Upload
phungtuyen
View
213
Download
0
Embed Size (px)
Citation preview
How to Operate
58 HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
Why Axiom?First of all, here are some facts about
the telecommunications market: the
worldwide revenue of fixed lines in
2003 decreased by 2.2% compared
with 2002, the year in which the glo-
bal revenue of voice traffic was about
510 billion USD while that of data ser-
vice was 170 billion USD (source: ITU);
a consulting company conducted a
survey on 22 fixed line carriers in Asia-
Pacific only to see two with a negligible
growth in 2003 and the rest with
reduced revenue or profit. So this is the
situation in the global telecom market.
Traditional operators are undergoing
the following challenges: the fixed and
wireless voice market is now approaching
the "economical" saturation point;
new technologies like IP and VoIP are
sapping the profit out of TDM; the
development of broadband (data
communications) lacks an effective
strategy and profit model; the fixed
voice traffic is diverted to mobile; the
competition field turns from voice traffic
management to complicated NON-
VOICE SERVICE operation.
Technologies and regulations are lowering
the boom of the industry: technologies
such as VoIP, PLC, 2G-3G PLMN,
BB, Cable, Wi-MAX and HSDPA can
provide more effective and valuable
communication services; the regional
regulatory rates of voice are diversified,
most of which are preferable to the
consumers; the tariff of voice changes
from regulatory rate to at-auction price,
representing its revenue as precarious
as the Sword of Damocles; No matter
how hard the telecom operators
squeeze their costs, they are unable to
make ends meet because the saved
pennies still cannot offset their loss
of income; it is too difficult for the
operators to survive from voice
operation; thereafter, the business
model of traditional voice operation is
an irretrievable failure in itself.
Almost all carriers (the whole telecoms
market) will transform from "basic tele-
communications" to "consumption
telecommunications", from price mode
to value mode and from network-
capability service provider to business-
Network AxiomA Close Look at the Key Issuesof Network Transformation
By Liu Nanjie
– Plus Discussion about Profit Models of3G/Broadband/NGN
How to Operate
59HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
Intelligent Network and Soft Switch are
to enable voice-added service. Al-
though IN only solved part of the prob-
lems in voice service application, it can-
not be properly reckoned as a top-layer
application protocol. It cannot eventu-
ally solve the issues about NGN/IMS
service. Parts of the value-added voice
processing functions in packet voice
Soft Switch are the rudiment of Service
Network.
The concept of Communication Sub-
net and Resource Sub-net models may
explain all the questions about NGN,
IMS, and Enhanced Service Network
(ESN). The whole network will return
to the OSI framework.
What is shown in figure 1 is the model
of Communication Sub-net and Re-
source Sub-net, respectively called as
"Egg Yolk Network" and "Egg White
Network", with the former providing
"Basic Communication" services and
carrying the Resource Sub-net while the
latter supplying "Consumption Com-
munication" services (non-essential and
personalized telecommunication). Both
sub-nets need operators and SPs.
Nevertheless, traditional internet does
not need carriers; it is thereby an inop-
erable network resource, not a resource
network.
The evolution of the telecommunica-
tion network from carrying operation
to service capability (resource) opera-
tion brings a broader horizon for
development. Facing the situation that
the price of the traditional service runs
to the cost, and the new services need
creativity and TVO/TCO (Total Value of
capability service provider.
As a matter of fact, the whole tele-
communications market is bringing
in the trends that mobile replaces
fixed, non-voice replaces voice, ICT
convergence supersedes traditional
business customers, value commu-
nication takes the place of price
communication, and resource
operators take over from network
carriers
Following this tendency, the next 3 to
5 years will see enormous changes and
transformation in the global telecom
industry: stagnant or negative growth
in the world fixed line market may
come along in the near future. The 3G/
BB/NGN based service operation will
gradually breed a new business model,
operation model or profit model.
Ther whole telecommunications market
is bringingg in the trends that mobile ser-
vice rereplaces rixed; non-voice substitutes
voice; ICT convergence superpersedes
traditional business customers; value
communication takes the place of price
communication takes the place of price
communication; and resource operators
takes over network carriers.
The so-called "network axiom" men-
tioned below is actually a summary,
generalization or abstraction of the
practices of non-voice service, mainly
addressing concepts that are clarified
to us if the network is viewed as a com-
bination of "Carrying Network" and
"Service Network". Once we assume
that the entire network is composed
of "Communication Sub-net" and
"Rethe service controlling parts using
packet switch technologysource Sub-
net", we will clearly understand service
operation and network operation, dis-
tinguish value from price, and explore
operation disciplines and profit model.
The concept of "Network Axiom" may
help to understand and solve most of
the doubts concerning convergence
between computer and communica-
tion and the practical problems oc-
curred dur ing NGN/3G/BB/ IMS
operation.
Axiom 1: The entire network is
made up of "Communication sub-
net" and "Resource sub-net".
"Network" is divided into two layers:
"RESOURCE SUB-NET" and "COMMU-
NICATION SUB-NET" (Core, Metro, AN
and W-AN belong to Communication
Sub-net) from essential and objective
perspectives, according to the OSI sys-
tem and the rules of a network's capa-
bility to carry and process information.
The important role of Resource Sub-net
can only be detected when communi-
cation is merged with IT.
In terms of the 7 Layers of the OSI
Model, COMMUNICATION SUB-NET is
engaging in the correct transmission of
information under Layer 4 (Transport),
while RESOURCE SUB-NET is dealing
with the accuracy of the grammar,
meaning, presentation, understanding,
synchronization and application col-
laboration of information. The principle
of the 7 Layer can easily clarify those
scrambling "convergence" between
networks, the confusion between ser-
vice and network, and the bewilder-
ment about price and value.
How to Operate
60 HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
Ownership / Total Cost of Ownership)
capability, operators should convert to
the systematic transformation oriented
to market application so that they can
completely conform to the objective
law of market requirement and keep
growing. Transformation from
denotational Expand & Reproduce to
connotational Expand & Reproduce,
from extensive operation to intensive
operation, from quantity oriented to
quantity & quality focused, from mere
attention to product management to
equal stress on both product and
resource management, and from
closed-end development to open-end
development.
Only through product and marketing
innovations can telecom operators
actively build up a state-of-the-art next
generation business model applicable to
personal communication, shifting their
role as traditional voice operator
(Carrying Network oriented) to new ser-
vice operator (Service Network oriented)
to maximize their market value.
Axiom 2: "Consumption Communica-
tion" is the most profound realm of
telecommunication operation; It is
boundless.
The carrying service in Communication
S u b - n e t p e r t a i n s t o " B a s i c
Communication", and the service
in Resource Sub-net belongs to "Con-
sumption Communication". Carry is
universally required. Operators buy
MOU, bandwidth and ports to provide
price-based service. Nevertheless,
Consumption Communication is
personally demanded to bring value on
the basis of applications. An operation
system that fully satisfies all personal-
ized requirements is the profit direction
in the future. The telecommunication
industry is in the transition from
basic voice communication period to
Consumption Communication times.
The so-called "Basic Communication"
can be compared to peop le ' s
essential requirements (like food provi-
sions characterized as allowance, wel-
fa re and pub l i c in te res t . ) fo r
telecommunication, which falls into the
realm of telecommunication right. On
that account, there are some so-called
killer services (just as everybody
needs "communication"). However,
"Consumption Communication" does
not fall under fundamental needs. It is
the service with substantial valuable
content catering to individual telecom-
munication interest. It is in the realm
of value consumption. Basic commu-
nication is only a particular case in the
preliminary phase of Consumption
Communication.
PEOPLE'S REQUIREMENTS FOR
TELECOMMUNICATION EVOLVES
WITH THE DEVELOPMENT OF
TECHONOLOGY AND INDUSTRY TO
THE PURSUIT OF VALUE CONSUMP-
TION AND PERSONALITY. CONSUMP-
TION COMMUNICATION IS ENDLESS.
THE GROWTH OF THE INFORMATION
INDUSTRY DEPENDS ON THE BUSI-
NESS OPERATION MODEL WITH CON-
SUMPTION COMMUNICATION AS ITS
CARRIER. If there is a file recording each
individual's telecommunication require-
ments (including the processing of re-
quested information), this file should be
specific to each person like a fingerprint.
We may call this personalized file "tele-
communication fingerprint" (personal
permanent telecom "Number").
There are substantial differences between
Basic Communication and Consumption
Communication in the aspects of the
business model, operation model and the
profit model.
Basic Communication or carrying
communication is never dispensable,
yet people's demand for information
communication is not just carrying and
transmission, but more processing on
the content, as the volume of egg white
is always bigger than that of the egg
yolk. The service "embedded" (born
with the network) in Communication
Sub-net is voice, which is a must to
everyone, but is not always commer-
cially valuable. THE ISSUE WITH
TRANSFORMATION FROM BASIC
COMMUNICATION TO CONSUMP-
TION COMMUNICATION IS THE
RADICAL CHANGE IN SERVICE
MODEL, WHICH PREVIOUSLY
PROVIDED ONLY ONE TYPE OF
SERVICE OR OPERATION TO ALL
Nqo}zm9(Uwlmt(wn(Kwuu}vqki|qwv([}j5vm|ivl(Zm{w}zkm([}j5vm|
0Moo5{pixml(Vm| wzs(Uwlmt1
61HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
communication fingerprint) to win
more segments. The times when it is
possible to use single service to gain all
users has gone forever. Thereupon,
how to provide the requested service
according to each consumer's "tele-
communication fingerprint" becomes
the critical profit mode in the next
phase competition. What is showed in
figure 2 illustrates the issues and solu-
tions that the operators will face with.
In the concept of Resource Sub-net, IT
and telecommunications will be con-
verged more closely. Service "compu-
tation" capability depends more on
telecommunication. Likewise, next gen-
eration telecommunication also needs
to support the processing of services
at higher layers (IT architecture) more
strongly. Thanks to the realization of
high-speed wide area communication,
Resource Sub-net leads telecommuni-
cation to the layer of resource, further
arousing the great potential of
applications. This is also the point of
reference for those proactive and stra-
tegic products of companies such as
MS, IBM and Qualcomm.
The innate character of Communica-
tion Sub-net and Resource Sub-net
results in the fundamental changes
in the business model, operation
model and profit model of the
traditional telecom operators and
equipment manufacturer. TELECOM
OPERATORS SHOULD TRANSFORM
FROM MERE VOICE NETWORK OP-
ERATION TO HIGH-VALUE-ADDED
SERVICE NETWORK OPERATION,
FROM VOICE OPERATION TO NON-
VOICE OPERATION, FROM NET-
USERS, NOW HAS TO PRIVIDE MIL-
LIONS OF PRODUCTS TO MILLIONS
OF INDIVIDUALS WHO MAY NEED
ONLY A FEW OF THE PRODUCTS.
People's requests for communication
products are similar to their needs for
agricultural products. Agricultural products
are still indispensable, though the number
of types of edibles is beyond man's
imagination. Moreover, the number is
still growing at a faster speed, creating
a food industry system. The revenue of
agricultural product is much lower than
that of the food industry. From this, we
can see a brighter future for Consumption
Communication rather than Basic
Communication.
The Communication Sub-net provides
the "Basic Communication", whereas
the Resource Sub-net supplies the
"Consumption Communication".
What the traditional operators operate
on is the Carrying Network the
Communication Sub-net. Its game
rules, operative characterist ics,
protocol (function), intelligence,
profit model, construction rules
& specifics, investment peculiarity,
technical trait and regulations of the
Communication Sub-net are clear
enough. It is in the realm of traditional
telecommunication network. Because
the operation revenue is closely related
to the telecom equipment (build-in),
it is more and more close to the
cost of service with the progress in
technologies. The "CAPEX"-based net-
work service model gradually enters
into the "phase of traditional industry".
At the same time, people's require-
ments for communication and its quality
are also creeping. The task of processing
on the non-voice telecommunication
service and computation should be
completed by the Resource Sub-net
which is more complicated than the
voice communication network.
Consumption communication is char-
acterized (defective) by its abundant
varieties but rare usage. Therefore,
"convergent service" (a collection of
related services) arises. The profit model
of operators is to provide each con-
sumer with the personalized service
that he needs (according to his tele-
Nqo}zm:(Qtt}{|zi|qwv(wn(|pm(Ozw |p(wn(Wxmzi|qwv(Zm~mv}m5(Q{{}m(ivl[wt}|qwv(nwz(Li|i([mz~qkm
How to Operate
62 HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
WORK-CAPABILITY OPERATION TO
SERVICE-CAPABILITY OPERATION.
THEY SHOULD SEEK PROFIT OPPOR-
TUNITIES NOT ONLY FROM NET-
WORK PRODUCTS BUT ALSO FROM
SERV ICE CAPAB IL ITY. THEY
SHOULD CONDUCT RESEARCH ON
THE REVENUE RULES AND MODEL
OF SERVICE OPERATION. THE NEXT
3-5 YEARS WILL BE AN IMPORTANT
PHASE FOR TELECOMMUNCATIONS
INDUSTRIAL TRANSFORMATION. In
the view of differences in the new type
of service and its rules, the transforma-
tion should involve many aspects like
operation model, market, regulation,
value-chain, industrial structure, prod-
uct structure, consumption behavior,
profit model, operation organization,
billing, settlement, interconnectivity
and etc.
Intensive personalization of communi-
cation will be the trend of the telecom-
munication development in the future.
Effectively merging the advantages of
mobile network with those of fixed
network and developing converged
personal communication and in-door
telecommunications are what users
require and are the future road for
telecom operators. With the develop-
ment of NGN, IP, wireless coverage and
terminal technologies, fixed & mobile
convergence (FMC) provides the users
with the possibilities of best convergent
services. Service convergence can bring
the users with brand-new services and
applications. When it brings conve-
nience to customers, it will trigger
customers' further requirement for tele-
communications service, too.
Axiom 3: The core profit of basic
communication is "price" while that
of consumption communication is
"value".
Profitability of Carrying Network comes
from CAPEX. Network capability is the
profitability, so the core of profit lies in
the pricing (cost) attributes of CAPEX
which is the result of regulations. Basic
communication belongs to the realm
decided by regulation and cost.
"Killer services" are mainly Basic
Communication, which are based on
price instead of value, thus they run into
flat rate. In accordance with the "com-
position of egg white", non-voice
communication, integrated with
the elements that are not closely
associated with network equipment
investment_service capability, content
element, SP/CP management cost,
customer management and billing,
becomes the ratio of value and
cost_providing what kind of customer
value with how much cost. The service
provided varies in value for customers
with different telecommunication
fingerprint. Service cost mainly comes
from OPEX, thus the basis of profitabil-
ity in Consumption Communication is
to provide value. It is more than neces-
sary to start "telecommunication pro-
file management" to properly provide
each individual with different value
service. Profile Management will be the
commanding elevation for controlling
user consumption value in Service
Network. It will be the core requisite
for profitability. AT THE SAME TIME,
IT IS THE TERMINAL, INSTEAD OF
NETWORK, THAT LEADS THE VALUE
OF CONSUMPTION SERVICE.
TERMINAL WILL BE THE UNIQUE
INTERFACE FOR END USERS TO
EXPERIENCE AND CONSUME
VA L U E . N O T E R M I N A L , N O
CONSUMPTION!
On account of the transformation,
the telecom market requirements can
be classified into two types_basic
requirements and consumption
requirements, most of the latter are
non-voice services.
The profitability of traditional telecom-
munication network lies in those
factors relative to network capability
such as MOU, wavelength, bandwidth,
port and QoS; thereupon, its profitabil-
ity is derived from the collection of car-
rying capability, which is mostly in close
relationship with the capability of
tangible equipment (network product).
The profitability of resource (service) is
based on the collection of the capabili-
ties of services like high layer protocol
switching, content, software platform,
middle ware, session management (By
Transaction, On-demand, Streaming),
mobil i ty management, industry
application, resource server, storage,
collaborative processing, stream
media distribution, DRM, Profile
Management, Application Driven
QoS, service authentication, security
connection, Presence Management,
content process, service CRM, carrying
ERP, dynamic IP Billing, SDP like service
fast delivery and terminals, which are
the capability elements of service
delivery, management and execution.
The profitability factors of Communi-
cation Sub-net are all correlated
63HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
with cost and the relevant price and
pricing (regulation); whereas, those of
Resource Sub-net are associated with
the size of the user requirements.
Customers will pay for the value that
they have consumed. Even the same
service will be paid at different value
on different occasion and at different
time. This is the magic of the Resource
Sub-net. As to the application oriented
service operation, the personalization
makes the service unpredictable with
varied length of application value chain
and in immature service delivery platform
architecture. The ownership of Service
Network or Resource Sub-net is taken
by several SPs, so the rules of Service
Network have not been recognized by
the majorities of the industry. It takes
time for operators to transform, thus
there will not be any incumbent players
or service providers for the Service
Network in a quite long period. With
the improvement in Service Network
profitability, sooner or later, dominant
players in Service Network will come
to their place and transform from mak-
ing profit by their capability of network
(carrying) coverage to profiting by con-
sumption services (successful business
model for consumption network).
Axiom 4: Only consumption com-
munication possesses the character-
istics of the value chain and value
allocation and needs a new busi-
ness model.
The "application value" of Resource
Sub-net is provided to the end users by
service operators through the product
design, product delivery, cross offering,
dynamic billing, composite binding,
c u s t o m e r - s e r v i c e t a i l o r i n g
management, service synchronization
a n d Q O S . U n l i k e t h e B a s i c
Communication, the requirement of
Consumption Communication needs to
be completed by a series of steps,
which call out the value chain mode
The value chain of Consumption
Communication is so long that it needs
a kind of fair adjustment mechanism
or business model which defines the
processing and operation rules for each
player of the chain. There should be a
service business & operation sub-
system for each product value chain
and a cross S-BOSS for multi-services.
That is why there are requirements for
a sophisticated industry model. This is
a new field which is often neglected
by people because of their insufficient
understanding of the business. Before
the perfect solution comes out, the
whole industry is in confusion, crying
out for a business model. In fact, it is
safe to say that the business model for
non-voice communication or Con-
sumption Communication is already
defined, but it will take some time for
it to appear.
The business model for Resource Sub-
net operation is the composite func-
tion of the business models of each
simple service.
The product development and opera-
tion should build up a complete indus-
try chain including telecom carriers,
telecom service operators, equipment
manufacturers, content providers,
information service providers, industry
application ISV and terminal vendors,
each of which should play a specific role
during the course of product develop-
ment and operation; otherwise, the
value chain will fall apart. Only a solid
value chain model can lock all players
onto creating value for product devel-
opment and operation.
Most products of Service Network or
Resource Sub-net cannot go directly to
full deployment. After the new prod-
uct is developed, produced and deliv-
ered to market, the development of the
product is not yet complete. The pro-
motion and sales of new products are
not the selling of simple voice. The ex-
isting mode is not adaptable to guar-
antee the full deployment, promotion
and service of the new products. The
operation of a Service Network is en-
tirely different from that of a Carrying
Network. The high risk and uncertainty
of the new product development calls
for the assurance mechanism of risk
management. New products need in-
cubation and should be developed in
the market to be operable services.
Accordingly, new product trial environ-
ments with relevant new mechanism
should be built up. A comprehensive
interactively experiencing environment
should be set up for new products char-
acterized as large quantity, short life
cycle, small market segmentation and
high cost.
To bring the above-mentioned environ-
ment into operation is actually to re-
build a whole new network space. We
believe that the experience of the end
users is the critical success factor for
non-voice Service Network (Resource
Sub-net) operators. Operators can suc-
cessfully improve their ROI of the Re-
How to Operate
64 HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
source Sub-net construction by mak-
ing the users pay for their choice of
new services, the value of which they
already experienced in the service.
Axiom 5: The value of consump-
tion service lies in satisfying con-
sumer behavior "TRICKS". Telecom
product development is to satisfy
the customer and create maximum
value.
The characteristics of consumption
operation are the comprehensive re-
flection of bandwidth, mobility and
personalization. The consumer habits
of non-voice service users will conform
to the principle of "TRICKS". As we all
know, in market requirement analysis,
market segmentat ion rel ies on
consumer behavior. In terms of non–
voice services, consumer behavior is not
decided only by age, profession and
income; it is the innate relation of
"application service" consumption.
Based on such market segmentation
and various "collection" of telecom
profile, ARPU, together with its
supportive products, can be designed
to provide customers with proper
products and create maximum market
value.
The reason why the previous market
segmentation failed is that the segmen-
tation is subjective rather than
objective. For example, many custom-
ers are "convenience- oriented" while
some customers are "price-oriented".
To provide differentiated quantity and
quality of services to market segments
with different value orientation will cre-
ate the maximum value.
The so-called consumer behavior does
not exist in traditional telecom
products. There are only general rules
for consumption, for example the busy
interval. The characteristic of consump-
tion is a comprehensive reflection of
broadband, mobi l i ty ( including
roaming) , personal izat ion and
intelligence. The consumption habit of
non-voice service consumers follows
the principle of "TRICKS":
Transparency: Transparency of usage
and bil l ing (l ike the deal in the
marketplace);
Reliability: The stability and reliability
of network service;
Low Cost: Unnecessary to change ter-
minals or platforms frequently for dif-
ferent services; add the low-cost
solution;
Convenience: Services and terminals
are closely bound, more convenient to
use;
Know-how: Even with no specific
skills, users can enjoy the friendly guid-
ance and training and learn in spite of
the complexity of data services.
Security: Secure usage and payment;
The TRICKS of service consumption
behavior has been the rule of service
design. Priority of different segments
becomes the comprehensive index for
market segmentation. Correct ARPU
design is based on correct market
segmentation. The essential in prod-
uct profitability research is the research
on consumption behavior and differ-
ence in personalization. These are
both social and market issues which
may be solved by long term accumula-
tion in the entire value chain and
environment, which is also the only road
for Consumption Communication.
The leaders of non-voice consumption
are the consuming value of "terminals"
and applications instead of price. The
competition in operation derives from
the competition in service delivery,
management and execution. Terminal
customization, in some sense, is the
measure to realize user requirements
and protect the interests of operators
by leveraging the differentiation in
service management and execution. All
of these present great challenges to the
traditional voice service operators.
The law of Metcalfe states that the
usefulness, or utility, of a network
equals the square of the number of
users. However, user consumption of
Resource Sub-net is personalized; that
is to say, the number of users is in line
with the size of network services. From
here, we can say the value of Resource
Sub-net is in direct proportion to the
Nqo}zm;((Qtt}{|zi|qwv(wn(Kwv{}umzJmpi~qwz(Mtmumv|(5(*\ZQKS[*
65HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
square of services. The granularity of
personalized service is quite small. Only
if the number of such granularities in-
creases to a certain point, the number
of users will grow. So will the network
value and network revenue.
Considering the specific characteristics
of China, the stand point of recent
product development is to satisfy the
basic requirements, but consumption
requirements should not be neglected.
Meanwhile, the ratio of consumption
product should be increased and the
construction of operability should be
strengthened.
There are four success factors for
telecom product development:
1. Focus on the resource investment,
cost and IOR analysis in product
development.
The investment of Communication
Sub-net mainly goes to "Network
Unit". The service revenue mostly
comes from network CAPEX, that
is to say, the revenue is in direct
proportion to the network carrying
capabil i ty. The investment of
Resource Sub-net mainly goes to IT
architecture, platform, service
servers, application software, service
capability parts and CRM. The rev-
enue "implicatively" aligns with the
OPEX, service capability and services
instead of the CAPEX. In compliance
with the division of Communication
Sub-net and Resource Sub-net, the
relevant resource investment in net-
work product development should
be noticed. The relative cost should
be checked and the IOR should be
analyzed.
2. Quick response to market. Although
it will take some time for network
evolution and product development,
the delivery time to market and cus-
tomers should not slow down, or it
may not stand the competition. In
the current market, the following is-
sues should be carefully considered
in product development: 1) voice
traffic shunting; 2) high customer
churning rate; 3) to which value area
should the increase of new users go;
4) small proportion of "VAS" in the
total revenue; how to make more
profit through changing the business
structure and operation model. Prod-
uct development should be innova-
tive and fast; besides it should grasp
the best time to enter market.
3. Creating requirements and leading
consumption with a certain lead
time are necessary in product
development. The satisfaction for the
market and customer requirements
is essential to product development.
On such basis, it is necessary to
consider, in advance, the facilitation
of consumption and the emergence
of new requirements in product
development. The two products of
British Telecom_ICT and AAI effec-
tively integrated their resources to
provide customers with proper ser-
vice in reference to their research into
customer requirements. They have
done well.
4. Conduct research on consumer be-
havior and its trends, pay attention
to customer experiences and see
their readiness to accept. To conduct
research on consumer behavior and
its trends and thereafter define the
counter plan is a must in product
development. The changes in con-
sumption requirements should be
embodied in product development in
time. Sometimes, customers may not
know their real demands, but their
readiness to accept should be con-
sidered according to the nature of
consumption products. First let the
user experience the products; then
pay close attention to their reaction.
Only by doing this, can a company
develop products acceptable by us-
ers and market and create outstand-
ing achievements.
British Telecom's ICT and AAI effectively
integrated resources to provide service
in direct response to research into cus-
tomer requirements
Brief Summary:The in-depth connotation of "Network
Axiom" has been proved by history.
Its only objective is to answer the
questions about the operation model,
business model and profit model for
non-vo ice communicat ion and
Consumption Communication. It ex-
British Telecom's ICT and AAI effectively integratedresources to provide service in direct response toresearch into customer requirements
How to Operate
66 HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16
plains the operational problems that
appeared in the practice of BB/NGN/
3G/IPTV. The "answer" to the business
model of data services (BB/B3G/3G/2.
5G) lies in the rules of Resource Sub-
net. In the new business model, the
operation model will also be updated.
The equation of operation profitability
is P=C_carry_+S_service_. NGN
network will have two layers: Carrying
Network and Service Network. Charge
on the traditional operation is simply
the fee for carrying (constant number
C), excluding the expenditure in ser-
vices (it is just a channel charged with
flat rate. The expenditure for carrying
has nothing to do with what it carries.).
Nevertheless, the profitability in S
(service) mainly draws on the platform's
capability to percept, authenticate,
innovate, manage and execute the
services. In any case, the platform
should have the functions of charging
by "service transaction" _ not only
charging the service operation fee for
the operators, but also charging by ser-
vice transaction fee for each player on
the value chain. Charging by transac-
tion is the foundation for the so-called
service operation (the third generation
profit) mode. With the open API, as
long as ICP/ASPs provide services and
content, they can profit from the con-
sumers' usage of services and contents.
The new operation (value chain model)
can ensure this. In this way, a service
development model can be established.
It will attract a lot of ICP/ASPs to ac-
tively attend the market application
design & planning, develop market and
provide contents. If so, the issues with
the business (profit) model, operation
model and service development model
of the data services are all solved.
Consequently, what is discussed is not
a theory on paper. It is actually practi-
cal and operable. Quite a lot of inter-
national first tier operators and equip-
ment manufacturers have begun to put
it into practice. Out of confidentiality,
the inside story could only be sensed
by the readers themselves. The last
table demonstrates the comparison of
the two types of operation rules in net-
work axiom.
Communication Sub-net
Collection of bearing capability: Network relies on
carrying resources such as bandwidth, MOU, QOS,
ports, reliability and connection to charge.
Basic Communication: The L1to L4 is dominated by
equipment. Its usage is checked based on visible cost.
It is classified as basic telecommunication facilities, in
strict constraint of telecommunication regulations.
Price-oriented: ( general service, public service,
essential service, etc.) Monolithic service (voice) with
heavy traffic, price sensitive, finite number of service
packages (similar to inorganic chemistry); terminal
insensitive, limited income.
Investment: Network resource or CAPEX related
Income: "Price" decided by the cost based on
resources and regulations.
Public basic consumption: Undifferentiated, price-
driven, price sensitive, uniform profile, unified CRM,
simple profit model.
Resource Sub-net
Collection of Service Capability: Service access authentication,
telecommunication profile management, service semantic
control, resource scheduling, content distribution, stream
smoothness, content assembling and searching, dynamic billing,
RT settlement, service deliverability.
Consumption Communication: The L4-L7 gives first place to the
switching between IT and Server and the software functional
parts. The capability to deliver, control and execute the services
is the foundation of service.
Value-oriented: (personalized service, charge on the usage
value, consumer segmentation) Abundant service products with
light traffic, forming a type of consumption that each product /
service has its own specific value. Infinite number of service
packages (organic chemistry). Terminals lead consumption,
experiencing economy. Revenue can increase through ARPU
design. (the same with fixed and mobile)
Investment: Resource network or OPEX related (including SP
platform and infrastructures) TCO/TVO
Income: "Compound value" of the service provided in the
platform based on service; satisfaction of personalized
requirements (new margin for income).
Personalized consumption: Value-driven, consumer behavior
conforming to the principle of TRICKS, personalized telecommu-
nication attributes (telecommunication fingerprint profile)
management will be the critical point for controlling user
consumption behavior. Complex CRM, relatively complicated
profit model.
Profit Fundament
Network Specific
Application Service Attribute
Income vs. Investment
Product & Consumption Specific