Strategic Drivers for Early to Market Policy
Oct 20, 2014
Strategic Drivers for Early
to Market Policy
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2009 2010 2011 2012 2013 2014 2015 2016Mo
bil
e b
roa
db
an
d (
WC
DM
A,
TD
-SC
DM
A,
HS
PA
, C
DM
A 1
xE
V-
DO
, L
TE
, M
ob
ile
WiM
AX
) c
on
ne
cti
on
s (
00
0s
)
Small-screen (handsets) Big-screen (USB modems, datacards, laptops, netbooks, tablets)
Big-screen reaches
724m in 2016 (20%
CAGR 2011-16)
Small-screen reaches
3.2bn in 2016 (24%
CAGR 2011-16)
Growth overtakes big-
screen from 2013
Source: Ovum
Mobile Broadband Market Status & Outlook
The opportunity: Connection growth continues
Source: Ovum
Mobile Broadband Market Status & Outlook
The impact on the customer: Data, data everywhere
Source: Ovum
Mobile Broadband Market Status & Outlook
The impact on the customer: A shift in the way we consume content
Source: Ovum
Mobile Broadband Market Status & Outlook
The impact on the customer: Data tariffs everywhere
Source: Ovum
• 'Global mobile data traffic grew 2.6-fold in 2010, nearly tripling for the third year in a row' – 'Mobile data traffic [in 2009] was three
times the size of the entire global Internet in 2000‘
• 'Global mobile data traffic will increase 26-fold between 2010 and 2015' – 'Two-thirds of the world's mobile data
traffic will be video by 2015'
– 'Mobile-connected tablets will generate as much traffic in 2015 as the entire global mobile network in 2010'
Mobile Broadband Market Status & Outlook The impact on operators: Every silver lining has a cloud
$0
$50,000
$100,000
$150,000
$200,000
$250,000
2009 2010 2011 2012 2013 2014 2015 2016Mo
bil
e b
roa
db
an
d (
WC
DM
A,
TD
-SC
DM
A,
HS
PA
, C
DM
A 1
xE
V-
DO
, L
TE
, M
ob
ile
WiM
AX
) re
ve
nu
es
($
mil
lio
n)
Small-screen (handsets) Big-screen (USB modems, datacards, laptops, netbooks, tablets)
Big-screen reaches
$50bn in 2016 (12.6%
CAGR 2011-16)
Small-screen reaches
$167bn in 2016 (18.1%
CAGR 2011-16)
Source: Ovum
Mobile Broadband Market Status & Outlook The impact on operators: Revenues not growing at the same rate as connections
• Differentiators are hard to find, so pricing will remain key
• Operators are only able to charge an LTE premium over 3G/3.5G for a while
– < 20% in Asia / >100% in Europe • Plans emphasize high data speeds,
esp. Europe
– Quality & consistency of user experience are powerful differentiators, but it is difficult for users to compare
• Devices offer differentiation in the short-term
• Segmentation by peak speed encourages take-up
– E.g. Vodafone Germany
36 3843
79
95
87119%
129%
121%
0
10
20
30
40
50
60
70
80
90
100
Tele2 Telenor Telia
Mo
nth
ly f
ee
(U
S$
)
0%
20%
40%
60%
80%
100%
120%
140%
% p
rem
ium
ch
arg
ed
fo
r 4
G
Monthly fee of high-end 3G package up to16Mbps (US$)Monthly fee of high-end 4G package up to80Mbps (US$)Premium charged for 4G (%)
Source: Ovum
Mobile Broadband Market Status & Outlook The impact on Operators: LTE is no ‘killer app’ & competition is already intensifying
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
2009
2010
2011
2012
2013
2014
2015
2016
Mo
bil
e o
pera
tor
serr
vic
e r
even
ues (
$ m
illi
on
)
2G data access Mobile broadband
Value-added services Messaging
9% of data revenues
in 2009, falling to 6%
in 2016 (0.65% CAGR
2011-6)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2009
2010
2011
2012
2013
2014
2015
2016
En
d-u
ser
reven
ues f
rom
paid
-fo
r d
ow
nlo
ad
s
(no
t in
clu
din
g a
dvert
isin
g)
($ m
ilio
n)
- D
RA
FT
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
To
tal
paid
fo
r ap
pli
cati
on
do
wn
load
s (
000s)
-
DR
AF
T
End user revenues from paid for downloads(not including advertising)Total paid for application downloads
Total ops & 3rd
parties revenue
hits 8.4bn in
2016 (CAGR
2011-6 16%)
Source: Ovum
Mobile Broadband Market Status & Outlook The impact on Operators: Operators won’t benefit from content & apps growth
Source: Ovum
The impact on Operators: Complex ecosystems
Regulator telecoms banking
Device Vendors
Mobile Operators
MNOs MVNOs
Banks
Government aid
agencies
Technology vendors
Specialist research bodies
Agents & Resellers
Charities/ NGOs
Enablers /
intermediaries
Mobile
Industry
associatns
Mobile
Industry
associations
Enablers /
intermediaries
Mobile Broadband Market Status & Outlook The impact on Operators: Business models must change
Excessive data usage must be paid for
Service bundling is becoming
critical
Fair Usage Policies
Mobile revolution
The end of unlimited?
Key Messages
• There is undoubted demand for mobile data
• Network investment must increase
• Customers can look elsewhere
• LTE is not a panacea
• Long-term & Evolution are the key words
• New Business models & ecosystems
Technology & Network Evolution
2G
GSM
3G+
HSPA+
3G+
HSDPA
3G
UMTS
2.5G
Edge
4G
LTE
9.6k
11M
100M
5.8M
384k
Internet browsing
Web search Email Read blogs
Social
networking
IM News online
Streams video
Streams
music
Web search
1M
File sharing
Download
movies
Play online
games
Internet
banking
Access
speed
Mobile Data Consumption Drivers
Three main drivers
• Customers expect a seamless
experience regardless of device
• Online services worldwide are
increasing cutting deals with
content providers
• The ‘capacity crunch‘ is recognized by most operators
• Growth in demand for capacity has exceeded the growth in supply
• Revenue is no longer connected to the cost model; flat rate is no longer a viable option
• User expectation of mobile broadband is set by their experience with fixed broadband
• OTT providers are launching bandwidth intensive applications
• Mobile networks are experiencing more capacity issues
• Anticipating traffic patterns & building traffic models
• Managing traffic load while increasing service personalization
• Striking a balance between network & pricing policies
• Ensuring QoE for the increasing demand for quality video experience & enhanced monetization
Current Challenges in Mobile Data Supply
Policy Management Objectives
What’s Policy all about
• Differentiated access to services
• Allocation of network resources to
better manage congestion burdens
Dynamic
decisions
• Subscriber profile, location, equipment
• Network capacity
• Source & type of traffic
Decisions
based on
• Any IP application
• Mobile, wireless & cable/broadband
Applicable
for
Policy
Enterprise/
Parental Control
Fair Usage
Congestion
Mgnt
Bill shock
Charging
Content Charging
Location Based
Charging
Spending
rewards
Service
personalization
QoS
Premium
services
Policy Management
From network-centric to subscriber-centric approach
Control
Fair Usage
Congestion
Management
Parental
control
Bill shock
Prioritization
Subscriber self
care and
personalization
Application
bundles
Service
limited pass
• Complex spend control
• Resource prioritization
• Dynamic up-selling
• Congestion control
• Load balancing
• Optimized routing
Monetization Differentiation
Evolving Services
New requirements
By Subscriber profile
By Access method
Gamers Business
Heavy
users Basic
Blackberry IPhone
Key
applications
Parental
control
Allocate
number
Set
priorities
Premium services
Spending
reward Bill control
By Application
By Device
By Volume
By Time
New Business Models
Consumer electronic devices – future growth of mobile comms
Policy Management
Emerging Markets – Need for Congestion free Networks and Traffic Monetization
Network Pricing
Mobile data
usage
Policy Management
Emerging Markets Status
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2010 2011 2012 2013 2014 2015 2016
Glo
bal m
ob
ile b
road
ban
d c
on
necti
on
s (m
illi
on
s)
of which big-screen
of which small-screen
• Transition to 3G and LTE begun
• Limited CAPEX to increase coverage
• Internet penetration in emerging markets:10%
• Data services cost at least twice in emerging markets comparing to mature markets
• Broadband pricing is low
• In several emerging markets data services are already charged using usage based models
• Reduced data delivery costs evolving to 3G/4G, implementing policy control & optimizing the network
• Need for tiered, dynamic, usage based pricing and charging
• Tiered services
• Mobile advertising & mobile commerce on the corner
• Challenges in terms of product innovation, infrastructure investment monetization & costs optimization
• Growing 3G/LTE penetration
• Lowe cost Smartphone and high concentration in urban areas
• Increasing bandwidth demand
• Popular mobile applications and flat rates
Policy Management
Mature markets – Need to reduce data delivery costs
Strategic drivers for policy adoption
Functional footprint
POLICY
Subscriber Intelligence
Personalised subscriber service
experience
Assured Monetisation
Revenue assured & flexible
service charging
Marketing Improvements
Increase ARPU with tiered
and evolved data services
• Proven experience and references
• Cost effective alternative
• Multivendor operability
• Established solution roadmap
• Focused on innovation
• Willing to offer knowledge sharing opportunities and training
• 3GPP compliant
• Can offer a best of breed, tailored made pre-integrated solution
Policy Management
Vendor evaluation
– Carrier-grade, highly extensible and configurable solution, enabling you to adapt it easily to changing business needs
– Established roadmap and evolution path to 4G/LTE and for policy convergence across both fixed and mobile
– Independent of network infrastructure
– Full 3GPP compliant
– Contextual, supported by subscriber awareness
– Become an active member of VAS and content from the network value chain
– Engage in beneficial partnerships
– Easily charge for OTT services
Policy Management
Recommended approach: implement today a scalable solution
Take Away Ideas
• Policy management goes beyond managing the supply capacity & should be subscriber centric
• New business ecosystems require an entirely new approach – early adoption of a policy management will bring a competitive advantage
• To generate new revenue streams, policy needs to be deeply integrated with BSS - particularly with the charging components
Mobile Data Accessibility
Mobile Broadband Users Growth: 2010-16
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2010 2011 2012 2013 2014 2015 2016
Africa
Middle East
Asia-Pacific
Eastern Europe
Western Europe
South & Central America
North America
Source Ovum
• Mature markets are driving innovation, but emerging markets are driving volumes. According to an Ovum forecast, overall mobile broadband users will grow at a CAGR of 28% by 2015.
• While growth will continue to be robust in Western Europe and North America, the strongest growth is forecasted to occur in the emerging markets of Asia-Pacific, the Middle East & Africa, with compound annual growth rates exceeding 35%.
How is the future profiling?
• Video traffic is doubling every 12 months
• By 2015 there will be in use approximately
one mobile-connected device for each
person from the planet
• Smartphone's user consume more than
twenty times more data than traditional
handsets users
• 48 million people around the globe have
mobile phones even though they don’t have
electricity at home
Policy Management
Mobile data monetization use cases
Policy, Charging & Traffic Control
Use cases
Market Offer
Tiered Priced Quotas
Time Based Services
On-Demand Capacity
Rich Communication Services
Machine to Machine Services
Cloud Computing Services
Per Usage Based Services
Service Control
Backhaul Reduction
Roaming
Application Filtering
Application Bandwidth Control
Application Store Partnerships
Pre-pay Control
Fixed to Mobile Convergence
Device Based Control System Function
3GPP PCRF
3GPP OCS/OFCS
Active Mediation
Network Edge Rating
3GPP PCEF (Service Level)
Deep Packet Inspection
WIMAX CSN Node
Customer Experience
Bill Shock Control
Advice of Services & Charge
Application Quality of Service
Service Personalization
On Demand Activation
Employee/Parental Control
Loyalty Rewards
Service Self-Care
• Monitoring and metering applications
• Prioritize, shape and block traffic flows to control congestion
• Dynamic resource allocation
• Exploit highly valuable information such as:
− Most popular applications for each service plan, period, region
− Top users per service plan, period
− Quota usage
• Enforce or restrict OTT applications traffic
• Subscriber awareness and quota management
Policy Management
DPI – When and Why Do You Need it?
− Greater personalization and user control
− Enhance management and monetization
− Real time network intelligence
− Content usage patterns
− High value customers
Policy Management
Strategic drivers
Broadband Usage Protection Market Segmentation Extend Business Paradigm
Bill Shock
Fair Usage, FMC &
Capacity Mngmt.
Tiered Quota
/ Usage Mngmt.
On Demand Application
QoS Capacity&Control
Managed Services
(VoIP, IMS,RCS, M2M)
2-Slided Business Models
(Apps Store QoS & Telco 2.0)
Policy Management (Gx)
& Monitoring
Policy Management
(Gx), Charging (Ro),
Monitoring &
Enhancement
Policy Management
(Gx&Rx), Charging
(Ro&Gy), DPI,
Monitoring &
Enhancement
Policy Management (Gx,
Rx, S9) & Charging
(Ro&Gy), Monitoring &
Enhancement, DPI
Applicable
Mobile 3GPP
Standards 2.5G/3G PCRF &DPI
2.5G/3G PCRF, PCEF and
OCS/OFCS
2.5G/3G/LTE Visiting/Home PCRF,
OCS/OFCS, PCEF, IMS, GAN and
AF
Finance Minimizing Network CAPEX
And Customer Care OPEX
Network Investment and
Reducing ARPU Erosion
ARPU Improvement through
improved value proposition
Mobile Service Evolution
Systems
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