Shifting demands need rapid operator response

Details: Bob Drummond; Category: Consumer Ecosystems; 24 August 2011; 8586 views

In this bylined article, Bob Drummond, Vice-President of Asia-Pacific at OpenCloud, discusses an open and flexible framework for service development and delivery, to improve the customer experience and bolster new revenues. Observations are based on the innovative approaches employed in the Asia-Pacific region...

Asia-Pacific mobile operators are recognised for service innovation, and their focused approach means they often beat many of their global rivals to the punch. Their response to slumping voice and messaging revenues, and increasing demand for data services, has been to launch new value added services which drive new voice, messaging and data revenues.

Informa forecasts global mobile revenues will hit $1.1tn by 2015; with 40 per cent of this ($440bn) coming from data. Over-the-top (OTT) players are also looking for a share of this market. These trends have seen carriers become more service driven; but operators must leverage this demand for data services by enhancing their offerings to spur new revenues and compete with OTT rivals.

Innovation can play a critical role in managing churn, enhancing margins and improving the customer experience. Carriers are aware of the need for agile processes to speed up development; and operators in Asia-Pacific are especially adept at driving innovation through their businesses. To answer shifting subscriber needs, they launch services quickly and prolifically; meeting demand and beating rivals.

Here we study two different operator approaches to service innovation; the Asia-Pacific established ‘boxed solution’ method and the open service layer framework.

Operator A deploys new services as self-contained ‘boxed’ solutions. These new services are developed by third parties with little integration required. In this case the time, effort and costs associated with service development are passed onto third parties. The operator only makes an outlay when the service is generating a healthy revenue share for themselves and the third party.

Reduced integration means lower implementation barriers for operators. To bolster uptake, developers include most service functionality within the 'box'. Some network available functionality is replicated within the solution, to relieve operators of the integration burden. The risk associated with new services is handed to the developer. With less at stake, this operator can afford to be adventurous with new service delivery propositions. If services fail, developers take the pain; if successful, the service is expanded.

Despite developmental flexibility, integration costs still exist and can be significant. Network complexity also increases here, as successive innovation deployment means more ‘boxes’. Third-party development is also overly costly, due to functionality duplication. Third-party payment is deferred until the service generates revenue, but operators end up paying more.

Agility in the implementation of new services is crucial, and a Vanson Bourne study recently revealed that 54 per cent of operators ranked architectural agility as a top three priority; while 67 per cent said industry standards would give them a flexible service layer framework. Ensuring operational efficiency in providing new services was also critical; 56 per cent estimated existing standards adoption would release 1-16 per cent of their annual budget, while 75 per cent stated that current integration costs were higher because of inconsistent adoption.

Some of these issues are addressed by Operator A’s approach, as it enables flexible service development.

Operator B’s approach uses an open, standards-based, service layer framework integrated into the network, providing execution for third-party developed services. This method reduces integration spend and ensures that operators don’t incur development costs. However, it advances both principles and addresses Operator A’s issues. Network integration of new systems is time-consuming and costly; and Operator A’s method means this is repeated with each new system added. For Operator B, service layer framework integration is also straightforward as the application server is network agnostic and is integrated into the network just once; each new service deployed represents a cost and time-to-market saving for Operator B compared with Operator A, as no further integration is required. Furthermore, only one ‘box’ (the service layer) is added here, so network complexity is not a problem.

Because the service layer is already integrated, duplication of functionality within a self-contained solution is not beneficial as developers can re-use existing network capabilities within their own innovations, without integration costs rising.

A service layer framework allows the re-use of existing services to extend others, or rapidly create new ones. Application server functionality allows the quick and easy development of entirely new applications through access to core network functions as well as location and presence servers. Subscriber and market data can also be leveraged, as developers use this intelligence to create bespoke applications.

An open, standards-based, service layer framework, based on JAIN SLEE, for example, simplifies service development and allows operators to innovate more freely. Using open APIs and JAVA means less telecoms-experienced developers can be used resulting in a wider pool of partners to pick from and more competitive costs. Operators’ development can be undertaken cheaply, thus enabling control of the innovation roadmap.

Asia-Pacific operators are recognised for creating innovative services; but adopting an open and integrated service framework will enhance existing models, drive innovation and lower costs. This method enables operators to be adventurous with their service development and delivery as the risks associated with this approach are less significant.

Operator B’s response to opportunities is more effective. It monetises new services rapidly, generating incremental revenue, and slashing churn through an improved customer experience.