For several years we have been saying to anyone who will listen (brow furrowed) that telecoms revenues are on the way down and we need to find services and products to replace them. Even so, it is quite shocking to visit a web and find a chart that, well, charts the decline. All major Western European operators’s revenues – down, mobile revenues – down, ARPU – down.
And not just down. Way down. The GSMA reported that European ARPU had fallen 5.9 percent per year on average in the four years to the end of 2013. Meanwhile capex per subscriber has risen 60 percent. That equates to, let’s see – if 60/5.9xARPU – er, sleepless nights for CFOs. Equally worrying is that of those operators who report such deep secrets as percentage of customers churning, only 10 percent have managed to reduce churn yearly since 2011, and they in developing economies. Subscriber growth itself will also more than – or perhaps worse than – halve by 2017.
The way back up, according to a Heavy Reading report, carried out on behalf of real-time BSS provider Openet, hangs on using charging and policy management to enable more innovation in operators. According to their survey, nearly 60 percent expected to offer sponsored promotions, and over 60 percent said they would implement policies based on level of real-time radio access network (RAN) congestion – for example, quality-of-service (QoS) prioritization.
To support this, operators need to be – to use now overused words – agile and lean. NFV is certainly on the radars of many of the big operators, with Telefonica publically leading the way. But it may yet be that the little system that was introduced to control prepaid customers really does hold the key.
There are a wide range of ideas on the table for increasing revenue and reducing churn. The Heavy Reading survey found that of 71 operators the top three policy use cases are two varieties of fair usage (as you would expect) and bill shock management linked to roaming. In the next two years, however, the policy use cases change emphasis and become more ‘positive’ in nature. Temporary data passes, video optimization and location being among the more popular.
Interestingly, like the TM Forum research carried out during the summer, the applications supported by policy and real time charging in two years’ time covers a lot of examples. In the TM Forum work OTT collaboration, VoLTE and data packs and roaming solutions were the most popular – but there were many within the 30-40 percent bracket. On top of the research, we have also seen (and heard) plenty of evidence lately that the OTT players, now known as Digital Service Providers (DSPs) here at BillingViews Boulevard, are very keen to partner with operators. In their view, operators have the customers, know who they are and what devices they are using, and together the products and services that they can put together jointly and based on merged knowledge will be more and more compelling.
So, that’s OK then. Problem solved.
Except, of course, in reality things never work like that. To fully utilize the power and potential of the policy platform, Networks will have to work with the Business. Some years ago, a CTO of a (very) major player said they wouldn’t connect its policy server to charging “because of the complexities of dealing with the IT department, and all their legacy IT systems.” This may sound extreme, but politics may still be the downfall of what one North American player referred to as “the dream of policy based billing.” In the TM Forum work, one VP of IT told us that he had made the decision to get his supplier to unbundle policy from its integrated policy and charging offering because “it wasn’t worth the fight with Networks. You have to pick those.”
Hurdles there may be, but declining revenues are good focus pullers. And if Networks and IT and the Business don’t play nicely pretty quickly, it is more than likely that the grown ups on the Board will want to have a word.
Related: this article also provides a dose of reality.