White Paper Subscriber Optimized Charging for 4G Services

Copyright Openet Telecom, 2009 2011

White Paper Subscriber Optimized Charging for 4G Services 2

Index Introduction Mobile Data: Growth Rates Traditional Pre-Paid and Post-Paid Charging and Billing
Legacy System Challenges: Limited Flexibility, Performance, and Subscriber Experience Combined With Slow Time to Market and High Costs 3 5 6 6 9 9 10 10 11 11 12 12 13 15 15 15 15 16 16 16 17 18 18 19

The Need for Subscriber Optimized Charging in 4G

4G Packaging and Pricing Business Drivers for Subscriber Optimized Charging: Converged, Personalized, Dynamic Services: Sample Cases
Converged: Family / Group Customers Personalized: Real-Time Subscriber Assurance Dynamic: Real-time Context Sensitive Offers Other Mobile Services OTT Services

Current Capabilities of Operators to Develop and Implement Flexible Pricing Plans Providing a Platform for Subscriber Optimized Charging for 4G Services
Flexibility and High Performance: With Real-Time Charging, Rating, and Balance/Account Management Capabilities
Ability to quickly develop innovative 4G services and incorporate third party services Timely response to market opportunities Ease of configuration by marketing teams Self service provisioning by subscribers

Support for Pre-Paid, Post-Paid, and Real-Time Payments on a Single Platform Charging Integrated With Network Resources and Context Support for Any Type of Service Across Any Network An Adjunct Approach

Summary

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White Paper Subscriber Optimized Charging for 4G Services 3

Subscriber Optimized Charging for 4G Services

InTrOduCTIOn
With 4G in commercial operation and over 100 operators lining up to launch 4G networks in the near future, there is a question of what impact will subscriber demand for faster bandwidth and the emergence of new business models have on operators and their existing B/OSS (business / operational support systems). The main benefits that 4G offers to operators is the ability to provide high-bandwidth, rich multi-media services and applications to their subscribers. 4G will also provide a dramatic decrease in transmission cost per megabit, but the flip side of this is that 4G subscribers will typically use more data than 3G subscribers, as they use more data hungry services such as video, across an increasing number of devices. 4G bandwidth still needs to be monetized with subscribers paying for what they use, how they use it and the context in which it is used. The main challenge is to anticipate how subscribers will use and experience 4G and how operators are going to maximise the monetization opportunities that 4G presents. How a service is priced can often have a significant impact on subscriber usage and the operators ability to maximise revenue opportunities. Existing 4G pricing models include operators providing tiered usage plans based on combination of usage volume, download and upload speed usage volume with no speed restrictions until usage threshold is hit, then speed is throttled back download speed with no volume restrictions

This offers a relatively wide range of pricing plans for 4G services. Some operators are already using integrated policy management (e.g. throttling of network speed). It is probable that 4G pricing will get more complex with an increased range of pricing variables as more operators launch 4G services and competition intensifies. Also, the number of price based promotions will increase as operators look to upgrade their existing 3G subscribers and / or attract subscribers from their competitors. This is where operators will need to look at their existing charging and billing infrastructure and look at how theyre going to make money from the services and business models enabled by 4G. The traditional approach of having a charging system for pre-paid subscribers on an IN (intelligent network) platform and separate billing systems for post-paid subscribers may have serious limitations for monetizing 4G based services. Convergence is changing how operators view subscribers, and this is having a major impact on the systems needed to support them. The mobile business model is changing and many traditional batch based billing systems have had expensive add-ons developed to help with new rating and billing functions. However, the introduction of 4G may be a change too far for traditional B/OSS and force a tipping point where operators may need a new approach to charging and billing. This is due to many factors but the main ones are: Subscriber convergence (subscribers using a range of services, with different payment mechanisms) Increasing dominance of real-time charging Multiple devices per subscriber (smartphone, laptops, tablets, internet enabled TVs) Subscribers network experience becoming a dynamic pricing variable Real-time contextual subscriber intelligence driving services offered Ability to quickly react to new business models and opportunities marketing, OTT, advertising, new business areas (e.g. security, M2M, e-Health)

Copyright Openet Telecom, 2011

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Talk of 4G acting as a catalyst for a new approach to charging and billing is all well and good, but operators have invested heavily in IN platforms for pre-paid usage and retail billing systems for post-paid billing. Most operators have several billing platforms, so advocating a new approach for all billing could be somewhat onerous if looking at swapping out all existing billing systems. A cost effective system evolution approach using an adjunct real-time charging system for 4G services could be an option worth consideration. As available network speeds increase, data uses increase and as more data heavy applications are consumed, the need to add policy management to charging becomes stronger in order to give operators a service differentiator over their competitors and manage network resources more optimally. This would involve utilising a charging and policy management system for 4G usage for all subscribers, using different payment types (pre-paid, post-paid, service passes). This provides flexible pricing and real-time charging for 4G services. Adding policy to the equation allows the subscriber usage experience and network capacity to be optimized. To provide this requires a platform which enables convergent, personalized, and dynamic pricing and charging. This is Subscriber Optimized Charging. Just as 4G is providing mobile with faster speeds, Subscriber Optimized Charging delivers the foundation to take charging, rating, and billing to a new level.

Copyright Openet Telecom, 2011

White Paper Subscriber Optimized Charging for 4G Services 5

MObIle DATA: GROwTH RATeS

Introduction: Mobile data is growing fast. This section discusses mobile data forecasts and current usage examples. Heavy use of mobile data and new business models are now entering mobile mainstream. 4G will speed up that process. The services that 4G will enable are numerous, but the main consumer of mobile data traffic will be video. See Figure 1: Global Mobile Data Traffic 2010 2015.

Petabytes per Month 7000

92% CAGR 2010 - 2015

1.5% 4.7% 6.1% 20.9%

3500

66.4%

0 2010 2011 2012 2013 2014 2015

[Mobile] VoIP

Gaming

M2M

P2P

Web/data

Video

Figure 1: Global Mobile Data Traffic 2010 -2015

with regards to current growth for mobile data there are some interesting usage figures from Google, published by Fiercewireless in April 2011. These figures show not only impressive growth of mobile data usage and smartphone sales, but also that new OTT businesses (such as mobile advertising) are experiencing substantial growth. The figures show that Googles mobile search traffic has increased 5,000 percent during the past two years, and that the Company is now activating around 350,000 Android smartphones per day. The area of mobile advertising is also growing with Googles AdMob mobile advertising platform now recording 150 million ad requests per month from Android and Apple iOS devices, representing an increase of 50 percent during the past four months. Also Google now counts more than half a million advertisers using the companys click-to-call mobile advertising function. It is clear that mobile data is experiencing rapid growth, and that the new business models are fast becoming mainstream reality, even if they arent alluring to all operators.

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White Paper Subscriber Optimized Charging for 4G Services 6

TRADITIONAl PRe-PAID AND POST-PAID CHARGING AND bIllING

Introduction: As operators look to fully monetize 4G services they may be limited by use of traditional charging and billing systems. This section discusses the challenges operators will face by using traditional systems for 4G. Traditional legacy charging and billing infrastructures are typically defined by two main silos based on payment types with: Post-paid billing systems, consisting of mediation, rating, billing, which are typically batched, software based, and reside within the IT domain Intelligent Network (IN) pre-paid charging platforms, which are hardware based and were, introduced a number of years ago within the core network to provide the real-time capabilities needed to manage, rate, and charge for traditional voice services.

This traditional approach of separate In and billing systems has evolved over time, and many systems have had expensive, customised add-ons developed in order to enable them to cater for new services (e.g. 3G data). 4G enables a wider range of services to be delivered direct to the mobile device at faster speeds. This will further open up the mobile market and provide increased choice for subscribers. In order to increase ARPU and usage of data rich services enabled by 4G speeds, operators should examine the packaging, pricing, and delivery of 4G services and review the challenges these will place on existing In and billing systems. The challenges operators are facing due to their silo based legacy infrastructures (e.g., prepaid charging, post-paid billing silos) are represented in figure 2 below.

Legacy System Challenges: Limited Flexibility, Performance, and Subscriber Experience Combined With Slow Time to Market and High Costs
Below is a representation of the four key challenges operators will face due to their legacy charging and billing infrastructure, followed by an analysis of each challenge:

Figure 2: Legacy System Challenges

Challenge 1: Lack of Flexibility, Performance, and Future Readiness, Resulting in a Limited Ability to Effectively Innovate, Monetize 4G Data, and Monetize Third Parties by its nature 4G is designed to provide high volumes of mobile data fast. This generates very high volumes of transactions which require strong real-time capabilities. with 4G realtime charging is central to flexibility and innovation. However, many operators legacy charging and billing platforms were originally designed for 2G, (with customised add-ons developed for 3G data). As discussed in the introduction to this document, 4G will present new charging variables, and it could be argued that a system developed originally for older mobile technology charging or billing may struggle to create innovative, flexible pricing plans and business models that incorporate third parties. Also 4G will see increase numbers of transactions and therefore charging requests, so systems need to deliver cost effective performance. legacy post-paid billing systems do not support real-time charging, which is why IN pre-paid charging platforms were introduced in the first place. So the question is that with 4G, how can operators offer real-time context sensitive charging for post-paid subscribers, given that legacy billing systems are batch based systems.
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White Paper Subscriber Optimized Charging for 4G Services 7

IN pre-paid platformsmany designed to only charge by volume/timeare often unable to support more sophisticated charging models based on content and value: e.g. A movie may be charged at a fixed rate, and the operator needs to ensure the transport cost is not charged for and that the transport is not counted against a threshold monthly data volume. Furthermore, not only will 4G subscribers be more data hungry, but they want ever richer content from variable sources; the demand for applications, especially video applications, is growing particularly fast. This is forcing operators to better co-operate with third party application and content providers. The implication is that they need to find innovative ways of charging and managing access to these third party services in order to effectively monetize them and play a key role in the value chain. As these business models evolve, charging platforms must have the flexibility and extensibility to support these new models.

Challenge 2: Limited Subscriber Experience and Up/Cross-Selling Capabilities Resulting In Limited Loyalty and ARPU Growth With network speed a key selling point for 4G, subscriber usage experience will be a key competitive differentiator for operators as they strive to deliver a compelling experience in order to attract new 4G subscribers and stimulate usage. However, legacy charging and billing infrastructureswith their pre-paid/post-paid silos and platform limitationsdo not support a differentiated, compelling subscriber experience. With a silo based on payment type, operators cannot usually offer seamless services to all their subscribers across payment types, networks, and devices. This can result in frustration and churn. For example, some operators dont enable roaming for certain services for prepaid subscribers; vice versa, post-paid subscribers may not enjoy real-time advice of charge offered to pre-paid subscribers. Also the same subscriber is often treated as a different subscriber depending on whether their queries relate to their pre-paid or post-paid services. As subscriber data is distributed in different systems, operators may not have a single view of an individual subscriber. As a result, they could find it difficult to provide full, overall visibility to subscribers for all of their services and usage/spending, which is a key loyalty driver. Without this single view of a subscriber, neither can they effectively up-sell or cross-sell. The ability to do this requires operators to be able to associate different services to the same subscriber and provide strong real-time capabilities across the subscriber base to trigger timely, personalized promotions and offerings for all. This inability to effectively up- and cross-sell means less revenue. In most cases subscribers are restricted in the type of payment method they can use to purchase services. Moreover, legacy charging, rating, and billing platforms may not allow operators to create multiple, differentiated service plans that provide more options to subscribers and better suit their specific needs. Challenge 3: Slow Time to Market Resulting in a Loss of Competitive Edge and Revenue Potential Fast time to market gives a key competitive advantage to operators and tends to have a direct impact on revenues. However, when an operator has multiple siloed charging and billing systems, configuring a new service may involve working with multiple systems that perform similar functions but are built on different technologies. This equates to more work, more potential for human error, and more time (and money). As discussed above, some operators have implemented customised software add-ons to legacy systems. For example, in order to get some IN pre-paid platforms to charge for data, bits were converted into seconds. However as many customised software add-ons are nontransferable, the operator has to go through the same process for each service launch, which results in slow time to market. The service launch delays, due to legacy charging and billing system software changes and upgrades, often leads to missed opportunities for operators to increase revenues or build loyalty, whilst they are incurring high costs.

Copyright Openet Telecom, 2011

White Paper Subscriber Optimized Charging for 4G Services 8

Challenge 4: High Costs Resulting in a Challenge to 4G Profitability In addition to increasing revenue opportunities to maximise return on 4G investment, operators also need to better control costs and remove as much unnecessary IT or B/OSS expenditure as possible. However, the cost of adapting existing legacy, charging, and billing infrastructures to be 4G compliant, and cater for the new business models enabled by 4G, may be significant. Adding custom development add-ons is expensive and does not enable operators to benefit from the economies of scale of software product development. It is much more cost effective to use a system that has been designed for use in a 4G environment than to take a system that was developed for an older mobile technology and make alterations to try and make it fit the 4G model. even if an existing legacy system was tweaked enough to cater for todays 4G models, then it will only be a matter of time before it needs an upgrade to cater to a new business model variant. The cost of these upgrades needs to be looked at not only in terms of the software enhancement, but also in the increase in on-going operational and maintenance costs. The correct system architecture needs to be in place from day 1 to ensure the most cost effective solution.

Copyright Openet Telecom, 2011

White Paper Subscriber Optimized Charging for 4G Services 9

THe NeeD FOR SUbSCRIbeR OPTIMIzeD CHARGING IN 4G

Introduction: In order to best succeed, 4G will need pricing that is converged, personalized and dynamic. This type of pricing needs to be supported by Subscriber Optimized Charging. This section discusses the need for Subscriber Optimized Charging, and examines the business cases for providing 4G services that enable convergent, personalized, and dynamic offers, to be provided to increase the number of new subscribers, stimulate usage, and improve the customer experience. Research firm, Yankee Group describe Converged, Personalized and Dynamic pricing as the Holy Grail of Mobile Broadband Pricing.* This is a strong statement to make, given the speed at which the mobile telecoms industry is changing, and there will always be the latest Holy Grail for IT professionals and marketers to chase after. but in terms of setting out a realisable goal for near to medium term then converged, personalized, and dynamic pricing is as good as anywhere to start. *Source: Yankee Groups 2011 Predictions: 4G Fuels the Decade of Disruption December 2010

Figure 3: Converged, Personalized, and dynamic: Three Principles of Subscriber Optimized Charging

Taking converged, personalized, and dynamic pricing together provides the basis for Subscriber Optimized Charging. This is not defining some unattainable Holy Grail. The technology to enable Subscriber Optimized Charging already exists. It is deploying this technology in a cost effective manner that co-exists with existing b/OSS solutions that will enable operators to provide converged, personalized, and dynamic pricing for 4G services. Although Yankee Group refer to converged, personalized, and dynamic pricing, the underlying technologies that enable this approach to pricing also enable new approaches to packaging and positioning of 4G services.

4G Packaging and Pricing As we are seeing with existing 4G operations, promotional offers that provide free data heavy services (e.g. movie clubs, video services, interactive gaming) will be employed to get subscribers familiar with using these services. The use of data-heavy freemium services e.g. free You Tube access, but all other content is paid forwill add further complexity to pricing plans. 4G provides the download speeds to make the myriad of content pricing models a reality. This includes paid for content by segment / subscriber, geographical based content, real-time marketing, coupons, and paid for / subsidised advertising. Adding policy management into the pricing mix will generate an increasing level of pricing flexibility to operators. As an example, in order to monetize new business models, enhance the subscriber experience, and optimize network resources, network speed may be altered depending on context. This context could include service type, subsidisation from content partners, device type, subscriber segment, location, promotion and so on. Tiered pricing and the additional pricing options will enable operators to use policy and charging to develop new offers and new segments as they look to differentiate their offers.

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White Paper Subscriber Optimized Charging for 4G Services 10

Business Drivers for Subscriber Optimized Charging: Converged, Personalized, Dynamic Services: Sample Cases
Converged: Family / Group Customers In order to get a view of the use and consumption of communications traffic that can be delivered by 4G, take an example of a household of two adults and two teenagers. Figure 4 illustrates the number of internet enabled devices in the household and the different types of telecommunications subscriptions used by the family members.
ONE FAMILY

One Family
Nine Data Devices One fixed broadband connection One post-paid mobile subscription Three pre-paid mobiels One mobile data plan for tablet Occasional paid for wi-fi access from laptops

NINE DATA DEVICES

Figure 4: Family Plans An Opportunity for Convergence

In this household, there are a number of devices that consume data - Mum and Dad have one laptop, two smartphones and a desktop PC, the kids have two smartphones, a laptop and a tablet, and theres the new 3D hi def internet enabled TV hanging on the wall. Incidentally, the kids dont watch the family TV as they watch movies and You Tube video clips on their devices, while sending IM messages to their friends at the same time and keeping in touch via Facebook. At present most data usage in the house is provided via the fixed line DSl broadband connection which provides an in-house wi-fi network. However, all four smartphones have data options in their bundles and the tablet has its own data package. Taking this family as an example (albeit a well off one) then it can be argued that the change in communication habits and entertainment consumption has dramatically changed in the past 5 years. The reason for this change has been the emergence of enabling fixed and mobile broadband technologies. 4G will take this to another level, and operators need to be in a position to capitalise on this. 4G can provide high speed broadband services in the home as well as providing the added benefit of mobility. In some countries 4G (lTe) is being marketed as an alternative to DSl broadband taking fixed mobile substitution to the next level. Taking the family unit as described above, there are four separate mobile subscribers (three pre-paid and one post-paid), one fixed line subscription (in Mums name) for fixed line broadband and phone service, as well as a 3G data plan for the tablet. Then theres also sporadic wi-fi access outside of the home when using the laptops and tablets, which is sometimes paid for and sometimes free. Mobile data usage from the smartphones and the tablet when outside the house is from the data bundles provided. However, data usage from these devices inside the house often goes over the in-house wi-Fi network. A mobile operator could offer this family a bundled package (with data over 4G) in a single offer which is controlled by the Mum and Dad. As operators look to provide sticky convergent offers in order to try and increase ARPU from subscribers then the opportunity that family / group usage presents for this family alone could be significant. To attract this family to switch their numerous packages, including some provided by your company, some provided by your competition (both fixed and mobile), needs innovative marketing. being able to offer value adds is key. This is where providing a personalized and dynamic service comes in. However, in order to do this, an integrated charging system needs to be in place to support the data collection, rating, charging, billing, and subscriber management for all usage by this family. In addition to this, the integration of policy management enables a large degree of personalisation and dynamism of services that enhances the users experience and provides add-on services that are competitive differentiators. when looking to attract family groups as subscribers, operators may wish to position parental and usage controls as a value add offer. This will give the parents control over the kids access (by web sites accessed, time of day, black and white lists, etc.) and the ability to manage and control the usage in line with their budget. Operators can generate additional revenue from selling parental / usage control capabilities to subscribers.
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White Paper Subscriber Optimized Charging for 4G Services 11

Personalized: Real-Time Subscriber Assurance As discussed, 4G presents the opportunity for operators to win new subscribers by providing family / group mobile data plans. When marketing to family / group units, the ability to provide real-time subscriber assurance through controls and reports could be a significant advantage. As well as the traditional operator controls (fair usage monitoring, roaming usage monitoring), policy and control information can be delivered direct to the handset / device to provide the assurance to the subscriber that they are in control. Current 4G pricing is typically usage based, so a subscriber using too much (e.g. continuous streaming of movies) could get a shock when the bill arrives or their credit runs out quicker than expected. Operators will need to have a look at the tools available for individual usage monitoring and reporting. Real-time usage reporting and control directly on the subscribers device can keep subscribers in control of their usage. Figure 5 illustrates a familys usage being reported directly to an iPhone. In this example, the spend of each family member is illustrated against their family / group bundled usage. Providing this level of control enables users to operate within their budget and diminish bill shock. This is just one example of using personalization there are many others including loyalty plans, upsell triggers, etc.

Dynamic: Real-time Context Sensitive Offers Once pricing starts to become dynamic there are many Figure 5: Family usage reporting variables that can affect the price the subscriber (or a third party) pays. Given the context, resources used, and related cost, what is the appropriate price to charge for the service or application? How is the consumption being paid for, and by whom? Is the subscriber enjoying a promotion in which the first 15 minutes of a movie is received at high quality for free? Is the network resource included in the cost of the application? Operators need to manage costs in real-time and charge users appropriately depending on the resources consumed and the context. dynamic pricing can represent a real opportunity to assist with the take up of marketing and advertising direct to a mobile. Cross subsidisation of usage dependent on a users behaviouris possible. For example, a user may get a message informing them of a promotion in their nearest coffee shop. They accept this message and get a bar code coupon sent to their phone. If used in the next hour, this coupon provides a discount on a cappuccino, and fifty free texts for the rest of the week. In reality these texts arent free the coffee shop chain is paying the mobile operator for them. In this example, the coffee shop gets a new direct marketing tool, and a happy customer (who fits their target demographic, thus benefiting from cost effective targeted marketing), the subscriber gets a discounted coffee and free texts, and the operator gets new revenue and increased subscriber loyalty. This is just one example of using dynamic pricing to enable new revenue streams Figure 6: Speed Boost Offer and capitalise on new business models. Here multi-party settlement is used for charging and the context (location, demographic) of the subscriber is used to trigger the marketing promotion.

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White Paper Subscriber Optimized Charging for 4G Services 12

Dynamic pricing should also be applied to selling context sensitive add on services. Current 4G pricing uses usage and speed tiers. There will be times when a subscriber on a lower speed tier could be upsold a temporary speed boost e.g. just as the subscriber starts to download a data rich file, such as a video. This can generate additional revenue and provide the optimum subscriber usage experience. However, in order for this to be effective this must be done in real-time and the offer going direct to the subscribers handset / device. Figure 6 illustrates a bandwidth boost offer being made direct to a subscribers handset. This is just one example of using 4G enabled / enhanced services to upsell. The specific offer being made in this case is triggered by the knowledge that a subscriber is downloading a data heavy file, that they are in an area of 4G coverage and that they are on the low speed service option. The operator needs to know the subscribers context in real-time and have a triggered offer that creates a revenue opportunity for the operator and also an opportunity for the subscriber to get a faster network experience. Other Mobile Services By providing a faster and more cost effective transmission network, 4G can provide the platform for many additional / enhanced opportunities for use of mobile networks. M2M is one such opportunity, including just in time production and stock management, near realtime logistical planning, M-health, security services, real-time intelligent maintenance and entertainment systems in cars. These all can benefit from using converged, personalized and dynamic pricing to better position these services to existing and potential subscribers and to create new, and enhance existing revenue streams.

OTT Services Operators are developing partnerships with OTT providers and 4G can provide the fastest mobile channel for the OTT providers. By applying the fundamentals of Subscriber Optimized Charging with subscriber profile and policy management, operators can enable the optimum user experience for OTT services. This will be important as OTT providers look to differentiate their services from their competitors. network quality and user experience will be key here.

Figure 7: Application Context and Controls Application with Charging and Policy

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White Paper Subscriber Optimized Charging for 4G Services 13

CURReNT CAPAbIlITIeS OF OPeRATORS TO DeVelOP AND IMPleMeNT FlexIble PRICING PlANS

Introduction: Research firm, Telesperience carried out a survey of over 63 operators looking at their ability to provide personalized service. The results of the pricing section of this research are discussed below. If the ability to offer subscriber optimized pricing will be a key attribute in winning 4G market share, then its worth looking at the capability of operators to quickly and easily develop and implement new pricing plans. Research firm, Telesperience, carried out a survey in 2011 on the level of personalization in the telecoms industry. This involved carrying out a survey with marketing / product management and IT professionals in 63 operators and looked at the involvement of marketing and IT in developing and implementing personalization plans. This includes pricing plans. Figure 8: shows who is involved in planning & decision making for rollout of new services, tariffs or offers.
Marketing or product mgrs. Billing system staff CrM or customer service staff Fulfillment systems staff (OSS) Senior management network staff Staff responsable for data CIO CFO/finance dept. Partners (eg content partners) Consultants 90 70 60 53 47 46 46 38 34 10 7 13 17 50 Usually Sometimes 47 17 Never 33 33 20 10 17 13 Dont know 37 27 20 30 13 3 13 10 3 20 17 10 10 24 20 7 7 3 7 7 3 17 7 3 3 3 3 3

Always

Figure 8 Level of Involvement in Planning and decision Making for rollout of new Services, Tariffs or Offers (source Telesperience 2011)

Clearly marketing plays a major role in setting prices, but when it comes to setting the prices on the existing charging and billing systems, a lot of IT support is required. The Telesperience survey asked the marketing respondents in the 63 operators how easy it is to make changes to existing tariffs or offers, or to rollout new ones. Figure 9 illustrate the results.
Changes are very difficult 33% Can easily make changes 10%

Requires some IT support 20%

IT support required and it takes a lot of effort 37%

How Easy is it to Change Tariffs or roll Out new Ones (source Telesperience 2011)

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White Paper Subscriber Optimized Charging for 4G Services 14

As can be seen, its not easy to change tariffs. when asked the reason why, the IT respondents in the survey gave a very clear answer, as can be seen from figure 10.
0%
Siloed systems make it harder to rollout Legacy IT infrastructure doesnt fully support Orginisational barriers

10%

20%

30%

40%

50%

60%

70%

63% 60% 47% 30% 27% 7% 7%

Legal or regulatory requirements constrain us Goals of the business or marketing dept not clear Dont have the staff/ expertise to support We have other goals

Figure 10: IT Departments Main barriers to Rolling out Personalization

If operators are looking to provide convergent, personalized, and dynamic pricing for 4G then an alternative approach to siloed charging and billing systems needs to be examined.

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White Paper Subscriber Optimized Charging for 4G Services 15

PROVIDING A PlATFORM FOR SUbSCRIbeR OPTIMIzeD CHARGING FOr 4G SErVICES

Introduction: Having established the limitations of traditional charging and billing systems, and discussed the need for Subscriber Optimized Charging for 4G, the following section provides an overview of charging designs that could provide a solution. Such solutions can be architected on an adjunct basis where they interface with existing In platforms and retail billing systems, thus protecting existing system investment. In order to provide Subscriber Optimized Charging for 4G services, there will be a need to look at new designs that can break down the silos of legacy architectures and provide a foundation to achieve the key goals represented in figure 11:

Figure 11: Key Goals from a Platform for Subscriber Optimized Charging for 4G Services

To achieve these goals, operators need to put in place a centralized subscriber optimized charging platform that incorporates the following key capabilities summarized in figure 12 below and then discussed further:

Figure 12: Centralised Subscriber Optimized Charging Platform

Flexibility and High Performance: With Real-Time Charging, Rating, and Balance/ Account Management Capabilities
with a subscriber optimized charging platform that incorporates real-time charging, rating, and balance/ account management, operators will be able to achieve a number of operational and marketing benefits: Ability to quickly develop innovative 4G services and incorporate third party services Operators will have the capability to easily develop flexible, sophisticated charging models that can include charging on behalf of third parties. This will allow them to quickly configure and launch new, innovative 4G services and promotions to generate new revenue streams. They will also be able to support very high volumes of transactions, offer very fast response times for seamless delivery of 4G data services, and be backward compatible to support existing 3G services. Timely response to market opportunities by having more flexible charging and rating, marketing departments will be able to respond to market opportunities in a timely manner, and launch personalized offerings/promotions triggered in real-time according to the specific subscriber context. Offering personalized and dynamic offers / promotions that are context sensitive can be expected to increase the take up of new offers / promotions due to the increased timeliness and relevancy of the offer.
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Ease of configuration by marketing teams Marketing teams should be provided with the capability to undertake some key administration tasks usually undertaken by the technical teams (e.g. configuring bundles, setting up promotions). This capability considerably accelerates time to market and again provides a key competitive advantage. Self service provisioning by subscribers Another important aspect of a flexible platform is the capability to offer subscribers the freedom to activate and pay for their services at their own convenience and to have the service delivered immediately, without needing further assistance from the operators customer service staff. This is made possible with mobile devices that enable real-time, over-the-air service activation. It allows operators to accelerate revenue creation by making purchases very easy and at a low cost, as less customer service resources are required. This was illustrated in figure 6 with the speed boost offer being sent to, and provisioned from, the handset. Examples of new type of services that could be offered to subscribers include: Innovative pricing plans and offerings: Session based pricing - data service passes for those who would not commit to a contract but want the speed provided by 4G, single data plan for multiple devices, etc. Flexible, real-time balance/account management: balance transfer to another account, multiple balance types, personalized spending limits, shared family account, hybrid pre/ post-paid accounts, etc. Real-time, personalized promotions: special offer on your birthday, try before buy, free today for balances over $x, discount based on usage, etc.

Support for Pre-Paid, Post-Paid, and Real-Time Payments on a Single Plat-form

with the capability to support pre-paid, post-paid, and real-time ad-hoc payments on a single platform, operators will break down the payment silos. This will enable them to develop new business and payment models, offer their services to all subscribers regardless of payment type, and allow subscribers to use multiple payment methods for the same service according to their preferences. They will be able to offer hybrid accounts rather than an account per type of payment and support among others payment via credit cards, Paypal, or loyalty points for example. As a result, operators will be able to: Reach a wider subscriber base: This will drive more revenue. Enhance the subscriber experience: Subscribers will be given the flexibility to pay for their services as they want it, access any service available, and have a centralized view of their services, usage and spending. Achieve a better cost performance and fast time to market: Less resources and time will be consumed as services are developed and launched on a single platform. Some examples of new business and payment models enabled by this approach: A single user using multiple payment methods: network connectivity could be bought as part of post-paid subscription, applications bought using a pre-paid purse, or content (e.g. movie) bought in real-time using a credit card. Such a set up would be of interest to corpo-rate accounts where approved applications would be charged to the corporate post-paid subscription and employees would pay for their personal usage separately using their cho-sen payment method. A single user being offered free services in exchange for daily third party product adver-tisements: the subscriber can pay for usage above the free allocation via a prepaid purse, and use a credit card to pay for the advertised item in real-time. Split billing between content provider and operator: the first 15 minutes of a movie is pro-moted to a user. If the subscriber buys the movie (using pre/post/real-time payment), the revenue is split between the operator and content provider. If he doesnt, the network re-sources used for the 15 minutes of promotional time are paid for by the content provider.

Copyright Openet Telecom, 2011

White Paper Subscriber Optimized Charging for 4G Services 17

Charging Integrated with Network Resources and Context

By taking into account the context and network resources, operators can create more personalized, innovative services and charging, that will increase revenue and customer satisfaction and at the same time control network costs. Context concerns information on the subscriber, their usage, and their experience on the network. This can include personal information (e.g. birthday), service subscribed, usage, special offer, location (home/roaming), time, restrictions (e.g. parental control), application accessed, device, etc. Having this type of information about a subscriber can drive personalized offers and services, which can lead to more effective and efficient marketing to this subscriber. However, this is a two sided relationship and it must be optimized for the subscriber and the operator. Managing network resource and ensuring that the subscriber is getting the optimal experience on the network is important to drive revenue and also manage network costs. Information on subscriber context can be used to dynamically allocate network resource in real-time. This enables operators to better link revenue to related traffic and cost. It also allows them to supply an appropriate, uncompromised quality of service that protects subscriber satisfaction. For instance, a video session would be allocated much more network resources versus a simple e-mail service and therefore be priced differently. Examples of business models that Subscriber Optimized Charging support includes: Tiered services allowing segmentation of users to offer differentiated services depending on usage patterns Service passes with device agnostic access to network, applications, and content for a lim-ited period of time, volume of data, number of events Application-specific pricing which can use value based pricing (e.g. dynamic based on different criteria such as number of days since release for specific content e.g. a game, or a video). Real-time, personalized promotions where offerings can be triggered depending on the subscriber information (e.g. birthday) or when a usage threshold is reached for example Roaming controls to better enable operators to interconnect with their overseas counter-parts, so users can access their services when away from home More service controls such as partner service controls, device controls, parental usage controls, spending limits

Figure 13: Subscriber Optimized Charging Architecture: Integrating Charging with Policy and Subscriber data Management

Copyright Openet Telecom, 2011

White Paper Subscriber Optimized Charging for 4G Services 18

Support for Any Type of Service Across Any Network with a Network Independent, Software and Standard-Based Platform That Supports Commodity Hardware.
Any charging platform that an operator uses for 4G needs to have an underlying convergent architecture. The reason for this is that with a charging platform that can support any type of service (e.g. voice, data, content) delivered over different networks, operators will be able to develop more flexible business models and offer subscribers all their services in a unified way, breaking all the legacy infrastructure silos whether pre-paid/post-paid, data/voice, or fixed/ mobile. This means: Single account and more visibility for subscribers Subscribers will benefit from a single account encompassing all their services, and providing them with visibility and control over their services, which enhances loyalty & prevents bill shock. Single view of every subscriber Operators will also benefit from a single view of their subscribers which will enable them to effectively target them with relevant offerings and promotions, making up/cross-selling more successful. More sophisticated plans and bundles Operators can also develop more sophisticated service plans & bundles incorporating data, voice, fixed, and mobile services for example. They will also be able to offer the same service across different devices & network type, offering a seamless experience to subscribers. Better total cost of ownership Operators will achieve a better total cost of ownership with a single solution to deploy and manage all services that can easily support their network evolution plans as it is network independent and standards-based. Furthermore, operators can considerably reduce hardware costs by using commodity hardware to run the solution instead of being dependent on expensive hardware based IN pre-paid platforms for instance.

An Adjunct Approach
Providing a subscriber optimized charging platform that enables converged, personalized and dynamic pricing and charging, and replacing existing IN platforms and post-paid retail billing systems for all voice, data, and content services may look good on a PowerPoint slide and is a good vision. However, for established operators who may have numerous different billing systems, it can be a daunting prospect to say the least. Organizational and IT issues are often cited as the main reason for not introducing new systems into an operators IT architecture. This results in significant investment making customised developments to existing systems. A cost effective solution exists by taking an adjunct approach. Utilise the system illustrated in figure 13 initially for new 4G services, and provide a feed of rated CDRs to the existing retail billing system. This enables 4G transactions to be listed on mobile bill, but also the real-time benefits (e.g. real-time upsells) associated with subscriber optimized charging to be enjoyed by the subscriber. This approach is also applicable to integrate 4G transactions with the existing IN platform for pre-paid subscribers. This enables operators to leverage investment in current (legacy) systems, and use the new platform to enable capabilities that cannot be easily supported in legacy infrastructure.

Copyright Openet Telecom, 2011

White Paper Subscriber Optimized Charging for 4G Services 19

SUMMARY
To date only a handful of mobile operators have launched 4G services and already there is a relatively wide range of usage and speed based pricing plans available. With download and upload speeds that can compete with fixed broadband, plus the added benefit of mobility, operators are in a position to use innovative pricing to encourage subscribers to use their 4G services, without getting into the downward spiral of a price war.

About OPENET
Attract subscribers, provide them a great experience, maximize revenue from them, and minimize the cost to serve them. Sounds simple until you try to do it with millions of subscribers supported by inflexible legacy infrastructure amidst an ever-changing set of business requirements. To succeed in this environment, you must first know your subscribers and how they use your services, be capable of deploying innovative business models that maximize revenue, and be able to control the allocation of your network resources intelligently and efficiently. This is making the most of every subscriber. And Openet can help with our Subscriber Optimization Software. At the core of our solutions is the Openet Framework, a convergent, modular, realtime event processing and transaction management platform. This Framework enables operators to transform their BSS/OSS environments to capitalize on new services, business models and network investments. A global company, Openet is used by the worlds largest and most innovative service providers including AT&T, bT, Orange, Telstra, Time Warner Cable, and Verizon Wireless. Learn more at www.openet.com.

4G will enable more services and associated service usage. This can result in increased segmentation. Typically additional segmentation means more price plans, bundles, and promotions. Add content partners and potentially advertisers into the mix, along with family / group usage over multiple devices, the need for real-time, and the ability to charge for all 4G services using any payment method (post-paid, pre-paid, service pass) and it can be seen that new pricing and charging models could place some stress on existing legacy charging and billing systems. Given the challenges operators are facing with their legacy charging and billing infrastructure, they should look at implementing new platforms to complement the legacy systems. This is in order to have the b/OSS foundation to create profitable 4G services, effectively monetize the potential demand for 4G data, and generate revenues with OTT service providers. To achieve their goals for 4G, operators need to move away from their reliance on silo based infrastructure with IN pre-paid charging platforms on one side, and post-billing systems on another, to build a centralized infrastructure based on Subscriber Optimized Charging that: Incorporates real-time charging, rating, and balance management, providing the flexibility and performance they require to monetize 4G services, create innovative business models that can incorporate third party services, and achieve fast time to market Supports pre-paid, post-paid, and real-time ad-hoc payments on the same platform, breaking the payment silos to provide a seamless experience to subscribers, develop innovative payment models, and save cost and time on service launches Integrates Policy Management, enabling innovative business models that optimize network resource utilization whilst creating new revenue streams and providing a personalized experience. Is network independent, software/standard-based, and supports commodity hardware, enabling operators to easily evolve to new networks, providing a lower total cost of owner-ship, allowing a single view of a subscriber, and supporting cross-network bundles.

Providing such a charging solution would enable operators to provide 4G services secure in the knowledge that the underlying system flexibility exists in order for them to provide personalized offers and enhance the subscriber 4G experience. Once 4G becomes mainstream then the network speed differential selling point is lessened. In order to win subscribers and increase usage, operators will need to offer a 4G experience that offers more than speed and value for money. It needs to be personalized and dynamic, and enable operators to make the most of every subscriber.

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Copyright Openet Telecom, 2011