Comptel’s blog. And if you’re one of those mediation fans, you’re probably wondering: “What ever happened to the mediation market? Why has the sector been so quiet in recent years?”

Well, as an industry analyst who’s been following mediation and other BSS/OSS markets for quite a few years, I’ve been wondering the same thing myself. Mediation doesn’t get the press attention and conference coverage that it used to, and that’s a shame because we know that mediation plays such a vital role in the telecom back office.

Behind the Curtain

Mediation is like the stage crew working hard behind the curtain of a theatrical production. They’re the guys who work the spotlights, handle the costumes, move the scenery and perform the dozens of other tasks needed to support the main actors. In telecom BSS/OSS terms, those actors include all of the functions who get the limelight coverage—billing, charging, policy control, revenue assurance, cost assurance, marketing and fraud management, to name a few. But the truth is that none of those actors would accomplish much unless mediation was there behind the scenes doing the valuable data collection, aggregation and often real-time query work it’s famous for.

So why is it that we don’t hear much about mediation these days? Well, I attribute it to a couple of things.

First, the number of independent software vendors who sell mediation solutions has dwindled over the years, meaning there are fewer mediation companies eager to get the word out about it. In recent years, for example, AceComm was absorbed by Ventraq. CSG picked up Intec. Narus, a vendor who leveraged its mediation technology in the cyber security business, was sold to Boeing in 2010. Comptel got into the act too, acquiring some of the mediation assets of the Norwegian firm, EDB Telecom, a few years back.

A second factor that’s put a damper on mediation’s visibility is the mobile broadband explosion. As the market for iPads, Androids and other advanced mobile devices took off, many of the mediation vendors, including Comptel, built on their mediation expertise to add products in areas such as charging and policy control.

Future Mediation Opportunities

Ok, so exactly where does mediation go from here? Will the sector stay quiet, or will we see some kind of resurgence in the next few years?

Well, count me as a mediation optimist. I know how deeply embedded mediation technology is in telecom, and I see several industry trends that signal some nice opportunities for mediation to step up and add value.

Analysing “Big Data” – Telecom is abuzz over “big data” and “analytics” applications these days. And if that’s the case, then mediation is in a bit of a sweet spot because it’s responsible for feeding and enhancing the data streams for those “big data” guys. And what if mediation stepped up and assumed some of those analytics functions itself? For instance, mobile subscriber location information lives in the network, and a mediation system can gain access to it in real time. So if a mobile subscriber flies to a foreign country, and when she/he arrives and turns on the mobile phone, mediation is responsible for sending the subscriber a promotion to sign up for a special in-country roaming plan.

Consolidating Multiple Mediation Platforms – Plenty of operators own more mediation systems than they care to admit. But you know the story: “Time to market is more important than achieving mediation system commonality.” Sooner or later though, high maintenance costs dictate it’s time to consolidate. And talk about bloat: one operator recently consolidated 40 mediation systems onto a single platform.

Converging Mediation Functionality – The software vendors are getting more clever at building mediation systems that handle multiple functions. They can do batch as well as real-time on-line transactions in the same architecture. Fixed-line and mobile services, pre-paid charging and post-paid advice-of-charge can all be done in one place now, making consolidation on an advanced platform more attractive than ever.

Merging within Multi-Operator Groups – Large multi-operator groups can greatly benefit from mediation consolidation. Here I refer to cases where usage data is collected and distributed, say, across four countries and served by a data centre in one of them. One operator we know, a Comptel customer, manages 43 million subscribers and two billion transactions a day using this approach. A key advantage here: mediation expertise only needs to be maintained in one location.

Offloading Processing Power – Services in the mobile data world generate a ton of usage. And the need to extract intelligence from that data is coming from two directions. First, marketing seeks to promote services and generate more revenue. Then, engineering looks to optimise the use of expensive network resources. Mediation is the logical place to offload much of that usage processing.

Not only does mediation have access to the data first, but it can often process that data at a fraction of the cost. The latest mediation platforms utilise X86 and Linux blades that can deliver the same processing power at one tenth the cost of a traditional  system. As we know, most telecom IT shops are religiously attached to UNIX. But because mediation’s home is in the network, it’s politically acceptable to diverge somewhat from IT’s architectural preference.

Conclusion

Maybe it’s unrealistic to expect mediation to move into the limelight. Mediation has thrived quite well in a supporting role. And it can certainly remain working quietly behind the scenes.

Yet, the opportunities are tantalising. If mediation can offload even a small percentage of mobile broadband bucket computation and analytics, then mediation’s value to the telecom back office is guaranteed to grow very nicely.

Dan Baker is the research director of Technology Research Institute (TRI) and has been following the BSS/OSS market since he formed TRI in 1994. He has just released a major 600+ page research report entitled, “Telecom Business, Fraud, Cost and Revenue Assurance: State of the Market and Practice”.

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Informa Telecoms and Media Blog…
12 Top OSS/BSS Trends for 2012
Analyst Peter Dykes highlights an exciting outlook for the OSS/BSS sector in 2012. He predicts that the growing requirement for more complex rating and billing functionality will open up opportunities for vendors, and says that improvements in this area are necessary for operators embracing LTE. For 2012, he also believes that in both mature and emerging markets, there will be a greater focus on areas such as customer experience, business intelligence and innovation in handling network congestion.

The predictions Comptel believe are particularly interesting include the rise in demand for OSS tailored to M2M services, which Steve Hateley recently wrote about, and the growth of policy-based online charging (OLC) as operators seek to offer more innovative services.  What 2012 prediction do you think is most surprising?

Telecomasia.net…
Five New Challenges for APAC Telecoms in 2012
Ovum analyst David Kennedy believes that tightening margins and streamlining business processes will be the main theme for the Asia-Pacific telecoms industry, as overall growth in the mobile market slows and competition for customers increases. David believes these five trends will drive the market forward in the region in 2012:

• The push for cost optimisation and efficiency – this will grow in importance due to increasing competition and margin pressures.
• The importance of customer service – operators will work to stay ahead of the competition with promotions, marketing, better network convergence/reliability, etc.
• The future of smart devices and mobile app ecosystems – successful devices will need to integrate applications, content and services into the platform.
• Network data management importance– as data surges, operators are being forced to alleviate network congestion and will roll out a combination of solutions including more LTE networks and Wi-Fi offloading.
• Bundling for customer retention – more bundling is expected to emerge for mobile-only and second-tier operators.

Do you agree that these trends will define the APAC telecoms industry in 2012 and ensure continued profitability and improved efficiency?

Telecoms.com…
Mobile Network Predictions for 2012
In 2012, the mobile market will see two key trends emerge: technologies critical to maintaining a high user experience and initiatives providing additional profit growth opportunities while reducing costs.  In an effort to improve the customer experience and increase revenues, operators are looking to invest in network sharing and traffic optimisation.

Another major issue in 2012 will be coverage for LTE networks, most notably in markets where operators only have access to high frequency spectrum. LTE femtocells are predicted to boom in popularity, which will benefit residential, business and public hotspots.  However, deployment of LTE small cells for capacity improvements is not expected to be widespread in 2012.

Additionally, investing in traffic optimisation for video is a hot topic, with content providers, CDNs and other vendors, and mobile operators debating various ways to deliver mobile content efficiently. We’re looking forward to seeing mobile innovations in action at the upcoming London Olympics, where operators are expected to showcase the successes of their technologies.

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Broadband Traffic Management…
Analysys Mason: MNOs Need a New Approach to Compete with OTT VoIP
A report from Analysys Mason forecasts that third parties could account for as much as 16 percent of mobile service revenue in Western Europe by 2017. Consumer interest in over-the-top (OTT) mobile VoIP applications, such as Google Voice and Skype, are forcing operators to address the issue of how to charge for these types of services. Principal analyst Stephen Sale and research director Tom Rebbeck state that short-term measures like blocking or charging a premium for OTT services fail to address the issue in a sustainable manner, and operators should instead use a scenario-based approach to engage with longer-term market developments and effectively compete. As the report notes, common themes across each scenario include the need for operators to use policy control to manage the price and value of third-party applications, along with the need for them to pay attention to customer behaviour.

Tech Central…
The State of Telecoms in Africa
Africa is quickly moving to high-speed broadband, yet the continent’s ability to offer more Internet services and data access could be hindered by the inability of operators to deliver reasonably priced, fast and reliable bandwidth. Russell Southwood, head of African telecom consultancy Balancing Act Africa, says migrating to LTE may be the solution needed to overcome this roadblock.

Despite the challenges outlined in the article, Africa’s fastest growing sector is the telecoms industry, as noted in previous highlights, which gives hope that operators will spur innovation through continued expansion and better service and greater rural coverage. In addition to LTE, what game-changing technology do you think is needed to achieve a high-speed Africa?

Pipeline Magazine…
Analysts Weigh in on the Customer Experience
Stratecast, Yankee Group and Infonetics Research discuss the customer experience management (CEM) craze and agree that defining CEM can be difficult. The bottom line though: increasing revenue and reducing costs do not automatically equal a better customer experience. However, working on customer experience first and implementing the right “technologies that allow you to do a better job of understanding your customers,” as Nancee Ruzicka of Stratecast says, “[can] reduce costs. They do improve revenues. They do have all of those positive money effects. Then you start to see your business case.” What do you think of the analysts’ points on CEM?

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.

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Bloomberg…
India May Need ‘Tens of Billions’ in Broadband Network Spending
India, Asia’s third-largest economy, is targeting better public access to information and services—a move that requires billions to expand broadband connectivity. The opportunity for telecom operators and both local and global companies supporting the infrastructure build-out is tremendous in this region, where the number of broadband connections is expected to jump 13-fold to 160 million by March 2015. However, this dramatic, rapid subscriber growth is challenging the scalability and affordability of India’s broadband network and 3G services.

As the article notes, overcoming growth issues requires new business partners and ways of structuring to make money, in combination with some innovation. Flexible, dynamic OSS solutions are also essential for enabling operators to manage and monetise these offerings.

The East African…
Global Cellphone Makers, Telcos Scrambling for East African Market
Like India, East Africa’s fastest growing sector is the telecoms industry. According to Jolyon Barker, global leader at TMT Deloitte, this will continue to be the case in the coming years, as more international companies invest in the region, operators heighten the competition and people own handsets and connect to the Internet anytime, anywhere.

Some of the key challenges facing the telecom sector in East Africa include the need for better infrastructure and energy supply to meet the demand for newer technologies and more connectivity services. There is also increased pressure on operators, particularly small, local ones, to find innovative ways to grow while maintaining a high quality of service on tight margins. Communications service providers (CSPs) can effectively handle this pressure with the right levers to control service/resource supply and further encourage customers’ use of data services. What advice would you give to CSPs looking to survive and succeed in the East African market?

RCRWireless…
LTE Asia: Can Mobile Operators Sell Volume-Based Pricing to Customers?
Sabah Hussain of Informa Telecoms & Media believes that with the capacity crunch, it is not economically or technically feasible to provide unlimited broadband for all. But will customers be able to understand volume-based pricing, and will they accept it?

CSL, one of the first operators to launch LTE, has proved that volume-based pricing can indeed be implemented while keeping customers satisfied. The operator has accomplished this by educating subscribers on how to keep track of their data consumption. It has helped them avoid bill shock via text messages, made it easier for customers to upgrade their price plans or buy additional capacity at any time, and ensured high-quality over-the-top (OTT) services. Sabah goes on to explain that “a more controversial strategy has been to migrate all CSL customers to LTE no matter what.”

Overall, Sabah concludes, moving everyone to LTE is an advantage because customers will no longer have to worry about the variations in quality of service they’ll receive or wonder about the differences between 3G and 4G. Do you agree with Sabah’s points about the benefits of moving all customers to LTE?

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Pipeline…
Where Does IMS Stand?
Tim Young asserts that IMS is making a comeback in large part due to the growth of LTE. While LTE is all IP, there is virtually no support for voice, and as such, IMS has become a real contender to fill this gap, specifically as it applies to Voice over LTE (VoLTE).

This trend toward increased usage is supported by a recent Infonetics Research survey, which found that 78% of respondents will have mobile-specific services deployed over IMS by 2013, a significant increase from 35% today. The analyst firm also identified the desire to offer converged services and deploy LTE as key IMS growth drivers.

When IMS first entered the industry, some critics noted slow carrier interest and grew skeptical of its longevity. Now years later, do you think this renewed carrier interest foreshadows a promising future for IMS?

Billing & OSS World…
Gov’t Plan, Smartphone Adoption to Drive Data Growth in Colombia
A Pyramid Research report predicts that the Colombian government’s plan to increase broadband access and the adoption of smartphones will fuel data growth throughout the next several years. The government wants to quadruple the number of Internet connections in the country to 8.8 million, and is putting special emphasis on the availability of infrastructure for broadband coverage. This plan, along with handset vendor competition, more spectrum availability and decreasing smartphone prices, is expected to maintain Colombian telecom market growth.

This view reinforces predictions that Latin America will see broadband penetration skyrocket over the next five years and the amount of subscribers increase to 150 million-plus. Managing these new customers and services will be critical, and OSS/BSS will certainly play a significant role, allowing the region’s communications service providers (CSPs) to focus on their core business.

allAfrica.com…
Nigeria: GSM at Ten in Nation
August marks the tenth year since GSM was introduced in Nigeria. GSM made telephone access available to everyone, eliminating the age-long dominance of the wealthy on telephone use. But, the most prominent result of GSM can be seen in the tremendous growth of subscribers, rising from 450,000 fixed lines in 1999 to 90 million active lines, fixed and mobile, today. This figure is expected to rise even higher to 118 million mobile subscribers by 2014.

As IDC analyst Andy Hicks notes, developed market telcos can learn from the achievements of CSPs in emerging markets such as Nigeria. These include aspects like offering compelling services and real-time solutions, as well as identity management. What are some telecom trends you’ve seen in emerging markets that others can draw inspiration from?

What Can Developed Market Telcos Learn from Emerging Markets?

By: Andy Hicks, Research Manager, EMEA, Telecoms, IDC

By this point, most of us know how dramatically mobile communications have affected the emerging markets, bringing services and information to people who previously had only tenuous links to the larger world. Mobile payments have brought elementary financial capabilities to millions of people formerly dependent on cash. Newly available information on markets, agricultural practices, government services and health have also eased and enriched users’ lives. Communications service providers (CSPs) are offering discounts based on the current usage of individual base stations, stretching their customers’ money and taming network congestion.

The speed of development in emerging markets leads some commentators to proclaim that we live in an era of “reverse innovation,” where things happen first in developing markets and then are exported to mature markets. I’ve never liked that term, which both flirts with condescension and seems to ignore the fact that, from the beginning, the work that went into most of these services occurred in markets developing and developed alike. But what of the central point? Have telecoms in emerging markets produced products or practices that could improve the business of CSPs in the developed world?

At first glance, maybe not. Mobile networks in Sub-Saharan Africa can double as point of sale networks because thereias no established competition, and because regulators are willing to grant them some leeway in order to extend financial services to the unbanked masses. In the developed world, telecoms networks will never supplant the established clearinghouses. Instead, the industry is focussing on enabling Near-Field Communications (NFC), which, in turn, require a level of infrastructure rarely found in emerging markets. And probably the industry’s biggest worry—competition with over-the-top players— has been a non-issue in emerging markets, since few people can afford data subscriptions. Basic pocketbook issues have meant that in low ARPU areas, it’s a 2G revolution.

But if you break down the emerging market success stories, you start to notice that many of the best practices are found on the IT side of telecoms, whether in charging or basic service design. Here, briefly, are three lessons I think we can draw from emerging markets:

• Compelling services are real-time services. Given the predominance of prepaid in emerging markets, it’s no surprise that real-time capabilities are so prominent. The dynamic tarriffing I referred to above relies on real-time analytics and discounts to direct users to less-trafficked cells. In developed markets, a few CSPs are experimenting with similar capabilities for their data networks, both pre- and post-paid.
• Usability is even more important than you think. Everybody mentions Apple when they want to talk about design, but when your transport is SMS and some of your user base is illiterate, making your tasks lightweight, universal and fool proof is a necessity. Developed world users flock to well-designed functionality as well. And optimizing communication between the client and the data centre is still very much an issue in telco services.
• Identity management is a key telco asset. If anything, it’s even more important in developed markets, where the telco has less of a natural place in payments value chains and where fraud can produce much higher damages in absolute terms. When NFC availability depends on vendors and the transaction is cleared by somebody else, the ability to certify a user is a natural capability of the CSP—until OTT players capitalize on foot-dragging to take over that function, too.

There are almost certainly others. Think of it this way: emerging market CSPs are running smart pipes over voice/SMS. Anybody in carrier IT can draw inspiration from that.

Andy Hicks covers telecom software, services, and business strategies in EMEA, with special focus on emerging markets, at IDC. Currently, he is focussing on the IT-ification of telecoms, the increasingly complex services market they compete in, and the work of multinational groups to rationalize their operations across borders.

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Computer Business Review…

Mobile Network Operators Face Surging Data Delivery Costs: Study

According to Juniper Research, mobile data delivery costs could go up to $370 billion by 2016—a sevenfold jump from $53 billion in 2010. The analyst firm reported that mobile network operators can reduce costs with Wi-Fi network build-out, femtocells and network sharing initiatives.  Juniper also suggested that mobile network operators in developing countries transition to renewable energy for off-grid networks.

The bottom line though: data usage is outpacing operators’ revenues. This only continues to underscore the need to strike a balance between encouraging service use, controlling resources like bandwidth and ensuring maximum payback. Policy control gives operators the levers to manage mobile data delivery and monetise the services.

Alcatel-Lucent Blog…

Customer Experience Management and the Thieves of Time

Did you know that it costs about five to ten times as much to acquire a new customer as it does to retain an existing customer? As Alcatel-Lucent’s Vincent Kavanagh notes, unfortunately, “money talks”— and most companies typically end up incorrectly distributing their marketing spend. They’ve also ignored the fact that happy customers have proven to stay longer and spend more, and not made customer experience management (CEM) a priority.

Luckily, operators are paying greater attention to CEM. They are being increasingly conscious of customers’ time and interacting with them more over multiple channels including social media. One important area that they have yet to tap into though is their OSS and network data, to gain a holistic view of subscriber activity. By doing so, operators can open up a myriad of possibilities and turn them into something that can be monetised.

TYN…

Cloud Computing: Latin American Market Will Be 69% in Five Years

IDC recently conducted its Cloud Solutions Roadshow in Argentina, and after meeting with various Latin American company executives, one of the research firm’s vice presidents, Ricardo Villate, has dubbed 2011 as “the year of the cloud.”

IDC survey results have shown that 14.5 percent of Latin American companies with more than 100 employees have implemented cloud services. This is nearly three times more than in January 2010, and the market is expected to continue this steady growth pattern, reaching 69 percent in five years.

It’s exciting to see barriers to enterprise cloud adoption like security and performance management being broken down, much like Comptel demonstrated through several TM Forum Catalyst initiatives.

Video Making up the Majority of Mobile Network Traffic

By Samantha Tanner, Telecoms IQ at IQPC

It’s been widely reported that video is making up the majority of mobile network traffic. Most recently, research has revealed that more than two-thirds of consumers are watching video on the iOS platform compared to other smartphone operating systems. The report from Futuresource further confirms that the increased viewing of mobile video has been driven by the huge uptake of smartphones and tablets, such as the iPad. However, the consulting firm, like many others, is sending out a warning message to mobile operators—many of which are going to start (and are already) coming under increased pressure to better manage the data and resources like bandwidth as the mobile video explosion continues.

In a recent Telecoms IQ interview, Jim Morrish and Matt Hatton from Machina Research highlighted the choice that mobile operators have to make when deciding how they want to handle the data they receive from these devices:

“So with that growth in traffic from smartphones and these nebulous other devices, what are the implications for operators? Well, obviously, they’ve got a choice. Either they spend a lot of money upgrading the network in order to cope with that demand, which might not necessarily be profitable given the relative prices of mobile data compared to more traditional services. Or, they can leave money on the table, or they can provide a full user experience—none of these are particularly appealing propositions.”

Morrish and Hatton then went on to identify a number of ways in which mobile operators can manage this vast growth in mobile video usage and data traffic, but both were in agreement that it would be ideal to gain more spectrum:

“Getting hold of additional spectrum is obviously going to be a strong method of dealing with additional demand. Taking a European country as a typical example, 3G has around 150 MHz of spectrum in the 2.1 GHz band. There are two potential extra sets of spectrum available for use of data. The first is newly available spectrum, so that’s the 800 MHz digital dividend spectrum and the 2.6 GHz spectrum. Now that will add an additional 250-260 MHz of spectrum to the current 150 MHz.”

Of course, greater network capacity can only work to each operator’s advantage as better bandwidth and the ability to crunch through more data becomes more attractive to customers. For example, in the U.S., AT&T has been under attack for not being able to match the network capacity of rival Verizon, who won most of the bids for open spectrum in 2008. However, AT&T saw another route in gaining more spectrum this year, with the purchase of T-Mobile. But, it remains to be seen whether this will provide a fix to the capacity crunch.

Additionally, DNA has teamed up with Comptel in order to control traffic congestion on Radio Access Networks in real time and allow for maximum network utilisation—and remain competitive in Finland’s fierce mobile market.

To read the full interview with Jim Morrish and Matt Hatton and to find out more information on Telecoms IQ’s Spectrum Management & Network Optimisation conference in September, please visit www.spectrummanagementevent.com.

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