Operators need to take a new approach to deal with multiple content partners and bearer technologies, says Hans HH Hansen.
The explosive growth in mobile messaging over recent years, combined with almost as dramatic a decrease in profit margins, has shown that operators delivering future mobile data offerings must make themselves a more effective and indispensable part of the service delivery value chain. The combination of more players in the value-chain and profit erosion due to competition has, in many cases, reduced the role of the operator to a ‘bit pipe’.
In order to improve the position in the value chain the operator must leverage better the existing assets that are unique to the mobile network. The operator thereby conquers a larger share of the generated value, while also reducing the complexity of the value-chain. Based on stronger control of a more profitable value-chain the future operator could, within the next few years, generate more than 50% of its revenues by enabling new network traffic to and from external partners (besides OLO). The ultimate challenge in the realisation of these new revenue streams lies in the evolution of network infrastructure to manage such traffic and, equally as important, to manage the underlying partner relationships.
ROI driven evolution
Service delivery architectures to integrate third-party content and services have been on the drawing board at large network operators and network equipment providers for years, e.g. as part of the Open Mobile Alliance (OMA) standards body. However, the actual implementation of these new technologies has proven to be a more gradual process, whereby sound business practices have dictated the roll-out of the new service delivery network to be ROI driven.
Consequently, most major operators link their long-term strategy to end-to-end service delivery architectures, while actually undertaking incremental investments in point solutions that extend existing network infrastructure. More specifically, this has meant starting from the established foundations of profitable mobile messaging, where traffic is high but operator margins are lagging. The addition of new bearers and network interfaces will then take place gradually over time, adding network information API’s (such as location) before graduating to full mobile web-service-enabled architectures.
One of the most important first investments for an operator is in a scalable system to develop and manage successful content models. Successful content models are in this context defined as the ability to effectively manage:
l Hundreds of content partners
l Thousands of external sources for content and services
l A mix of branded, non-branded and corporate content
l Enabling retail, wholesale and partner content business models as needed.
These key parameters are independent of the maturity of the operator network technology and content model and must be addressed in both the short-term and long-term strategies of the mobile operator.
A content model provides the operator with a tool to define and manage the business processes underlying content sourcing, provisioning, delivery and billing. Initially, the operator should focus on establishing processes for content variety, i.e. sourcing content that covers a broad section of subscriber needs and interests, and, just as important, ensure that the ‘user experience’ of these services meets the highest standards.
In order to achieve the first goal, content variety, the operator should build the content offering on a large number of content sources, whereas the second goal is best achieved using careful optimisation of each service for available delivery mechanisms, e.g. SMS, WAP and MMS. In other words, the main requirement for a successful content model is the ability to offer a wide range of content services with high usability.
However, although this simple first step is the most widely used method to achieve profitable content services today, it is not sufficient to fully exploit the features of modern network and terminal capabilities, nor will it meet the ever growing demand for content services that are targeted to specific subscriber segments or personalised to the individual subscriber.
The content model can be evolved with more sophisticated content strategies that combines content versatility and delivery channel optimisation with increased control over the content formatting and delivery process. The key factor in mastering these additional steps is the automation of the underlying business processes. In this way, advanced content models allow the creating of more targeted content offerings to a segmented subscriber base, with services that are customised to their specialised needs and delivered over the most efficient and user-friendly channel.
Automation of the business processes combined with a flexible deployment strategy will further allow the operator to optimise both the business model by which the content services are acquired from partners, as well as how they are offered to subscribers, e.g. if services are part of a branded offering or sourced from an external ‘content MVNO partner’.
Finally, the content models must also take into account the overall Quality-of-Service (QoS) of the content services to assure a stability and quality that resembles that of the other internal network services. This is again achieved by automation and control of the service interfaces, as discussed in the following sections.
Defects in current models
Product management and service definition are coming into alignment in the operator organisations, with significant resources being spent on defining new applications and sourcing content and services. The business processes for sourcing these new initiatives, including both service level agreements and financial terms, have now reached a level of maturity where they are reasonably efficient.
However, technological support for these processes is flawed. Once a product manager has struck a deal for exciting new services, realising these services, including connecting a third-party provider to the network, is a costly and lengthy internal process. This results in a time-to-market for new services that is an order of magnitude too long and closes the door on many potentially profitable services that would require a shorter turnaround.
Even the most successful examples of a mobile content ecosystem in Japan, where, functionality-wise, the service provider management is state of the art, the bespoke nature of the systems results in very high OPEX that, in effect, is hampering further evolution of the current approach.
The net result of this situation in Europe is that operators choose to connect only a few content aggregators to their network and, to a large degree, leave the service creation and content sourcing to them. This, in turn, means that the operator is reduced to a wholesaler of bandwidth without any real pricing power, which is, for example, evident in the low margins achieved by operators for the bulk of premium messaging passing across their networks today.
Role of convergent services
In order to realise successful content models and effectively take control of the mobile data value chain, the operator must expand the core value potential of mobile data services by empowering the key player in the creation of mobile data services — the third-party content partners.
Traditionally, third-party developers have been restricted to innovation only in the presentation and business logic of mobile data services. However, with the introduction of advanced content models, as described above, the innovation power of the developer is extended into both delivery channel selection and application level billing.
Convergent Content Service enable a new generation of services that fully exploit the mobile network delivery channels, while maintaining a simple development paradigm based on standard Internet tools. Convergent Application Level Billing delegates the definition of all billing aspects of a service (within pre-defined boundaries) to the developer.
To fully leverage the mobile network and avoid ‘the fate of the ISP’, operators must address the following fundamentals:
l The accessibility, usability and value of mobile services must improve and, in particular, not require that the subscriber has skills in the usage of a particular delivery channel such as WAP or MMS
l Focus of mobile services must change from the underlying technology to the value delivered to the end-user
l The operator must open his value chain to allow fruitful co-operation with third parties
l There is no ‘killer-app’. Instead, a rich and varied portfolio of services combined with targeted marketing is the only way to effect/induce mass market acceptance.
In other words, content models must help developers deliver innovative services that seamlessly take advantage of available delivery channels, while requiring neither the developer nor the subscriber to understand the details of these delivery channels.
Mastering different billing models will be an essential part of the content model, demanding great flexibility in both the implementation and the management of each step of the billing process. Operators must offer application level billing by separating billing management and control from billing definition. More specifically, the billing models must allow mobile network operators to manage and control the flow of money around the value-chain, e.g. setting overall billing limits on specific Value Added Service Providers (VASPs), while leaving the detailed billing definition and innovation up to the VASPs.
For example, using a self-management interface VASPs can optimise billing aspects of their applications for such things as tailoring the application for event-, transaction-, subscription- or session-based billing. In this way, the operator can delegate rudimentary billing tasks to a large group of VASPs, while still maintaining detailed control of the billing characteristics of each service. The control over a very large community of services is thus made possible using the billing-specific, automated VASP management features.
Operators are starting to plan for an evolved IT infrastructure solution which will reduce costs and automate the business processes between themselves and third-party service providers, thus ensuring that these business relationships are as natural and streamlined as operator-to-subscriber relationships.
The access gateway
As major operators explore their approach to this re-engineering of networks and processes according to 3GPP and other standards bodies, it becomes clear that an evolutionary path should be taken. This involves the introduction of a number of new network components, being key to the successful implementation of the vision of a standards-based Service Delivery Environment.
The key component required to implement the content model processes, as described above, is a new network node, namely the Service Provider Access Gateway. This is the logical funnel through which traffic from third parties will flow to the network, both bi-directional content delivery traffic, but also network queries. This logical entity will enable the quick provisioning of new external access, as well as enforcing the service level agreements (SLAs) related to the new business relationship.
Giving service provider access to traffic receipt and delivery, as well as network-based information (e.g. subscriber location), is the basic premise of third-party applications. However, one size does not fit all when it comes to accessing the network, and simple access — ‘allowed’, ‘not allowed’ — is not enough to create a sustainable business. This makes tailored relationships for different types of service providers essential.
This tailoring takes the form of different agreements as to how a service provider can use the network, e.g. traffic submit rate, types and format of content delivered. A content provider delivering high-volume, low-value SMS services, for example, might have a different revenue-share, or price-per-message, to a lower volume ‘Find my nearest…’ MMS mapping service, based on location data.
Fundamentally, the technology deployed to bring third-party services to the operators’ subscribers needs to support the business agreements between the operators and their third-party service providers. These take the form of bi-directional SLAs that dictate what network resources are made available to the service provider, under what conditions and at what price.
An example might be: MMS submit and receive; location queries with high accuracy; traffic rate of 10 transactions per second; still images only; maximum of five recipients per message. In order to be scalable and deliver promised cost savings and efficiency benefits, the operator needs to be able to provision the agreed SLA quickly and then enforce it at run time. Additionally, tracking of availability and success rates for applications, as well as their delivery to the network, alike, are all essential, providing the basis for an automated billing and settlement process between the operator and the content provider.
This whole evolving area needs to be embodied in a new generation of products able to enforce SLAs at run time as well as reducing the time it takes for the provisioning and connecting of new third-party service providers down to hours rather than weeks. This has to be done without losing the control needed to maintain both network integrity and commercial feasibility. This is the dawn of the Service Provider Access Gateway.