By Olivier Suard, marketing director, Comptel
In the mobile phone world, pay as you go is a well-established alternative to formal billing relationships with operators. It's a principle that has been around for years in areas such as public transport. But can it transfer to other areas of telecom‾
Telecom operators are increasingly looking to expand their market share and boost revenues in new ways, leading them to look again at the potential fruits of the prepaid market. On-demand services seem to be one method for operators to expand prepaid revenues.
Another influence is the trend towards convergence, where service providers can offer the same services regardless of the delivery mechanism or the payment method.
For example, operators can set up a user service with no monthly bill payments. Whenever users wish to surf the Internet, they can purchase tokens containing a code that can be entered into a login screen, getting them online. Users can also choose to have a credit balance similar to Skype or iTunes, allowing them to monitor their credit levels online as they spend.
Such mechanisms make the user experience simple and easy to operate. For the service provider, however, it is far from simple. In fact, for any operator considering offering pay-as-you-go services, there's a lot to think about.
Traditionally, prepaid charging has always been handled in the intelligent network platform. But this has to change with on-demand services as charging needs to be much more tightly linked to provisioning and services need to be updated in real time. Also, many of the services are not actually in the network but on content servers. Any delay will result in windows of risk for service providers to lose money.
The increasing diversity of service means charging has to move to the mediation layer. It has to become an extension of usage collection. The whole rating and balance management is now handled in that layer.
With the move of charging closer to the network, the role of billing is made much simpler, merely producing bills and collecting money. This change of emphasis within the network will lead to a fundamental shift in the OSS/BSS market, because the BSS world will be opened up to the competition of large mainstream software suppliers.
Traditionally, BSS is basically made up of three components: order management and customer relationship management, mediation, and billing. For some time, carriers have been able to manage order management and CRM with off-the-shelf software by vendors, and these companies have made good inroads into the telecom service providers. Meanwhile, mediation has always been a niche market, left to smaller specialist players.
Finally, there's billing, by far the most complex slice of the BSS pie as it has to cover capabilities for rating, bill calculations, bill formatting, presentment and dispatching, and collections. Because of its complexity, this market has been dominated by specialist telecom billing companies.
Until now, these companies handled all of the elements of billing in one comprehensive package. But with the advent of on-demand services, this "˜billing monolith' will have to be broken down and dealt with in separate parts as they will fit together differently. In particular, rating has emerged as a separate market, in the form of convergent charging, and will be handled much closer to the network than that which is touched by BSS suppliers.
Convergent charging solutions overcome all these challenges, helping the operator to differentiate in highly competitive markets by offering a smooth evolution of the operator's current network - and BSS/OSS - environment into a fully convergent solution.
Charging can be done for any type of service including voice, data, multimedia and content; from any type of account including post-paid, prepaid and convergent billing; and for any type of charging model including subscriptions, event-based, volume-based, time-based and reward-based.
This means the telecom billing process is effectively becoming de-specialized, providing an opportunity for generic business software specialists to move into this traditional area of the BSS market. The software layer close to the network will absorb the more complex, specialized technologies.
The new paradigm, therefore, is that BSS will be handled by simple telecom applications within generic business solutions, while OSS, of which mediation and charging will now be part, will remain the domain of specialist solutions. This means traditional billing vendors can become squeezed out by specialist OSS vendors and large generic software vendors.
Fortunately for the billing vendors, three major assets go in their favor.
The first one is their established customer base. BSS and OSS projects are very complex. Once in place, service providers are generally reluctant to change suppliers, so billing suppliers with large established customer bases are likely to be able to keep those for a while.
Second, the specialist telecom knowledge of BSS suppliers is what separates generic applications from telecom applications. More general suppliers will need to acquire this knowledge to succeed in BSS. While it is not impossible to do this, existing billing vendors still have the advantage.
Finally, billing vendors are relatively large in the BSS/OSS market, giving them an opportunity to move into the OSS layer through acquisition should they choose to.
In other words, the new paradigm still leaves plenty of scope for established billing vendors to remain successful. On the other hand, smaller billing vendors may find it difficult to survive, unless they adopt niche-market strategies. Meanwhile, OSS specialists will continue to thrive.
If they take off as well as expected, the advent of on-demand services will create major changes within the industry. How well the traditional BSS suppliers can survive in this changing world remains to be seen.