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White Paper 3G+ and LTE Charging: How to Evolve B/OSS to Monetize High Speed Data



3G and LTE Charging: How to Evolve B/OSS to Monetize High Speed Data

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InTrOduCTIOn

Monetizing high speed data will be key to determining which operators succeed and which operators become also-rans in the race for market share, profitability and happy customers. Voice and messaging ArPu is declining and data represents the real opportunity for operators to deliver a wide range of services that will drive profits.

However, more than ever, in order to be best placed in this race for profitability, operators will need to assess the current B/OSS (Business and Operational Support Systems) they use. What works well for monetizing voice and messaging services, may have serious limitations when it comes to monetizing high speed data.

The traditional approach of having a charging system for pre-paid subscribers on an Intelligent network (In) platform and separate billing systems for post-paid subscribers, may have serious limitations for monetizing 3G+ and LTE based services.

The mobile business model is changing, and many traditional batch based billing systems have had expensive add-ons developed to help with new rating and billing functions. However, the roll out of 3G+ and LTE may be a change too far for traditional B/OSS and force a ‘tipping point’ where operators may need a new approach to monetizing services.

This is due to many factors but the main ones are:

¨ Introduction of new value based pricing models

¨ Multiple devices per subscriber (smartphone, laptops, tablets, internet enabled TV’s)

¨ Increasing importance of the network experience to subscriber

¨ real-time contextual subscriber intelligence driving services offered

¨ Ability to quickly react to new business models and opportunities – marketing, OTT, advertising, new business areas (e.g. security, M2M, e-Health)

¨ Subscribers using a range of services, with different payment mechanisms

Most operators have several billing platforms, so advocating a new approach for all billing could be somewhat onerous if looking at swapping out all existing billing systems. A cost effective system evolution approach using an adjunct real-time charging system for high speed mobile data services could be an option worth consideration.

3G+ and LTE demonstrates the evolution of mobile networks. Coupled with this are continuous advances in devices, customer behavior, and expectations. This industry evolution needs to be supported by evolved charging in order to provide the foundation for monetization.

3G and LTECharging: How to Evolve B/OSS to Monetize High Speed Data



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SECTIOn 1:

PrOVIdInG A PLATfOrM fOr EVOLVEd CHArGInG fOr 3G+ And LTE SErVICESIn order to provide evolved charging for high speed data services, there will be a need to look at new designs that can break down the silos of legacy architectures and provide a foundation to achieve the following key goals for B/OSS.

Key Operator Goals for Evolved B/OSS

To achieve these goals, operators need to put in place a centralized evolved charging platform that incorporates the following key capabilities, summarized in figure 1 below and then discussed further:

faster Time to MarketQuickly set up and launch new plansStreamline new service launch processSupport high number of plans and services

Improved Cost ControlOpex reduction through decreased system changesCapex reduction through plans which optimize network usage

Support new Business Models

Ability to quickly configure and support new business modelsContent / Over-the-top (OTT)Machine-to-machine (M2M)

Easily Support new Offers

Shared PlansBring your own device (BYOd)Service PassesHybrid accountsEnable compliance - e.g. bill shock, roaming legislation

figure 1: Centralized Evolved Charging Platform

Table 1: Key Operator Goals for Evolved B/OSS



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fLExIBILITY And HIGH PErfOrMAnCE: WITH rEAL-TIME CHArGInG, rATInG, And BALAnCE/ACCOunT MAnAGEMEnT CAPABILITIESWith an evolved charging platform that incorporates real-time charging, rating, and balance/account management, operators will be able to achieve a number of operational and marketing benefits:

Ability to quickly develop innovative data services and incorporate third party services: Content billing and revenue assuranceOperators will have the capability to easily develop flexible, sophisticated charging models that can include charging on behalf of third parties. This will allow them to quickly configure and launch new, innovative services and promotions to generate new revenue streams. When charging/billing on behalf of content partners, it is important that this is real-time and the funds for the content purchase are collected before the content is provided to the customer. Otherwise, if the customer defaults on paying for the content delivered, the operator may still face the wholesale charge for that content from the content partner. Applying such content revenue assurance processes in real-time is essential if operators wish to ensure that they are not financially exposed. Further, there will be cases of customers buying third party content without fully being aware of the charges. Content revenue assurance also needs to provide a full audit trail of retail transactions in order to handle wholesale content dispute management.

Evolved charging will also allow operators to support very high volumes of transactions, offer very fast response times for seamless delivery of 3G+ and LTE data services, and be backward compatible to support existing 3G services.

Timely response to market opportunitiesBy having more flexible charging and rating, marketing departments will be able to respond to market opportunities in a timely manner, and launch personalized offerings/promotions triggered in real-time according to the specific subscriber context. Offering personalized and dynamic offers/promotions that are context sensitive can be expected to increase the take up of new offers/promotions due to the increased timeliness and relevancy of the offer.

An example of operators quickly developing flexible offers in response to market conditions is illustrated in figure 2 below. This is an operator providing data roaming packages for customers. This ‘service pass’ approach to time sensitive data roaming – e.g. being able to buy roaming data bundles that are valid for a certain time period, gives the customer transparency and control over data roaming usage. It could be argued that operators launch data roaming service passes, not only to give greater service and transparency to customers, but is also designed to ensure compliance with forthcoming European union legislation on data roaming.

Ease of configuration by marketing teamsMarketing teams should be provided with the capability to undertake some key administration tasks usually undertaken by the technical teams (e.g. configuring bundles, setting up promotions). This capability considerably accelerates time to market and again provides a key competitive advantage.

figure 2: Example of data roaming offfer



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Self service provisioning by subscribersAnother important aspect of a flexible platform is the capability to offer subscribers the freedom to activate and pay for their services at their own convenience and to have the service delivered immediately, without needing further assistance from the operator’s customer service staff. This is made possible with mobile devices that enable real-time, over-the-air service activation. It allows operators to accelerate revenue creation by making purchases very easy and at a low cost, as less customer service resources are required.

Examples of new type of services that could be offered to subscribers include:

¨ Innovative pricing plans and offerings: Session based pricing - data service passes for those who would not commit to a contract but want the speed, single data plan for multiple devices, etc.

¨ flexible, real-time balance/account management: balance transfer to another account, multiple balance types, personalized spending limits, shared family account, hybrid pre/post-paid accounts, etc.

¨ real-time, personalized promotions: special offer on your birthday, try before buy, free today for balances over $x, discount based on usage, etc.

SuPPOrT fOr PrE-PAId, POST-PAId, And rEAL-TIME PAYMEnTS On A SInGLE PLATfOrMWith the capability to support pre-paid, post-paid, and real-time ad-hoc payments on a single platform, operators will break down the payment silos. This will enable them to develop new business and payment models, offer their services to all subscribers regardless of payment type, and allow subscribers to use multiple payment methods for the same service according to their preferences. They will be able to offer hybrid accounts rather than an account per type of payment and support among others payment via credit cards, Paypal, or loyalty points for example.

As a result, operators will be able to:

¨ reach a wider subscriber base: This will drive more revenue

¨ Enhance the subscriber experience: Subscribers will be given the flexibility to pay for their services as they want it, access any service available, and have a centralized view of their services, usage and spending

¨ Achieve a better cost performance and fast time to market: Less resources and time will be consumed as services are developed and launched on a single platform

Some examples of new business and payment models enabled by this approach:

A single user using multiple payment methods: network connectivity could be bought as part of post-paid subscription, applications bought using a pre-paid purse, or content (e.g. movie) bought in real-time using a credit card. Such a set up would be of interest to corporate accounts where approved applications would be charged to the corporate post-paid subscription, and employees would pay for their personal usage separately using their chosen payment method.

Support for BYOd (Bring Your Own device): a subscriber can have work related usage billed to his employers post-paid account, and his personal usage charged to their own prepaid account. With employees often preferring to use their own tablet and /or smartphone for work purposes BYOD is forecast as a significant growth area. Figure 3 illustrates how one leading operator is marketing BYOD.

figure 3: BYOd Messaging



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CHArGInG InTEGrATEd WITH nETWOrK rESOurCES,COnTExT And SuBSCrIBEr EnGAGEMEnTBy taking into account the context and network resources, operators can create more personalized, innovative services and charging. This will increase revenue and customer satisfaction and, at the same time, control network costs and open up a personalized dialogue with the customer.

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. Having this type of information about a subscriber can drive personalized offers and services, which can lead to more effective and efficient marketing to this subscriber.

figure 4: Example of family Spend Controls direct to the device

Information on subscriber context can be used to dynamically allocate network resources in real-time. This enables operators to 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.

Communications directly to the customer with information on usage, controls, and offers can be provided in real-time and can also be context aware. A high level example could be a roaming subscriber hitting a threshold and receiving a notification to enable compliance with legislation. Spending controls can also be set for groups/families. This is illustrated in figure 4 where individual spend in a family plan is controlled by the mother.

With high speed data operators will develop an increasing range of business models to deliver personalized services. Examples of some business models that evolved charging supports includes:

¨ Tiered services allowing segmentation of users to offer differentiated services depending on usage patterns

¨ Service passes with device agnostic access to network, applications, and content for a limited period of time, volume of data, or number of events

¨ Application-specific and toll-free pricing which can use value based pricing (e.g. dynamic based on different criteria such as number of days since release for specific content – e.g. a game, or a video). This can also cover zero rating of data for specific content – e.g. a subscriber downloads a song from a content partner’s site. The data usage is zero rated and does not count against the subscribers allowance. In this case the content partner pays a wholesale rate for the data.

¨ real-time, personalized promotions where offerings can be triggered depending on the subscriber information (e.g. birthday) or when a usage threshold is reached for example

¨ roaming controls to offer real-time spend and usage controls to enable compliance with bill shock legislation and regulations

¨ More service controls such as partner service controls, device controls, parental usage controls, and spending limits



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COnVErGEnT ArCHITECTurE, EASE Of InTErOPErABILITY TO EnABLE AdjunCT BILLInGAny charging platform that an operator uses for high speed data needs to have an underlying convergent architecture. The reason for this is that with a charging platform that can support multiple services delivered over different networks, operators will be able to develop more flexible business models and offer subscribers all their services in a unified way, breaking all the legacy infrastructure silos whether pre-paid/post-paid, data/voice, or fixed/mobile. This enables:

More sophisticated plans and bundlesOperators can also develop more sophisticated service plans and bundles incorporating data, voice, fixed, and mobile services for example. They will also be able to offer the same service across different devices and network type, offering a seamless experience to subscribers.

Better total cost of ownership Operators will achieve a better total cost of ownership with a single solution to deploy and manage all services that can easily support their network evolution plans, as it is network independent and standards-based. Furthermore, operators can considerably reduce hardware costs by using commodity hardware to run the solution instead of being dependent on expensive hardware based IN pre-paid platforms for instance.

Reduced billing OpEx: Enabling adjunct billingProviding an evolved charging platform that supports high speed data and convergent pricing and charging, and replacing existing In platforms and post-paid retail billing systems for all voice, data, and content services may look good on a Power Point slide, and is a good vision. However, for established operators who may have numerous different billing systems, it can be a daunting prospect to say the least. Organizational and IT issues are often cited as the main reason for not introducing new systems into an operator’s IT architecture. This results in significant investment making customized developments to existing systems.

A cost effective solution exists by taking an adjunct approach. Utilize real-time charging, collection, rating and balance management initially for 3G+ or LTE services, and provide a feed of rated CDRs to the existing retail billing system. This enables high speed data transactions to be listed on mobile bill, but also the real-time benefits (e.g. real-time upsells, bill shock legislation compliance) associated with evolved charging to be enjoyed by the subscriber. This approach is also applicable to integrate 3G+, or LTE transactions with the existing IN platform for pre-paid subscribers. This adjunct billing approach enables operators to leverage investment in current (legacy) systems, and use the new platform to enable capabilities that cannot be easily supported in legacy infrastructure. It also enables operators to forego the high opex costs of re-engineering an existing batch based billing system to make it close to real-time.



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Challenge 1: Limited Support for Marketing and new Business Models

Limiting offer developmentLimiting new content revenue streams: wholesale and retail

Challenge 2: Lack of Convergent Architecture

not supporting convergent plans – fMC, multi-payment typeLimited support up-selling

Challenge 3: Inability to Quickly Build and Launch new Plans

Lack of business investment in systemsSlow time to market for new services

Challenge 4: Lack of real-time Support

Limiting customer experienceInability to support legislative requirements – e.g. bill shock

Challenge 5: High Opex Costs

Impacting profitabilityHigh cost of ownership

SECTIOn 2:

HIGH SPEEd MOBILE dATA: CHALLEnGES TO TrAdITIOnAL PrE-PAId And POST-PAId CHArGInG And BILLInGAs operators look to fully monetize 3G+ and LTE services, they will be limited by the use of traditional charging and billing systems. Traditional legacy charging and billing infrastructures are typically defined by two main silos based on payment types with:

¨ Post-paid billing systems, consisting of mediation, rating, billing, which are typically batched, software based, and reside within the IT domain

¨ 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

This traditional approach of separate In and billing systems has evolved over time, and many systems have had expensive, customized add-ons developed in order to enable them to cater for data services (e.g. GPRS and 3G data). 3G+ and LTE enables a wider range of services to be delivered direct to the mobile device at faster speeds. This will further open up the mobile market and provide increased choice for subscribers. In order to increase ARPU and usage of data rich services enabled by higher speeds, operators should examine the packaging, pricing, and delivery of data services and review the challenges these will place on existing In and billing systems.

The challenges operators are facing due to their silo based legacy infrastructures (e.g., pre-paid charging, post-paid billing silos) are represented in the table below.

LEGACY SYSTEM CHALLEnGES:Below is a representation of the five key challenges operators will face due to their legacy charging and billing infrastructure, followed by an analysis of each challenge:

Table 2: Legacy System Challenges



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Challenge 1: Limited Support for Marketing and New Business Models

Many In pre-paid platforms were designed to only charge by volume/time and are often unable to support more sophisticated charging models based on content, context, and value. For example,a movie may be charged at a fixed rate, and the operator needs to ensure the transport cost is zero rated and is not counted against a threshold monthly data volume. This approach to ‘toll free’ data charging, where the subscriber only pays for the movie, and not the transport cost, is good for subscribers, operators and content partners, as it provides a transparent and equitable pricing model for content.

furthermore, not only are subscribers becoming more data hungry, but they want ever richer content from variable sources; the demand for applications, especially video, is growing particularly fast. This is forcing operators to better co-operate with third party application and content providers. The implication is that they need to find innovative ways of charging and managing access to these third party services in order to effectively monetize them and play a key role in the value chain. As these business models evolve, charging platforms must also evolve and have the flexibility and extensibility to support these new models.

Increasingly marketing departments in operators are driving functionality, features, and design capabilities for B/OSS. In 2011, research firm Telesperience carried out a survey on the level of personalization in the telecoms industry. This involved interviewing marketing /product management and IT professionals in 63 operators, and examined the involvement of marketing and IT in developing and implementing personalization plans. This includes pricing plans, which directly affect B/OSS.

figure 5 shows who is involved in planning & decision making for rollout of new services, tariffs, or offers.

Clearly, marketing plays a major role in setting prices, and it is anticipated that marketing’s influence and demands on B/OSS will increase as operators move towards personalization and offer increased number and range of data based offers.

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figure 5: Level of Involvement in Planning and decision Making for rollout of new Services, Tariffs or Offers (source: Telesperience 2011)



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Challenge 2: Lack of Convergent ArchitectureOperators are no longer thinking about separate lines of business, each with their own legacy billing system. Operators are looking for customers to take all their services and deal with customers on the customer’s terms to deliver the best experience.

However, legacy charging and billing infrastructures–with their pre-paid/post-paid silos and platform limitations—do not support a differentiated, compelling subscriber experience.

With a silo based on payment type, operators cannot usually offer seamless services to all their subscribers across payment types, networks, and devices. This can result in frustration and churn. For example, some operators don’t enable roaming or MMS 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. Also the same subscriber is often treated as a different subscriber depending on whether their queries relate to their pre-paid or post-paid services.

As subscriber data is distributed in different systems, operators may not have a single view of an individual subscriber. As a result, they could find it difficult to provide full, overall visibility to subscribers for all of their services and usage/spending, which is a key loyalty driver. Without this single view of a subscriber, neither can they effectively up-sell or cross-sell. The ability to do this requires operators to be able to associate different services to the same subscriber and provide strong real-time capabilities across the subscriber base to trigger timely, personalized promotions and offerings for all. This inability to effectively up- and cross-sell means less revenue.

Several operators are now offering different payment services for different services for an individual subscriber. For example, a post-paid subscriber could have their basic bundle (voice, data and text allowances) billed as post-paid, and any content charged to a pre-paid account. Subscribers will want to pay for services in the way that is most convenient to them, and catering for this can speed up new service adoption. However, some legacy charging, rating, and billing platforms may not allow operators to create multiple, differentiated service plans that provide more options to subscribers and better suit their specific needs.

Challenge 3: Inability to Quickly Build & Launch New Plansfast time to market gives a key competitive advantage to operators and tends to have a direct impact on revenues. However, when an operator has multiple siloed charging and billing systems, configuring a new service may involve working with multiple systems that perform similar functions but are built on different technologies. This equates to more work, more potential for human error, and more time (and money).

The service launch delays, due to legacy charging and billing system software changes and upgrades, often leads to missed opportunities for operators to increase revenues or build loyalty, whilst they are incurring high costs.

Looking at the Telesperience survey of 63 operators, the marketing respondents in the survey were asked how easy is to change tariffs or offers, or to roll out new ones. The results are represented in figure 6.

Clearly many operators see that making changes to tariffs is difficult. However, high speed mobile data is bringing a move towards personalization and new business models, which will result in increased number of tariffs, and increased number of plans, and more pricing variables. Legacy systems–where it is difficult, costly and time-consuming to develop and change tariffs–will be a major stumbling block in getting new products and services to market.

figure 6: How Easy is it to Change Tariffs or roll out new Ones (source: Telesperience 2011)



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Challenge 4: Lack of Real-time Support By their nature 3G+ and LTE are designed to provide high volumes of mobile data – fast. This generates very high volumes of transactions which require strong real-time capabilities. for example, a subscriber downloading video may use up their monthly allocation quicker than expected. Real-time usage notifications and controls need to be in place to support ‘bill shock’ legislation and keep subscribers informed. With high speed data, real-time charging is not only central to flexibility and innovation, it also is needed to keep customers happy and meet legal and regulatory requirements.

However, many operators’ legacy charging and billing platforms were originally designed for 2G, (with customized add-ons developed for GPRS and 3G data). As discussed in the introduction to this document, 3G+ and LTE are presenting new charging variables, and it could be argued that a system developed originally for older mobile technology charging or billing may struggle to create innovative, flexible pricing plans and business models that incorporate third parties, with the ease and speed required by operators today.

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. So the question is that with high speed data, how can operators offer real-time context sensitive charging for post-paid subscribers, given that legacy billing systems are batch based systems?

Challenge 5: High OpEx CostsIn 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.

However, the cost of adapting existing legacy, charging, and billing infrastructures to cater for the new business models enabled by 3G+ and LTE, as well as meeting customer expectations and regulatory requirements, may be significant. Adding custom development add-ons is expensive and does not enable operators to benefit from the economies of scale of software product development. It is much more cost effective to use a system that has been designed for use in a high speed mobile environment than to take a system that was developed for an older mobile technology and make alterations to try and make it fit the new model. Even if an existing legacy system was tweaked enough to cater for today’s high speed data models, then it will only be a matter of time before it needs an upgrade to cater to a new business model variant. The cost of these upgrades needs to be looked at not only in terms of the software enhancement, but also in the increase in on-going operational and maintenance costs. The correct system architecture needs to be in place from day 1 to ensure the most cost effective solution.

figure 7: IT department’s Main Barriers to rolling out Personalization

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When looking at cost, there is also opportunity cost to consider. If an operator cannot get a service to market quickly enough, then what is the cost of the lost opportunity? As discussed getting new products and offers to market as part a move towards personalization, involves getting the offers and tariffs quickly set up on the relevant B/OSS platforms. The Telesperience survey asked IT departments what their main barriers were to rolling out personalization.

As can be seen from figure 7, siloed and legacy systems are by far the main barriers in place. If operators are looking to provide value based pricing for high speed data, that quickly responds to market advances, then an alternative approach to siloed charging and billing systems needs to be examined.

SuMMArYGiven the challenges operators are facing with their legacy charging and billing infrastructure, they should look at implementing new platforms to complement the legacy systems. This is in order to have the B/OSS foundation to create profitable high speed services, effectively monetize the potential demand for data, and generate revenues with OTT and content providers.

To increase profitability, operators are starting to move away from their reliance on silo based infrastructure with In pre-paid charging platforms on one side, and post-billing systems on another, to build a centralized infrastructure based on evolved charging that:

¨ Incorporates real-time charging, rating, and balance management, providing the flexibility and performance they require to monetize data services, create innovative business models that can incorporate third party services, and achieve fast time to market

¨ Supports pre-paid, post-paid, and real-time ad-hoc payments on the same platform, breaking the payment silos to provide a seamless experience to subscribers, develop innovative payment models, and save cost and time on service launches

¨ Integrates Policy Management, enabling innovative business models that optimize network resource utilization whilst creating new revenue streams and providing a personalized experience.

Providing such an evolved charging solution would enable operators to provide high speed data services secure in the knowledge that the underlying system flexibility exists in order for them to provide personalized offers, enhance the subscriber experience and have the foundation for data monetization in place.

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Openet wp 3-g+ & lte charging_07-2012