WHITE PAPER: building the foundation for LTE revenue

© Copyright Openet Telecom, 2013

Building the Foundation for LTE RevenueEvolving Legacy IN Charging and Billing Systems to Accelerate Service Innovation

White Paper

White Paper - Building the Foundation for LTE Revenue

2 © Copyright Openet Telecom, 2013

INdEx

Index 2

Introduction 3

Why Evolve Legacy IN Charging and Billing Systems 4

Challenge 1: Lack of Real-time Support and Flexibility, Essential for High Speed Data Monetization 6

Challenge 2: Slow Time to Market and Limited Support for Marketing Initiatives 6

Challenge 3: Lack of Convergence and Ability to Provide an Integrated Customer Experience 7

Challenge 4: High Cost 7

The Five Pillars of LTE Revenue Generation 8

1. The Central Pillar of High Speed Data Monetization - Real-time Charging 8

2. Enabling Context-Sensitive Offers and VoLTE – Integrating Real-time Charging with Policy Control 9 3. Understanding Customer Behavior and Context – the Role of Real-Time Intelligence 10

4. Offering the Ultimate Purchasing Experience and Stimulating Spend – On Device Sales/Purchase and Interaction 11

5. Convergent Architecture and Ease of Interoperability to Deliver Real-Time Charging to all Customers 12

Conclusion 13



INtroduCtIoNThis whitepaper discusses the necessity for operators to evolve their current Intelligent Network (IN) charging and traditional billing in order to have the foundation in place to really profit from the rise of high speed data / LTE. It examines the revenue-generating infrastructure that operators require with the advent of LTE, the five pillars of such infrastructure, and the central role of convergent real-time charging. It also analyses the challenges they face with current IN charging and traditional billing infrastructures in a data-centric world, in light of their key strategic goals (Figure 1) and highlights the redundancy of IN platforms as Voice over LTE (VoLTE) is introduced.

Many operators have already taken steps to evolve their legacy charging infrastructures to better monetize LTE. For example, in North America, Bell Mobility had updated their infrastructure prior to evolving to LTE, adding a scalable, real-time charging infrastructure to roll out a broader array of personalized pre-paid and post-paid services. This new deployment was a key enabler for revenue growth for Bell and consists of a 3GPP compliant Online Charging System which incorporates Convergent Real-time Charging, Rating, and Balance Management. There are similar examples in Europe and the developing nations; A1 Telekom Austria for instance deployed convergent, real-time charging and policy control platforms, making it possible for their subscribers to benefit from enriched and innovative services that will enhance the customer experience.

Figure 1 - Operators’ Key Strategic Goals



Why EvoLvE LEgACy IN ChArgINg & BILLINg SyStEmSthe challenge of high speed data and the advent of voLtEWith 100 million LTE subscribers in 2012 and 381 operators currently investing in LTE (including 234 commercial launches) in 114 countries (source: GSA, Evolution to LTE Report 2013), LTE has been growing much faster than predicted (Figures 2 & 3), driving more volume, more complexity, and more use cases. For both 3G and LTE operators to maximize revenue, it’s paramount to put in place the right revenue-generating infrastructure now in order to make the most of LTE speeds - as a recent survey by Informa Telecom (source: Informa, Succesful LTE Strategies 2012) has clearly shown that LTE itself does not create new revenue streams.

The speed and data-led services that high speed networks like LTE drive present a challenge to legacy Intelligent Network (IN) charging and billing infrastructures, originally designed for simple voice transactions. These systems have found themselves quite limited in their ability to cope, let alone to provide the flexibility, real-time capability, and support for innovation that operators require in an increasingly data-centric fast world. These limitations directly affect operators’ ability to quickly and cost effectively create innovative revenue streams, and provide a seamless revenue-generating experience to their customers. Convergent real-time charging systems have therefore been introduced to enable operators to better monetize data and their overall services.

As Voice over LTE (VoLTE) is introduced (Figure 4), it won’t be possible for operators to maintain legacy IN charging systems which were originally designed for traditional voice services, as they are inherently unable to handle data, VoLTE being a data service.

Figure 2 - Global LTE Subscriptions by Region, 2011-2016

Figure 3 - Number of Global LTE Subscribers Forecast



Figure 4 - Primary Solutions for VoLTE

In a word, operators need to review their current IN charging and billing infrastructures in light of their strategic goals (Figure 1), taking into account upcoming VoLTE services. The time for this is now to avoid further investments in already costly IN platforms that are not adequate for their most lucrative and soon only source of revenue - as everything becomes data.

Below the top five challenges most legacy charging and billing infrastructures are faced with in the context of LTE. Most of them are derived from their inherent inadequacy for high speed data as well as their silo based architecture, with:

yy Post-paid billing systems, consisting of mediation, rating, billing, which are typically batched,

software based, and reside within the IT domain

yy Intelligent Network (IN) pre-paid charging platforms, which are hardware based and were

introduced a number of years ago within the core network to provide the real-time capabilities

needed to manage, rate, and charge for traditional voice services



Challenge 1: Lack of real-time Support and Flexibility, Essential for high Speed data monetizationBy their nature, 3G+ and LTE networks enable high speed data services that generate very high volumes of transactions and require strong real-time capabilities to meet and monetize the demands of customers who want it all now; real-time charging is central to flexibility and innovation.

However, IN pre-paid charging platforms do not cost effectively support the fast processing and high scalability that 3G+/LTE data services require. A traditional voice service would typically generate one record per call whilst a single data session can generate multiple transactions that need to be processed in real time. Also, legacy post-paid billing systems do not support real-time charging, which is why IN pre-paid charging platforms were introduced in the first place.

Furthermore many IN platforms were designed to only charge by volume/time and are often unable to support more sophisticated charging models based on content/third party applications, context and value. This is required to deliver maximum value to customers and subsequent revenue to operators (e.g. a movie at a fixed rate—the related traffic should not be charged for or counted against the subscribers monthly volume threshold).

Although many, if not all operators have tried to charge for data using their legacy infrastructures, most ended up with solutions that are often not viable and not flexible, as well as being both time consuming and costly to develop (e.g. bits have been converted into minutes/seconds to charge for data). As operators’ business models evolve and charging requirements become more complex, charging and billing platforms must also evolve to make it simpler for operators to innovate and better monetize high speed data.

Challenge 2: Slow time to market & Limited Support for marketing InitiativesIn an increasingly dynamic environment, where service introduction cycles need to be faster and faster to seize market opportunities and up/cross-sell at the most opportune time, time to market is critical for operators revenue maximization goals. Distributed legacy infrastructures tend to cause delays as, for instance, multiple systems need to be configured to launch the same service to different types of customers or to apply any changes. Furthermore, IN systems tend to have long development cycles and operators depend on the IN vendors to create each new service.

A recent survey by Telecoms.com Intelligence and Openet highlighted that 80% of operators (from a survey of over 200) felt that existing billing systems restricted operators from getting new products and services launched fast enough (Figure 5).

Figure 5 – Survey Results: Are Billing Systems Holding Up Business?



Challenge 3: Lack of Convergence and Ability to Provide an Integrated Customer ExperienceCustomer experience is a key competitive differentiator for operators as they strive to deliver a compelling experience that stimulates loyalty and spend— something which legacy IN charging and billing infrastructures do not support effectively. First, with a silo based infrastructure, operators cannot usually offer seamless services to all their subscribers across payment types, networks, and devices, or offer them multiple payment options. This can result in frustration and churn. For example, some operators don’t enable roaming for certain services for pre-paid subscribers; vice versa, post-paid subscribers may not enjoy real-time advice of charge offered to pre-paid subscribers.

Furthermore, as subscriber data is distributed in different systems, operators may not have a single view of an individual subscriber; this makes it difficult to up/cross-sell effectively and to provide them with full visibility over all their services and usage/spending, which is a key loyalty driver. Worse, the same subscriber is often treated as a different one depending on whether their queries relate to their pre-paid or post-paid services. By being able to offer multiple payment options and services across their customer base, operators will not only better satisfy their customers but also increase their revenue base.

Challenge 4: high CostIn addition to increasing revenue opportunities to maximize return on network investment, operators also need to better control costs and remove as much unnecessary IT and B/OSS expenditure as possible. Not only are IN systems known to be high cost as proprietary and single network access hardware, but also the distributed nature of legacy infrastructures makes them very costly to manage and maintain. This cost accelerates when operators add custom developments to these systems in order to try and cater for high speed data models—knowing that they remain inherently inadequate, this process could be endless. It is more cost effective for operators to use flexible software based solutions that are specifically designed for high speed data.

The review of the limitations of legacy IN charging and billing infrastructures clearly highlights the necessity for operators to evolve these infrastructures in order to meet their strategic goals in the era of LTE.



thE FIvE PILLArS oF LtE rEvENuE gENErAtIoNBelow are the five pillars that will enable operators to create a sustainable and dynamic revenue generation environment:

1. the Central Pillar of high Speed data monetization: real-time ChargingIn the era of high speed data, increasing competition, and ever demanding customers who want it all now, real time-charging is truly not optional. It is not only a necessity but also an opportunity to create more revenue streams from both prepaid and postpaid customers. A recent survey by Informa Telecom sponsored by Openet (source: Informa, The Future of Mobile Data Billing 2012) showed that most operators agree with this statement but only 10% of them had real-time capabilities in place for their post-paid customers.

With an evolved, real-time charging platform, operators will be able to quickly define and launch innovative dynamic services and promotions to generate new revenue streams. It allows them to easily develop flexible, sophisticated charging models that can incorporate third parties, to define these offers, and launch them in a single place for all subscribers and all services, regardless of payment methods or type of services.

By breaking down the payment silos, operators will not only be able to achieve faster time to market but also broaden their revenue base and better respond to customers’ needs: e.g. hybrid accounts, payment via credit cards, Paypal, or loyalty points.

Figure 6 – The Five Pillars of LTE Revenue Generation

Enabling dynamic Services“Dynamic Services” refers to the ability to create, present and charge for data services dynamically to reflect real-time customer usage and their preferences (figure 7)—this is the path to 3G+ and LTE revenue maximization. As an example, a leading EMEA operators used data roaming service passes to encourage roamers to use data and increased data roaming revenues by 35%.



Real-time charging is central to high speed data monetization; however its integration with policy control is essential not only to maximize profitability but also to accelerate innovation and create truly dynamic services (figure 7) that takes into account the customer context.

2. Enabling Context-Sensitive offers and voLtE: real-time Charging Integrated with Policy Control To effectively monetize the rise of high speed data, operators need to be able to create more innovative, value-based services that can be offered at the right time to the right person. This means truly dynamic services (Figure 7) that take into account the customer context in real time—This is made possible with real-time charging integrated with policy control.

Information on the subscriber context can also be used to dynamically allocate network resources and charge appropriately. This enables operators to create new business models that better link revenue to related traffic and cost. It also allows them to supply an appropriate, uncompromised quality of service that protects subscriber satisfaction. For instance, a video session would be allocated much more network resources than a simple e-mail service, and would therefore be priced differently.

Figure 7 – Dynamic Services

Context concerns information on the subscriber, their usage, and their experience on the network. This can include personal information (e.g. birthday), service subscribed, usage, special offer, location (home/roaming), time, restrictions (e.g. parental control), application accessed, device, etc.



Below are some examples of innovative business models enabled by integrated real-time charging and policy control:

Delivering VoLTE services also requires a deep integration between Policy and Charging functions. To ensure a high quality voice service, policy management is required to dynamically manage unpredictable mobile resources associated with each VoLTE call, while simultaneously ensuring the charge is based on voice call rates rather than data consumption.

3. understanding Customer Behavior and Context: real-time Intelligence The first step in enabling Dynamic Services is to understand customer behavior and context by collecting usage data through on-line mediation.

Traditionally, customer usage information is collected by mediation, passed to charging or billing, and then sent to a batch based data warehouse for analysis for use in planning and forecasting. This approach works well for strategic intelligence and reporting. However, customer intelligence on mobile data usage and behavior needs to be real-time in order to make context sensitive marketing and up-sell offers. In this case mediation can collect the data usage records, perform a real-time look up of the customer data in the existing data warehouse, and enrich the usage record with relevant customer information (e.g. life time value score, churn propensity score, etc). As illustrated in Figure 9, this enriched data record can then be passed to a real-time outbound marketing system that can trigger, if applicable, a context sensitive marketing offer to be sent to the customer’s device.

A simple example could be an outbound roaming customer who has switched off data roaming. The PCC system recognizes this, and in real-time, looks up the existing data warehouse and sees that this customer has a monthly subscription to a music streaming service. This enriched information is sent to an outbound system which triggers an SMS to be sent promoting a customer specific offer – e.g. buy a 1 day 50mb data roaming pass, with free access to music streaming service for €3. As well as providing the real-time data to trigger the context sensitive marketing up-sell, usage records from mediation provides the data needed to report on network performance as well as feeding usage intelligence to the data warehouse.

Figure 8 – PCC Enabled Business Models



4. offering the ultimate Purchasing Experience and Stimulating Spend: on device Sales/Purchase and InteractionSubscribers crave freedom and control over their services/budget. This is the key to keeping them loyal and making them feel comfortable and happy to spend more on data services. Being able to communicate context-sensitive offers, providing customers the freedom to purchase and activate the service at their own convenience, and then giving them real-time visibility over their usage/spend—all directly on the device—creates unprecedented customer satisfaction. This is the kind of revenue generating, personalized experience most marketers can only dream of right now. Furthermore, this can also reduce back end customer care costs for operators, due to fewer bill-shock complaints and more self-care.

The capability to support multiple interaction mechanisms to meet various customer expectations is essential to maximizing customer satisfaction. A smartphone application for purchasing and displaying real-time usage dashboards, combined with a secure interaction gateway between the application and the Policy & Charging Control network elements, takes customer engagement to a whole new level. To ensure subscribers are kept informed of the status of their account, real-time notifications also play an important role; e.g. purchase confirmation, usage alerts. Operators can take this opportunity to upsell and build loyalty; e.g. invitation to renew the plan, to upgrade, promotions, loyalty rewards etc.

This level of service and transparency can, in particular, help operators to activate dormant roamers and significantly increase data roaming revenues—knowing that a huge 70% of roamers worldwide do not currently use data roaming abroad (source: Juniper, Mobile Roaming Report 2012).

Figure 9 – Real-Time Intelligence



5. delivering real-time Charging to All Customers: Convergence and Ease of InteroperabilityConvergence is fundamental to fast time to market, but also to enabling more flexible business models and a seamless customer experience. With an evolved charging platform that allows multiple services to be delivered to all customers over different networks, operators will finally break down all the legacy infrastructure silos whether pre-paid/post-paid, data/voice, or fixed/mobile. This means more flexible bundles and also a unified view of all services—to provide full real-time visibility to customers and better customer care. This also means reduced total cost of ownership, with a single solution to enable all their service launches regardless of the network access technology.

The prospect of completely eliminating their legacy infrastructure will likely seem daunting to any operator. The cost effective option is to add real-time charging capabilities to their existing infrastructure with minimum disruption, thus enabling real-time convergent charging.

Figure 10 – On-device Sales/Purchase

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CoNCLuSIoNGiven the challenges operators are facing with their legacy, distributed IN charging and billing infrastructures, they are compelled to evolve in order to more effectively monetize the rising demand for high speed data, using value based dynamic services for instance. To achieve their key strategic goals, operators need to build a flexible infrastructure based on five key pillars, real-time charging being the central pillar. Such an infrastructure also requires policy control to enable context-sensitive offers and effectively deliver VoLTE. The third pillar is online mediation to enable the real-time intelligence necessary to create context-sensitive dynamic services. The fourth pillar enables operators to provide unprecedented revenue generating and personalized experience through on-device purchase and customer interaction. Convergence and interoperability is the final key pillar allowing operators to accelerate time to market, create a seamless customer experience, and leverage their current infrastructure to add real-time charging with minimum disruption. Many operators have already taken steps to adopt such an infrastructure and are already profiting from it.

ABout oPENEtSince the introduction of mobile data services in 1998, Openet has helped service providers capitalize on opportunities and overcome challenges. With competitive pressure accelerating, today’s service providers rely on Openet software to evolve business models around networking smartphones, M2M devices, and third party services. Openet’s portfolio combines policy and charging control with device and third party interaction to enable innovative charging models, to control operating cost, and to personalize services. More than 80 of the world’s largest service providers in 28 countries use Openet’s high performance software.

For more information, please visit www.openet.com.

WHITE PAPER: building the foundation for LTE revenue

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