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!

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

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.

Ever wonder what Lily Tomlin was doing when she would say “one ringy dinghy, two ringy dinghy”? Or how about Sarah in Mayberry RFD when Andy would pick up the phone, turn the crank a few times, and ask her to connect him to Aunt Bea? These are all examples of signaling being used to connect calls in the days before electronic switching. When you wanted to make a call, you turned a crank on the side of the phone, which then triggered “signaling” in the form of a light illuminating and a bell ringing on a switchboard.

The operator would then ask a series of questions so she knew how to connect your call (signaling again), after which she would manually plug a cord into a jack on the switchboard, completing the circuit to the destination, or to another operator in another city.

Signaling has changed drastically through the years, with everything involved now fully automated. Signaling allows the various elements within a network to communicate with each other regarding a specific connection. But nowadays, signaling takes many forms, depending on its purpose. There is signaling between a mobile device and the cell tower. There is signaling between the cell tower and the core network. And there is signaling within the core of the network. Regardless of its purpose, signaling up to now has been nothing more than pure overhead, contributing little to service provider revenue.

Though signaling has taken many forms over the years, the industry is now making a concerted effort to consolidate technologies and reduce the number of signaling methods used in networks to just two: Session Initiation Protocol (SIP) for connecting voice and video, and Diameter protocol for authorizing and authenticating subscribers and their devices.

Not only is Diameter used to access subscriber databases authorizing network access, but it also is used for charging as well. Most importantly, Diameter is used by network elements to communicate with the Policy and Charging Rules Function (PCRF).

It is the PCRF in the Evolved Packet Core (EPC) that allows service providers to personalize services they deliver to their subscribers, whether tiered service plans, parental controls or others. The role of policy in the network continues to grow as service providers get more and more creative with the rules they can generate to control the traffic in their networks and define new services.

The PCRF not only contributes to the bottom line on the balance sheet, but it generates new revenue streams for service providers such as mobile advertising and over-the-top (OTT) application subsidies.

Never before has one function in the network represented so many new opportunities for service providers, which are literally redefining the role that they play in the mobile ecosystem. They can now offer to their subscribers more intelligent choices tailored to their lifestyles, while also engaging new partners previously seen as competitors for the purpose of creating more compelling services.

OTT players such as Google, Facebook, and YouTube depend heavily on the network to reach their subscribers, but until now have contributed little to nothing back to the service providers as compensation for the network costs. But that can change as OTT players come to realize the value of becoming partners. As that happens, signaling will continue to move to the spotlight as a revenue generator rather than a pure cost of doing business.

As that happens, Diameter will be the signaling protocol that makes monetization of OTT services possible, and it might possibly be the one technology that will change the face of service provider business models forever.

It’s no secret that OTT players have successfully decoupled applications and services from the underlying networks responsible for driving the all-important “customer experience.” As a result, service providers should consider how OTT players like YouTube, Facebook, Amazon and Google can become a critical link back to what has become the disintermediated “traditional” customer” – the end consumer of communications and data services.

For example, in the “Verizon versus AT&T: Whose iPhone is better?” debate, end users care about the quality of experience enabled by the device and the apps available on the device. Their loyalties will sway according to which network optimizes their devices’ performance.

Since the telco brand is not directly tied to the devices and apps, but rather indirectly, it is important to cultivate that “indirect” link and open it to monetization by nurturing the OTT relationship. After all, service providers have the technological and business know-how to enrich OTT apps and services with differentiating capabilities (like speed boosts during gaming or video downloads).

Service providers have an opportunity to monetize the service level agreement (SLA)- and quality of service (QoS)-driven capabilities OTT players would otherwise struggle to create on their own.

There exists a universe of untapped services for both consumers and enterprises if operators consider OTT players their new “customers” as opposed to their competitors.

To read more about nurturing the OTT players as a revenue-rich customer base, go to the Tekelec white paper “New Diameter Network: Over-the-Top, Clouds and Machines.“

Operators are facing the classic challenge of shifting from being a network and device provider to being a service and content enabler. This includes being able to leverage the rich network and subscriber data and analytics they have to personalize services while respecting privacy through opt-in provisions. Also, this means offering customer-centric service rather than device-centric.

However, this challenge can present some key revenue generating opportunities for operators. Here are examples of how operators can monetize their networks and get subscribers on their side.

1)     Offer personalized services tiers that link usage and preferences to pricing

This approach is becoming critical in helping operators better align mobile data traffic growth with revenue growth. It requires policy to define usage rules and subscriber data management to segment subscribers and track usage and behaviors on a subscriber basis, as well as analytics to determine how services are performing and to use that information to evolve services.

Service tiers can be based on bandwidth, application usage, speed, time or device type, and they can be customized for different market and subscriber segments such as business users or students. Providing customers with notifications and messages about their usage and how it relates to what they are being charged will be critical to ensuring customer loyalty and preventing bill shock. 

2)     Personalize the Over-The-Top Experience

Operators need to add value to over-the-top applications by personalizing them with subscriber profile, usage, location, and analytics information. An example of this is enriching mobile advertising by targeting certain subscribers who opt in based on their location. The operator could charge the mobile advertiser for the location data they are providing and for analytics on the effectiveness of the advertisement.

For operators to realize the value in over-the-top applications, they need:

• A real-time view of the customer such as their location, applications and devices;
• The ability to offer quality of service guarantees;
• Analytics to enhance applications by measuring customer usage, performance, and application trends; and
• Open application interfaces that expose information to advertisers and application providers such as video quality of service, customer data and analytics

3)     Simplify Data Plans

Consumers with multiple devices are plagued with the headache of juggling multiple bills. By offering one plan that can encompass many devices, service providers can encourage greater uptake of devices including smartphones and tablets, as well as machines such as home energy management systems. This approach combines subscriber and device data management to assign multiple device identities to one customer profile. It also uses policy to share one quota across multiple devices and performance analytics to track and analyze customer and group usage.

4)     Capitalize on Casual Usage and Loyalty Programs

Casual usage and loyalty programs such as roaming or application day passes, birthday and service anniversary bonuses are another opportunity for revenue. These casual usage and loyalty programs require policy combined with subscriber data management to meter multiple usage limits per customer and to zero-rate services that are free based on application, time, and bandwidth. Performance analytics are also used to track usage, assess the impact of different programs, and evolve services.

For additional information, listen to our recent Webinar: Four Use Cases for Monetizing Mobile Broadband.

Joanne Steinberg, Director of Strategic Marketing, describes four key opportunities for operators to monetize their networks and get subscribers on their side.

Joanne Steinberg, Director of Strategic Marketing, talks about how operators can use network and subscriber activity to create revenue from their mobile broadband network.

Joanne Steinberg, Director of Strategic Marketing, addresses the various challenges that operators must overcome when trying to monetize their mobile network.