During the Management World keynote on May 15th, we got a taste of how an established service provider giant goes beyond its core business to capitalize on new business models. CEO Stephen Shurrock of New Business Ventures, Telefónica Digital, discussed its partnership with Generali, a major global insurance company with whom Telefónica has developed a pay-as-you-drive insurance product. He also discussed partnering with Mozilla to launch a Firefox phone later in the year.

This is just another recent example of how operators are exploring new opportunities. Other examples include AT&T saying that new business models will include subsidized data from content providers, potentially supported by advertisements, or news from ESPN that it will consider subsidized models as well. We are seeing more industry examples of content providers and advertisers who are prepared to pay the bills to ensure their customers can view content with a high quality of experience.

Of course, Net Neutrality and other regulatory issues will have to be considered, since some of the new business models are prompting criticism from Net Neutrality advocates. Additionally, customer opt-in, privacy and security will also be important factors.

Once these issues are addressed, it seems mobile subscribers may be happy that someone else will pick up the tab for their viewing of sports, TV shows, movies or other content.

If that becomes the case, there will be considerably more reliance on policy servers, charging systems and Diameter Signaling Routers. Operators would have to track:

• Which content providers and advertisers are paying for the usage;
• Which data packets would be associated with those partners;
• What parameters of each contract have to be enforced such as time of day, device, quality of service, and location; and
• What subscriber preferences need to be enforced such as opt in/out, security, and privacy.

If the time comes that subscribers start consuming subsidized content, there will also be opportunities for mobile operators to devise more personalized, flexible data plans, which would again be governed by intelligent policy control.

All in all, any business model that will increase the freedom with which mobile subscribers watch sports, movies, or other types of content will have significant Policy implications. Stay tuned!

Yesterday, Informa Telecoms and Media reported the volume of OTT messaging traffic is set to be twice that of P2P SMS messaging by the end of the year.

Informa also reported that nearly 19 billion chat app messages, from companies like Whatsapp and Facebook Messenger, were sent every day last year, as compared with 17.6 billion SMS texts.

While much of the consequent focus in the media was on whether the “cash cow” of text messaging is dying, the other side of the story is what impact “chatty apps” could have on operator networks.

As operators consider the unpredictable or “misbehaving” possibilities for these and other apps, they will want to more intelligently orchestrate and protect the subscriber experience. To protect the data plane and control plane, operators need network, subscriber, device and application awareness. They can no longer rely on congestion-mitigation strategies that force them to design networks for peak usage, leading to underutilization much of the time.

The better approach, they will find, will be to extend policy to the mobile device. Then, smartphones, tablets and other devices can become both enforcement points and application functions, thus opening up a world of new use cases that address:

• Network congestion management
• Application firewalling and security
• Application traffic scheduling
• Service continuity
• Battery life preservation
• Chargeable services and mobile payments
• Targeted mobile advertising
• Customer self care

These use cases are detailed in a new white paper, Policy On the Mobile, which describes how operators can move along the continuum from simple cost reduction to more sophisticated use cases for revenue generation, customer experience improvement, and network protection.

This continuum is particularly important given the mobile-social nature of today’s subscribers and the intricate relationships surrounding each subscriber – as individuals and as members of social networks.

Both negative and positive experiences resonate more quickly and more loudly than ever before. As a result, mobile operators have to address issues that disassociate their brands from what is becoming an increasingly intimate and positive mobile experience.

For example, smartphone users have an increasingly positive perception of mobile device manufacturers like Apple and Google, according to surveys done by J.D. Power and Associates and others. However, consumer satisfaction with mobile operators has declined enough that operators sit among the lowest-rated service providers in Consumer Reports ratings and other consumer-oriented ratings.

Subscribers have an increasingly positive perception of their smartphones’ operating systems, applications, processing speeds and video/camera quality, and yet an increasingly negative perception of their network performance, data download speeds and customer service.

Well founded or not, the perception of operator brands, and more importantly, future revenues, will be hard to ignore. Subscribers will increasingly demand the “ideal” of solid voice connections, ever-faster data speeds and world-class customer service. The closer operators come to that ideal, the more likely customers will be loyal and purchase future services.

Policy as an ‘Innovation Engine’
As operators transform from where they are today toward roles as “digital-lifestyle providers,” they have to make decisions about what underlying network and management technologies they need, and what they can retool. They have to become more dynamic, opening their networks to leverage social media, entertainment, rewards programs, mobile advertising, and mobile commerce partners.

Rather than embark on enormous rip-and-replace projects, operators can achieve new goals using what they already have, and without a huge cost. By simply elevating policy’s role from monthly quota and fair-use management to boundaries beyond the core network, operators can set the stage for “Policy Everywhere,” through which operators begin to improve network, device and application performance, as well as create new services.

With Policy Everywhere, policy is applied globally across networks, devices and applications.

The number of policy enforcement points will mushroom, and policy will become more centrally defined within an intelligent control layer – one that is independent of the underlying network infrastructure.

Tekelec customers, for example, have an integrated Mobile Policy Gateway (MPG) approach where policy is taken directly to the device through a management interface that is turnkey and inexpensive.

It fills in the gaps currently left by the 3GPP’s Access Network Discovery and Selection Function (ANDSF), the new standard that enables Wi-Fi offload. It is a solid first step, but currently stops short of immediately addressing issues clouding the customer experience.

The MPG enables operators to infuse the best of what the ANDSF offers with the time-to-market advantages of a commercial off the shelf (COTS) solution.

With MPG, operators build a unified policy creation environment through which real-time dynamic policy enforcement can be extended to devices, and through which they expand the capabilities of Wi-Fi offload use cases and invite altogether new use cases.

By using existing policy provisioning and management interfaces and tools, operators can create network and device policies from the same platform. They can reduce the chance of policy conflict and increase the scalability and flexibility of their existing policy servers (PCRFs) and the Diameter Signaling Routers (DSRs) which route signaling messages to these servers.

MPG addresses those goals by extending the reach of policy and establishing direct links to policy servers and end-user devices over a Diameter interface. That enables the devices to interoperate and act as an integrated policy solution.

The resulting holistic framework we call the Tekelec Policy Solution, as the Policy Server and Mobile Policy Gateway combine so that policy treats the device as both an enforcement point and an application function, giving mobile operators the ability to enforce policy wherever needed.

Within the Tekelec Policy Solution, the MPG also complements existing technologies, such as deep packet inspection (DPI), filling in the gaps in policy coverage. A DPI, for example, cannot identify all applications, especially if data is encrypted. With the MPG, operators evolve from a policy architecture covering just the network to one where they gain end-to-end control over the entire application flow.

To find out more about 8 new use cases and how MPG leverages what you already have in place, read Policy On the Mobile. Also, visit our Diameter Learning Center at LinkedIn.

There has been more news lately about some high-profile botnets, and the latest was one of the largest ever seen in Internet history, causing Internet slowdowns to hundreds of millions of users. The scale was orders of magnitude larger than anything seen before, affecting the very core Internet routers that make the Internet function. As mobile networks evolve to all-IP networks, these are the very security concerns operators should be focused on.

In this latest episode, attackers first targeted Spamhaus, and then the security company hired to break the attack, CloudFlare. A domino-effect ensued for any and all companies and groups associated with either Spamhaus or CloudFlare, peaking with a stream of data as big as 300 billion bits per second, which compromised sites – slowing them down or making them unavailable – for as many as nine days.

At the core of the assault was a powerful botnet — a network of thousands of remotely controlled, infected computers that caused a distributed denial of service (DDoS) attack. That attack is expected to be re-launched in upcoming days, according to Internet chatter, and it is causing security experts like Kaspersky Labs to note that DDOS-type activity is increasing rapidly, and far more malicious than fraudulent service and network security breaches of the past.

How Can DSRs and Policy Servers Help Mobile Operators?

For mobile operators, the rise in malicious attacks highlights a need to go beyond a socialized approach where one appliance is trusted as a security gateway. It pushes everyone toward a multi-layered-security approach, where operators protect the core, the transport layer and the application layer from rogue sites.

The Diameter Signaling Router (DSR) and Policy Server (PCRF) can strengthen security at particularly the control and application layers. Because botnets exploit routing software and servers, DSRs and Policy Servers play a role in preventing amplifications that otherwise get out of control and bring down networks.

For example, in our recent whitepaper, “Multi-layer Security for the Digital Lifestyle Provider,” we describe Access Control(ACL) Lists, Topology Hiding, Encryption, Congestion Control and other security measures augmented by the DSR and/or PCRF.

We look at the ways in which operators can add layers of protection, such as by implementing topology hiding, which protects the network host names from a DDOS. and we look at how encryption can be used for safeguarding subscriber data.

All in all, the operators’ strategies have to be proactive and multi-layered in order to prevent access from unknown partners or rogue sites. There’s no question the growing sophistication of services, and the mobilization and social revolution underway will mean not only innovation, but also more malicious security threats among operators and the third parties with which they will work – intentionally or not.

The ability to “virtualize” is critical for operators evolving toward ThinkingNetworks™.

Network Function Virtualization (NFV) implementations and virtualization of the Evolved Packet Core (EPC), as well as systems outside the EPC (e.g., billing), can significantly reduce network costs and help operators become more efficient in matching resources to network and service demands. NFV gives service providers the ability to elastically assign compute and storage resources through a software-only approach.

Assigning resources only where needed is important when it comes to Diameter network elements, especially the Diameter Signaling Router (DSR) and Policy Server (PCRF), which have to be “cloud ready” in order to successfully control LTE EPC functions.

Virtualization will essentially partition the resources of a hardware platform into unique “virtual machines.” These virtual machines replicate standalone functions currently supported on separate hardware. If more compute resources are needed to support a Diameter function, any available hardware can be chosen and a new instance of the virtual machine created by the hypervisor.

The same hardware could also be used to support instances of a policy function at the same time, if enough compute resources exist. It’s that ability to dynamically allocate additional compute and storage resources when needed – using a common pool of hardware – that makes virtualization so important.

The move to NFV implementations will mean operators expand virtual functions to support multiple regions, or extend functions to other partners as part of their cloud offerings. For example, MVNOs or multinational operators looking to put their packet core into the cloud can manage all services and countries through one implementation.

A Closer Look At NFV

At Tekelec, we have developed the Orchestrator, which determines through analytics and other inputs when additional resources are needed. The Orchestrator instructs the Virtualizer (the hypervisor) to create another instance of a function. The Virtualizer creates additional resources, and other instances of the DSR or PCRF per the Orchestrator’s instructions.

Since the Orchestrator is the function that determines what, when, and where additional compute and storage resources are needed, it goes into action when traffic levels in the Diameter network increase. It identifies the rise in traffic and determines if additional DSR or PCRF resources are needed to support the rise in traffic.

Once the Virtualizer implements the new instance of DSR or PCRF, the IP Flow Manager directs IP flows to the new instance of the function (since routing tables will not reflect newly configured hardware).

The communication and cooperation among these components gives networks the ability to expand and contract based on real-time traffic conditions. That capability will become invaluable to operators trying to balance the need for innovative services with the need to maintain network performance levels – both essential to the customer experience.

Mobile operators will continue to invest heavily in their relationships with customers, as they want to champion their brands as Apple, Samsung and Google have done. They also want to ensure their revenues and profits are not further eroded long term by third-party applications and over-the-top providers.

To create positive consumer perceptions about their brands and to deepen their customer relationships, operators know they have to differentiate according to more sharply defined customer wants and behaviors. This means offers and supporting network resources must evolve to dynamically adjust according to how people behave as individuals and in groups. This may include sharing data in real time with advertisers, or optimizing Quality of Service according the needs of an over-the-top application. In short, operators are are becoming “digital-lifestyle providers.”

The most critical element of this transition to digital lifestyle provider status is an adaptable, dynamic and flexible network, one that understands the customer in detail and responds to their actions with personalized, informed reactions. In short, operators require ThinkingNetworks™. This is not a ‘rip-and-replace’ proposition; rather, it is a phased evolutionary approach that adds and changes technological resources as the operator’s business changes according to market demand.

To evolve today’s mobile networks toward this more effective end state, we see four key overlapping phases, including:

• The New Diameter Network (NDN)
• Virtualize through the Cloud
• Monetize in mobile and social-networking environments
• Realize a policy-driven, software-defined ThinkingNetworks™ end state

In the first phase, operators tame the ‘signaling storm’ that could compromise their investments in Diameter-based environments through the New Diameter Network, which brings agility and speed to routing and signaling and provides crucial policy insight about subscribers and their devices, behaviors and apps. Policy becomes the ‘big brain’ of the network, keeping all relevant gateways, databases and operator systems informed. It also facilitates the real-time personalization that is essential to today’s demanding customers.

With that network humming, operators are ready to move into the second phase – a cloud environment that virtualizes network resources. This adds the benefits of on-demand resource allocation and optimal capacity utilization. It also exploits industry trends in software-defined networking (SDN) and standardized hardware improvements that are bringing down CapEx and OpEx unit costs.

In Phase 3, operators turn the tables in the market and go from passive ‘pull’ status to active, relevant ‘push’ vehicles, capable of interacting with entire social networks based on user interests and group behaviors. And, just as the human brain takes in multiple data points simultaneously to influence one’s actions, “one-of” consumer transactions suddenly become a dynamic real-time web of interactions. The network can then push revenue-generating recommendations, offers and ads based not just on one-to-one behaviors, but across this pulsating network of group insights, preferences and decisions.

Finally, in phase 4, ThinkingNetworks™ continually listen, learn and optimize. Instead of periodic off-line reporting and inexact capacity planning exercises, the operator is now given the power to adapt resources according to that delicate balance among business plan goals, network conditions, and customer desires.

The end game is achieved by giving the operator the capabilities they have sought for so many years: the ability to serve the market more quickly, more dynamically and more cost-effectively, and this is what brings differentiation and puts the operator in the driver’s seat as digital lifestyle providers.

To learn more read the new whitepaper: The ThinkingNetworks™ Revolution: A Call to Action for Digital Lifestyle Providers

Signal Research Group carries out a Tekelec-sponsored study to decipher how 3,476 mobile broadband users in five countries use mobile broadband services, what pricing models they prefer, what services they prefer, and what factors influence their mobile broadband purchasing decisions.

Smartphones and mobile devices are becoming an extension of who we are – as individuals, as members of groups and of social-media environments. Depending on where “we” live in the world, and what economic and social factors shape our perceptions and drive our decisions, we all have varying affinities for different pricing models and service bundles.

In order to bring actionable insight to our mobile-broadband operators across the globe, Tekelec sponsored “Mobile Broadband Pricing and Bundling – The Voice of the Consumer,” a Signals Research Group study of unparalleled scope in quantitative and statistical analyses of both developing and mature markets.

The report slices and dices data from 3,476 mobile broadband consumers spanning five countries: Brazil, India, South Korea, the United Kingdom, and the United States – the result of which is a 65-page report now distilled in a 14-page preview for service providers and analysts.

Intricate, in-depth information is conveyed in easily consumed tables, charts and “heat maps” that detail demographic, device and service-experience indicators.

This all comes together in composite and regional breakouts so that operators can better match subscriber desires and circumstances with actual service bundles and pricing models, region by region.

Some key takeaways from the report include:

Usage-Based Pricing and Paying for Specific Applications are the preferred pricing concepts on a global basis.

• Family Sharing is the preferred pricing model in South Korea and comes in second out of seven in the United States.
• Free Access ranked very differently country by country, providing an indicator of which countries might be more amenable to mobile advertising and subsidized free access than others. For example, 86% of respondents in Brazil expressed interest in Free Access as a pricing concept.

Security (Remote Lock/Remote Wipe), Web Browsing, and Email stand out as the preferred services on a global basis.

• Brazil, India, and South Korea prefer consumer/entertainment-oriented services like VoIP and Video, while the United Kingdom and the United States prefer productivity-oriented services like Web Browsing and Email.

In all countries surveyed, respondents strongly preferred a bundle of multiple services (two or three or four of their choosing) to any single service.

• While they don’t need to have an infinite selection, customers want some choice and variety, because they want to use their mobile device for more than one application.

In addition to key findings, the report reveals important correlations among data, such as:

• Hotspot usage is an indicator that subscribers allocate mobile data spend to Wi-Fi, which can be a red flag for new business opportunity.

• Respondents who do not currently use mobile broadband with a tablet or laptop, but who do pay for hotspot connectivity represent a viable untapped market.

• Enthusiasts who pay for hotspot access spend $104 per year on hotspots vs. $76 per year for Non-Enthusiasts (Interestingly, there are a significant number of people who spend more than $500/year on hotspots in Brazil, whereas in the U.K., the majority don’t spend a penny on hotspots).

These are just some of the findings that operators can use to gauge consumer appetite for more sophisticated pricing and bundling.

For further detail about the report preview, you may contact Susana.schwartz@tekelec.com

Downtown DC has braced for the arrival of up to 800,000 people, who will observe the 57th U.S. Presidential inauguration today. The event will be tweeted, shared and recorded on video by the assembled crowds, some of whom will be using 4G services and applications on their smartphones.

Besides the additional data traffic surge, Tekelec expects this event to generate increased Diameter signaling traffic, thanks to an increased density of LTE device users attending the ceremonies. In fact, the 57th Inauguration is sure to be very different from the 56th in terms of technology: four years ago, smartphones only had approximately an 11 percent market penetration – and BlackBerrys outnumbered iPhones two to one.

Additionally, LTE was not yet in service anywhere in the world.

Now, more than 55 percent of Americans own a phone that is capable of video streaming or Internet connectivity – a total of more than 100 million Smartphones. Add to the mix a new, dedicated free Inauguration app with live streaming (Inauguration 2013), and it’s easy to see how mobile data and subsequent Diameter signaling traffic will surge.

The density of LTE-enabled devices means that 4G coverage will be seriously tested during periods of peak usage, thus forcing subscribers onto 3G and Wi-Fi networks. Also, attendees’ mobility in and out of coverage areas may cause subscribers to switch from LTE to 3G networks, and back again. The result on the core network will be periodic spikes in Diameter signaling traffic.

It will be interesting to see how operators fare once users start comparing what they expect from their devices and mobile network providers, and what actually ends up taking place to either enhance or mitigate the Inauguration experience.

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Today we released our Diameter Signaling Index – a first-of-its-kind “guide” designed to help architects, engineers and marketers calculate the impact of devices and services on network signaling traffic.

It’s perfectly timed, as the iPhone 5 will be a prime example of the multi-session nature of new devices and the multi-tasking that will ensue for each subscriber. The consequent surge in Diameter traffic will require unprecedented levels of orchestration and communication among user to devices, cell towers, policy servers, charging systems, and subscriber databases and gateways.
As indicated in the report (which took a conservative road in its assumptions), there will be 47 million Diameter messages per second by 2016, representing a compound annual growth rate (CAGR) of 252% between 2011 and 2016.

The iPhone reflects the type of sophistication that will trigger more use cases around policy, which will in turn trigger more Diameter signaling. Mobility management functions and roaming will all have substantial impact.
So what does it all mean for operators, who obviously know what’s coming and have been building Diameter signaling strategies into their planning?

It means that what used to be addressed with a mesh approach to Diameter must now be addressed with more of a centralized approach. A centralized Diameter signaling architecture will be needed to effectively route, measure and monitor Diameter traffic so that signaling storms are held at bay, and so that the customer experience is optimized rather than compromised.

And since authentication will be invoked each time someone powers on an LTE device, or every time someone activates a new device (as with the 10 million iPhones forecasted to be sold this month), there could be as many as 60 million authentication messages generated by that event alone.

So, just as the original iPhone changed phone usage habits, so too will the LTE iPhone have an impact on LTE networks. New usage profiles and patterns combined with tiered service plans and the associated policy and charging information will equal A LOT of Diameter traffic. Charging for example could represent as many as 6 Diameter messages per session (depending on the type of session, billing arrangements, and numerous other factors, 6 is conservative).

New business models such as sponsored traffic and advertising also will require Diameter interactions, which means we’ll see more centralization of Diameter architecture to accommodate the evolution to LTE – on the iPhone and other devices.

Like a long-lost friend, unlimited data is getting a warm reception from media – major networks and trade channels – but will it make a real comeback among subscribers? And if so, will it attract more profitable subscriber segments?

These are the questions that are intelligently answered with policy solutions that pinpoint operators’ most profitable customers, and then enable operators to establish and enforce rules that enhance the customer experience for customers most likely to consume the types of services that drive loyalty and revenues.

Why compromise the quality of experience for the greater whole of users, who may suffer dropped connections and difficulties connecting to networks because of the heavy usage of a small percentage of people during peak hours and in congested cell areas?

Operators that want to get the most out of their 3G and LTE investments should continue on the quest to personalize services and content according to subscribers’ usage patterns, preferences, locations, and circumstances.

Operators need network analytics, and then can leverage real-time data from networks and subscriber data management (SDM) systems. This approach will help establish a strategy for balancing traffic in a way that optimizes the customer experience based on customer preferences and the value they place on the services. Central to that will be Policy solutions (PCRF), which define the rules for new services for different subscriber segments based on operator network requirements and marketing strategies.

While some operators may grow their subscribers based short term by bringing back unlimited data, the long-term profitability of operators – and the long-term role they will play as enablers in an OTT-driven model – will depend on their ability to stay the course in pursuing personalization of services. Those services will depend on dynamic charging and pricing models.