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Telecom business model transformation requires symbiotic service models

Business model transformation is the worldwide priority of network operators. While SOA and IMS don't guarantee results, they are essential tools to create the pieces of a telecom service transformation.

Editor's Note: This is the third in a three-part series on the future of telecom services, with an emphasis on how service providers can position themselves to get the full value of their network investment, as well as how to roll out new services and applications that will increase their revenue. Previous articles in the series include Building revenue-increasing telecom services for the future and The role of IMS and SOA in the service ecosystem.

For a network operator, the best way to create a valuable service is likely to include exploiting features and knowledge obtained from other services offered. Administrative and customer acquisition costs are paid on a per-customer basis, and if the customer has been obtained anywhere (or became a customer through any service or channel available to the network operator) it is critical to leverage the relationship fully.

This involves more than simply attempting multi-service up-sell; it involves creating cross-service symbiosis. The symbiosis can both lower operations costs and raise average revenue per user (ARPU), creating a double-win situation.

The classic example of cross-service symbiosis is fixed-mobile convergence (FMC). While the name suggests that the primary goal of FMC is infrastructure reuse, the current market mindset is that the greatest value lies in the ability to create more valuable and "stickier" voice services by creating a unified voice service that can be projected through fixed, mobile, or both avenues to the user.

What this does, in effect, is extend the range of custom calling features, which have long been the most profitable part of voice services, to include things like call management based on the status of the other channel (as in, "send my fixed-line calls to voicemail if I'm on my cell," or "ring through certain fixed-line calls to my cell if my fixed line is busy"). This is an extension of the popular concept of "presence," and it is valuable in itself.

FMC can be extended to content services, as well. For example, mobile video can be promoted by allowing the user to sample it via FMC while in the home. A mobile device could even be used to access a channel guide and plan future viewing, set recordings, and so on. Finally, active use of content delivery, such as watching IPTV, could also be an ingredient of "presence" and used to control how certain calls are handled.

Service oriented architecture (SOA) facilitates these applications by making the status and elements of one service readily accessible to the other. An SOA-based voice service can easily obtain the called party's TV state from the IPTV system, for example. IP multimedia subsystem (IMS) provides a means of managing both fixed and mobile calls using either Wi-Fi or  femtocell home gateways. It also offers a secure method of controlling how users access these applications, even away from home.

Increasing profits through partnerships

As attractive as a double-win can be, adding other opportunities to increase profits would be even better, and IMS and SOA can be valuable tools in doing just that. A particularly valuable profit opportunity lies in the relationship between the network operator and service partners. Surveys of network operators worldwide continually show that partnership creation is the highest single priority they recognize in the process of business model transformation. The network of the future will be built by the operator but may well be profitable based on the contributions of partners.

Cross-service symbiosis gives offers telecom service providers a double-win, enabling them to allow lower operations costs while raising ARPU.

Tom Nolle
CIMI Corp.

Partners offer operators two possible dimensions in which to extend their business.

  • First, the partner may be a channel to resell some or all of the operator's services. In a world where customer acquisition costs are mounting and in some cases becoming the dominant cost, this is an exceptionally valuable extension.
  • Second, the partner may be a source of special knowledge and features for services, particularly for vertical or specialty market segments. If a network operator can "import" features that have been customized to specific markets, the operator is more likely to be successful in those markets.

Most operators today are already exposing some voice features via APIs or exploring this, but such a move can create stability and security risks for the network and the user. SOA tools can facilitate both "exporting" services to partners and "importing" features or services from them, but they don't provide a perfect solution for stability and security. For example, it might be possible for partners to overload a service feature by accessing it excessively, which could have an impact on the use of the feature elsewhere. It might also be possible to lose the link between a feature request and the user who makes it, which makes billing for the use impossible.

IMS and SOA provide partner value

IMS and SOA together offer an almost bullet-proof way of providing integration of partner features or exporting of network operator features and information to partners. The SOA environment can control the actual partner interface, and the IMS environment can control the interface between the user and the partner-facilitated service. This provides a complete buffer between partner-facilitated features and critical network operator infrastructure elements.

Another major benefit of the IMS/SOA synergy in partner-related applications is the ability to offer the partner-facilitated service in mobile roaming and FMC applications, as well as for home-area or fixed-line only. Not only does this eliminate the risk that a mobile user will become dependent on a feature that is available only in a home area, it also makes the partnership relationship more valuable to both parties involved.

Partner-facilitated services may well be the foundation of the new mobile virtual network operator (MVNO). Traditional mobile MVNO relationships depend on a large spread between retail and wholesale service rates and on the ability of the MVNO partner to reduce customer acquisition and retention costs to justify that spread. If the MVNO partner can also leverage special features of the host operator, and if the partner can add vertical-specialized features to the service in a reliable and secure way, the MVNO relationship becomes more profitable and desirable for both parties.

Business model transformation is the worldwide priority of network operators. SOA and IMS don't guarantee that such a transformation will occur, but they are essential tools in creating the pieces of a transformation and ensuring that the transformation takes the network operator to a profitable future.

About the author: Tom Nolle is president of CIMI Corporation, a strategic consulting firm specializing in telecommunications and data communications since 1982. He is a member of the IEEE, ACM, Telemanagement Forum, and the IPsphere Forum, and the publisher of Netwatcher, a journal in advanced telecommunications strategy issues. Tom is actively involved in LAN, MAN and WAN issues for both enterprises and service providers and also provides technical consultation to equipment vendors on standards, markets and emerging technologies. Check out his SearchTelecom networking blog Uncommon Wisdom.

This was last published in July 2008

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