The telecom sector in India is growing exponentially with
a total subscriber base of close to 900 million, adding over 15 million users
every month. The industry is facing challenges of continuously dropping ARPUs,
high churn rates, stiff competition with over 15 telecom service providers
(TSPs), and increasing customer expectations. Putting together their thought
leadership ideas on how IT can aid telecom in ironing out these challenges,
Frost & Sullivan organised the IT in Telecom Summit 2011 in Delhi and
Mumbai.
Jump starting the event with some mind-boggling telecom
growth statistics, Nitin Bhat, partner and head of consulting – APAC, Frost
& Sullivan spoke about how IT was usually considered as merely an
aggregator for telecom, and the Changing Role of IT in Telecom.
Telecom revenues are declining the world over, except in
India where there is still a growing subscriber base. Profit margins are also
under pressure. On the other hand, data revenue growth is growing, and in five
years from now, India will be the third largest data country after China and
Japan, due to the new start and mobile broadband. In addition, smartphone
growth is also set to reach half a billion in the next four years, so 50-60
percent of all phones will be smartphones. Mobile data traffic is set to go up
by 60 percent in the next four years -doubling all over the world in 12-24
months, in terms of data per subscriber per month. On most HSPA networks also,
most traffic is data – to huge amount of traffic on the network. This
is Phase 1.
Changing consumer behavior with multiple devices is the
next phase. Choices have to be made if an operator wants to be a dumb-pipe or
become more customer-centric with faster roll out and approaching business from
a portfolio perspective. There is a need to add intelligence to the network.
The next 10 years will be about connecting devices – but the challenge is very
low revenue – thus business models must change. During this trend is emerging
new devices with embedded connectivity -changing customer behavior and focus
on apps in various formats like M2M. So while the last 10 years have seen
saturation, the next 10 years will be about enabling other industries, e.g
smart grid, m-health, etc, more than just legacy functions that they are now.”
Profitability of these services will also be different,
with lower than existing services necessitating prudent cost management. Mobile
data profitability will necessitate value migration to app stores – services
and business transformation (protecting existing business or generating new
revenue streams), network, customer management and organizational
transformation to facilitate the telecom transformation. This can be envisaged
in three ways: Service transformation: moving from VAS to variety of applied
services – like principles of app stores for new services models. Network
transformation: demand management – pricing, shaping, evolution and cost
management – LTE, Wi-Fi, backhaul. Customer engagement transformation: hasn’t
existed with most telcos for years. This will include how to enable end-to-end
experience, enabling stickiness, complex product differentiation which requires
new set of KPI (OSS/BSS), Personalised services: apps and content will drive
life-changing services, user devices, network connectivity, apps and
content.
He continued, Moving away from just providing bandwidth
to customer service quality management is a key concern, and peers are looking
at active cross industry business models and cloud OSS/BSS transformation will
grow with increasing saturation in voice. Moving forward, embracing services
that go beyond pure bandwidth services – how to get components together,
options implemented and bundled with current offers, virtual online stores,
flexibly priced service controls, billing and charging, OSS/BSS, are IT
functions that will help this.”
Four different ways for IT to play a bigger role would be
IT as critical shareholder for valuation upside, reducing and optimizing costs,
ability to offer new devices and offering agility. IT should provide strategic
value moving away from its current role, and act as a business sponsor –
defining metrics and driving value capture initiative, business domain
architect, service manager and user experience manager. Building capability
that leads to growth platforms – for unserved customers, predictable network,
retune network of trends change, are a few issues that need to be looked at for
enabling this to happen. The architecture must be designed with a stepping
stone approach, and domain view must be customer-centric to see how customer
needs will evolve. One way to implement this is to start with business
priorities and determine where we are in IT architecture, and how to change to
strong business architecture with low risk.
Speaking next about Enabling Service Provider
Differentiation, Anil Pochiraju, MD, India & SAARC Region, F5 Networks said
that the new technology evolution has allowed more services to proliferate, and
has evolved more around data than voice. Data provides new revenue models.
From a consumption of three terabytes of data in 2010, we are looking at
figures of 15 terabytes in 2012. Drivers for this have been – IP everything
(smart grid, M2M, video surveillance, multi media devices), and multimedia
content (VOD, cloud computing, VoIP, social media). India market drivers are 10
percent increase in smartphones ever since 3G launch. By 2013, 3G handset
population will be 20 percent of all devices. Additionally, there are 440
million smartphone subscribers today, and mobile internet users are set to grow
by 100 percent – amounting to 162 million mobile internet users by 2014, with
average data usage at 270 MB/month. Other drivers include MNP – with 15.55
million having already opted for MNP till 2011, financial inclusion mandate,
online transaction apps for rural areas, social media streaming video,
enterprise mobility – creating new service models and thus new revenue streams,
and quality of experience expected.”
If not evolving, telcos today will experience performance
issues, depletion of IPv4 addresses, and more. Voice dominancy is decreasing,
and today’s network challenges include the fact that smart devices
utilize more sessions, increased video consumption, adapting to security
concerns, scalability, speed to new devices, maintaining quality of experience,
providing value to users, and controlling OPEX spend. This has created a
profitability gap, with unmanaged data rush. What SP’s need is service delivery
controllers and creating apps that can be charged (making it a service model
for each app), traffic steering – control minutes of usage according to
individual data usage, policy enforcement for business, provide TCP
optimization – this will all help to monetize the network, lower costs, greater
flexibility and scale (without re-investing), increased ARPU and new revenue
models. F5 works with mobile, fixed and cable operators to provide these services,
and works with them as ISPs to create this differentiation of network which is
dynamic and flexible.
Mohammed Tanana, solution architect – CSP/Telco, F5
Networks then elaborated where Anil had left off, talking about Applying
Strategic Points of Control. According to him, the service delivery framework
architecture is slowly undergoing an evolution to packet network (evolved
packet core), and thus it is difficult to monetize services which are on the
packet level. One needs to thus, have a domain framework, driving traffic only
to necessary points from an application point of view. With a lot of traffic
being enabled by video, there is a need to reduce RAN costs, and VAS and app
phone are most important here. Seeing as security is an important concern, a
firewall should be chosen according to traffic growth and demand. Mobile
strategic points of control, including the mobile and cloud plane are also
important factors to be looked into, as at the end of the day, internet is all
about monetizing.”
In the panel discussion that followed on Best Practices
for prioritizing IT investments, panelists discussed on the transformation of
IT, namely how to move from essential IT services to services to compete like
OSS/BSS to optimizing revenue streams to apps and services. Organisations today
are trying to create opportunities for VAS and data services and trying to
monetize the same. Data is growing but VAS revenues must increase, as voice
ARPUs falling, and thus there has been an additional focus on VAS by management – which only puts more burden on big IT teams.
Some of the challenges faced in coming up with new VAS
are the fact that it is a new service, so there is no precedent to go by, and
IT teams also have no idea how it will pick up. In addition, there is no system
to support. Some of the technology challenges for service providers include the
transformation from dumb pipe to smart pipe – for which they had to take steps
and learn to evolve from these steps. There are also a lot of other pain points
in the market today, in terms of no single solution and devices that don’t talk
to each other, more subscribers in the future – operators consolidating
platforms, traffic steering, data plane steering, from control plane point of
view move to IT systems consolidating with single point policy consistent
across the network.
Most operators today only focus on firewalls
traditionally for security, which is not sufficient, as they also need to look
at DPI, IDS, etc. There is also no commonality between VAS and IT today, and
this needs to undergo some change, as they need to have common messaging blocks – need to collect metrics and user information, as well as systems on a variety
of metrics. Business analytics thus becomes very important, and metrics for VAS
services measurements to see how services are working will make it more
effective.
Bridging the gap between IT, VAS and telecom vendors is
the evolving role of vendors today. These groups need to decide whether
previous drivers like outsourcing is still relevant today and they need to
decide what IT to outsource and what to keep here in India. Lately, there has
been pressure on larger operators in APAC and many have gotten into
outsourcing, while India may retain and not outsource in connection with regulatory
guidelines – thus, it is time to evaluate the same.
In conclusion, the best practices therefore would be
business process management -change from automation to optimization,
innovation and business transformation, keeping customer at the centre and
looking at the value generated from them, and evolving one’s network blueprint
accordingly (processes, architecture). As revenue models grow, one needs to
understand how it impacts a customer – link back to OSS/BSS and metric
CRM-control plane therefore is very important – this is when OSS/BSS is
contained, and this will help to improve services offered at the SLA level.
Again, offering the same business processes for prepaid and postpaid presents a
big challenge for IT, and these have to be solved using some of the best
practices mentioned above.
By Beryl M
