CONTROL TRAFFIC CUT COSTS Dynamic Discount Solution
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CONTROL TRAFFIC CUT COSTS
Dynamic Discount Solution
IntroductionThe Dynamic Discount Solution applies specific discounted tariffs for voice, data or SMS for a particular time, cell or user group, then alerts users to the opportunity. These targeted offerings can effectively push traffic from peak to off-peak periods to balance out network load – as a basis for increasing revenue or driving subscriber growth.
An example could be a neighborhood in which heavy business
traffic during the day normally drops off dramatically at the end
of business hours. Encouraging local residents to call during the
evening or overnight uses underutilized network capacity, creating
income when the network would otherwise be costing money.
For consumers this means:
Better value for money from cheaper calls, SMS and data, >including different discount levels for voice, data and SMS
Greater control of their spending, as real-time broadcast >messages ensure they always know the current discount level
Improved network quality and better call completion during >high-use periods as congestion is lessened or eliminated.
For price-sensitive customers, it may be their first and only
opportunity to access mobile services.
Unlike other systems that provide static off-peak discounts,
Ericsson’s Dynamic Discount Solution lets operators react
dynamically to local load and revenue patterns. It gathers
historic and current data on network load, revenue, traffic mix
and other parameters, and then uses this information to apply
the optimal discounts for each individual cell.
The Dynamic Discount Solution makes once-unthinkable
business models viable, and provides a strong competitive
advantage, especially for those who are first to implement the
solution in their markets.
The benefits for network operators include:
Increased revenue from greater network traffic and more >efficient network utilization during low-traffic times
Reduced traffic during peak times, leading to better voice >quality and less congestion, which helps improve customer
satisfaction and reduce churn
Increased market share through adding price-sensitive >users attracted by the substantial discounts
during low-traffic periods
The ability to defer capital >investments by getting the most
out of the existing network.
ERIcSSon DynAMIc DIScoUnT SolUTIon 2
Market overviewoperators invest huge amounts in their mobile networks, which are designed to cope with periods of peak traffic and ensure connectivity in line with regulatory requirements. These peaks only occur a few times each day, however, resulting in excess capacity for the majority of the time.
In many networks, more than half of the available capacity
is “wasted” in this way. This excess capacity provides a
significant opportunity for operators to increase revenue,
boost network utilization, improve customer satisfaction
and attract new customers.
Subscribers are extremely sensitive to price levels. They have
limited financial resources and search diligently for the best
value for money when deciding where to spend. They have no
problem with changing operators when they find a better deal.
operators need a clear competitive advantage in order to win
and retain subscribers.
Some operators have tried using static, off-peak discounting to
encourage users to make calls at times of low traffic. This can
change traffic patterns, but carries the significant risk of
cannibalizing revenue when existing subscribers simply shift
their usage in order to exploit the off-peak tariff.
Rapid subscriber growth in emerging markets is also putting
pressure on networks, particularly during peak traffic periods.
And in both high-growth and more mature markets, high peak
levels of voice and data traffic at specific times of the day lead
to congestion and unacceptable numbers of dropped or failed
calls and data sessions.
The success and widespread adoption of flat-rate data
packages is also having a significant effect, pushing peak traffic
to extreme levels and affecting data reliability. All of these
factors are putting pressure on operators to invest in upgrading
their networks, even when there is extensive unused capacity at
other times of the day.
Dynamic discounting – using specifically adjusted tariffs
to encourage or discourage usage at particular times, in
particular locations or among specific user groups – has been
used successfully in numerous markets across Africa, and is
now being deployed in Asia.
Dynamic discounting also has significant benefits in more
mature markets, such as increasing ARPU, improving network
utilization and quality, and increasing market share and revenue.
ERIcSSon DynAMIc DIScoUnT SolUTIon 3
PROTeCT AND MAxIMIze PROFITThe Dynamic Discount Solution uses a
revenue optimization loop to ensure
revenue is maintained and maximized.
Business rules are set according to the
objectives, whether maximizing
subscriber growth or revenue, first one
and then the other, or a mix of both.
This discourages users from generating
traffic at peak times; if they still do call at
these times, their traffic generates
additional revenue. As traffic levels drop, the
system activates discounts of 20 percent or
more, encouraging users to call. Increasing
discounts as network traffic drops keeps
the network utilization at an optimal level
while at the same time maintaining and
even increasing your income due to the
increased overall usage.
INCReASe MARkeT ShAReour Dynamic Discount Solution lets
operators introduce innovative business
models that win new subscribers and
retain existing customers. Targeted
discounts and bonuses can attract
price-sensitive users without eroding
prices for, and therefore the profitability
of, other users.
Subscriber growth comes primarily in
two ways:
low-income users suddenly get access >to affordable telephony services
The discounts attract subscribers >from competitors’ networks.
Automatic cell-broadcast messages let
subscribers know about the current
discount rate, encouraging traffic when
you want it, and strengthening the correct
perception that your subscribers are
getting something extra.
Users also feel more comfortable making
longer calls when discounts apply, and
make shorter calls during peak pricing
periods. This also helps shift load to
off-peak periods.
GeT The MOST OUT OF NeTwORk INveSTMeNTBy shifting traffic from peak periods to
times of low traffic, operators can defer
the need for additional capital investment
in the short term, and improve user
satisfaction in both 2G and 3G.
Ericsson’s Dynamic Discounting Solution
shifts traffic from high-traffic periods to
low-load times. As well as using
underutilized capacity, this means less
peak-period pressure on the network,
resulting in better voice quality and call
completion, and leading to satisfied and
loyal customers.
Shifting traffic from high-load times also
extends the network’s lifetime. Without
the constant pressure to expand peak
capacity, operators can defer further
capital investment until they have
received the greatest return from their
network. This in turn keeps operational
costs down by avoiding the need to
operate additional equipment.
key capabilities
ERIcSSon DynAMIc DIScoUnT SolUTIon 4
TRANSPAReNT USeR exPeRIeNCeThe Dynamic Discount Solution been
designed to ensure a transparent
and simple user experience from the
very beginning.
It is simple for users to register for the
service. They receive constant cell-
broadcast messages, which clearly state
the level of discount that applies at that
time in that cell, enabling subscribers to
follow how the discount goes up or down.
When the subscriber places a call, starts
a data session or has sent an SMS, a
separate USSD message states clearly
exactly what discount or bonus applies.
As well as putting subscribers in control of
their spending, these messages also act
as advertisements, discouraging them
from connecting at peak times, when
tariffs are high, and encouraging them to
do so when tariffs and traffic are low,
when the network has spare capacity.
And after the call, SMS or data session,
the reporting system ensures the correct
discount is applied for billing and
revenue tracking.
FLexIbLeThe success of the Dynamic Discount
Solution in voice and SMS can now
bring similar levels of growth to
data-service subscribers.
The flexibility of dynamic discounting
can be particularly useful for mobile
broadband operators who have
introduced flat-fee or “bucket” data
services. For example, a flat-fee user
might have a cap of 5GB of data per
month. When a 50 percent discount
applies, only half the usage will be
deducted from the monthly limit. This
encourages users to shift their usage to
lower-traffic times of the day, relieving
pressure on overloaded mobile
broadband networks.
The Bonanza feature lets operators create
special promotions, using attractive
short-duration discounts on selected cells.
Typically 5-10 minutes, the Bonanza
promotions alert users to larger-than-usual
discounts for voice, SMS or data using a
special cell-broadcast message. Using
operator-configured business rules, the
solution selects the cells at random so
that users across the network share in
the Bonanza benefits.
exPeRIeNCeD bUSINeSS CONSULTING AND bACkUPThe Dynamic Discount Solution is the only
solution of its type. customers who have
introduced it in their markets have gained
a significant first-mover advantage, giving
them a head start over the competition.
But it is vital that the solution is developed
to take into account the specific challenges
and circumstances of the local market. If
not, it can be as inflexible and risky as a
static solution.
We use the experience we have gained
from operating this solution in a variety of
markets, and the resulting insights into
how subscribers respond to the dynamic
discounting concept, to ensure discounts
are computed for optimal benefit.
As the pioneer and only expert in dynamic
discounting, we use our consulting
business to investigate your market, help
with targeting segments and find the way
for you to get the most out of the solution
and the opportunities it brings.
We also know how to roll out the solution,
integrate it and tune it – how to make
sure you make money.
Key capabilities (Con’t)
5 ERIcSSon DynAMIc DIScoUnT SolUTIon
executive summary
your network has capacity going to waste. you could use it to
increase your revenue, grow your subscriber base, use your
network more efficiently, relieve peak-traffic congestion, and
reduce your capex and opex. or not.
The Dynamic Discount Solution uses your excess network capacity to:
Increase revenue >Improve your returns on investment and get more out of >your network
Win and retain customers >Allow you to defer network expansions, reducing both capital >and operating expenditure.
It does this by using discounted tariffs to shift load within your network,
away from periods of peak congestion to times when your network
has unused capacity.
This solution is dynamic: it uses historical and current load
and revenue data, and the business rules
set according to your business objectives,
to determine the optimal discount for
each individual cell, at specific times.
near-real-time monitoring allows you to
react quickly to network conditions and
unexpected events. A powerful
algorithm ensures control of your
revenue. Broadcast messages let your
customers know the discount level at
any time, encouraging them to call,
text or consume data – when
you want them to.
Real-time dynamic pricing has the
potential to increase customer loyalty and shape network traffic across a broad spectrum of market situations.
- Andy Hicks, Senior Analyst, IDc, July 2009
We’ve been doing this for years, helping operators win
millions of customers. The Dynamic Discount Solution won
the Africacom prize for innovation in 2008. The experience
we have built up is experience you can use to achieve your
business objectives, whether you want to maximize subscriber
growth, revenue growth or a combination of the two.
It’s all about seeing the excess capacity in your network as
a resource – one that can make you money and help your
business. Using our experience, the Dynamic Discount
Solution can help you achieve your business objectives
– whether you want to maximize revenue, optimize network
utilization or expand your subscriber base.
ERIcSSon DynAMIc DIScoUnT SolUTIon 6
Complete SolutionAs we mentioned earlier, the Dynamic Discount
Solution is not a feature: it is a new way of offering
services and getting the most out of your network.
It is a matter of finding a balance between discounts
and incomes, between subscriber growth and
revenue growth, and between encouraging traffic
and shifting it to a later time.
We can help you find that balance. our extensive
experience and broad competence can help you
analyze your market, network and subscriber base,
setting the parameters that let you use innovative
business models to achieve your objectives. We can
help you develop new revenue streams, improve the
efficiency of your network and win new customers.
This is possible because we have both a presence
in your market, and the global reach of a truly
international company, giving us access to best
practice born of thousands of projects, of all
scopes and sizes.
In close cooperation with our customers, we plan
and organize the project, managing quality, risks
and progress throughout the entire project life cycle.
our approach to project management is customized
to handle challenges within the telecommunications
area, while being based on industry standards.
our strength in systems integration helps ensure
your customized Dynamic Discount Solution works
correctly from day one, eliminating costly delays,
downtime and damage to your reputation.
Ericsson is the industry leader in telecom
services, with the most comprehensive network
of experts covering all areas of communications
technology. Through our support services,
we are ensuring that networks in 175 countries
can deliver reliable services to more than
2 billion consumers.
ERIcSSon DynAMIc DIScoUnT SolUTIon 7
Ericsson AB
SE-164 80 Stockholm, Sweden
Telephone: +46 10 719 0000
Email: [email protected]
www.ericsson.com
En/lZT 138 0449 R1A
© Ericsson AB 2010
Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership.
Providing innovative solutions in more than 175 countries, Ericsson is helping to create the most powerful communication companies in the world.
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