FMC services will require new approaches for billing and OSS, with operators needing to cover a range of potential future business models, says Dean Bubley, of Disruptive Analysis
Many operators have announced plans to combine wireless solutions with traditional fixed telecoms and broadband offerings. In supporting these initiatives a significant amount of emphasis has been placed by observers on the underlying network technologies — WiFi, 3G cellular, Bluetooth, SIP, hybrids like UMA (unlicenced mobile access) and next-generation carrier core network architectures, like IMS.
However, until now, there has been very little focus on the challenges of billing, provisioning and supporting FMC services. Given that traditional fixed and mobile services have been tariffed and marketed very differently, the “behind-the-scenes practicalities” of creating converged services will require foresight and flexibility on the part of the service provider and, equally importantly, their back-office infrastructure.
In particular, FMC services will need significant new approaches for billing and OSS, with suppliers needing to demonstrate the ability to cover a wide range of potential future business models.
In an ideal world, creating, deploying, billing and managing FMC services would be (relatively) simple. Converged operators would all run both mobile and fixed networks, offering a homogeneous array of services. Uniform and ubiquitous use of technologies like IMS and SIP would permit the creation of “seamless” services, without the need for complex legacy integration between different service providers or technical domains. Billing and customer care would be predictable, and structured around a finite and controllable set of variables.
Unfortunately, the real world is much messier.
Some operators are fixed-only or mobile-only. Local competition and regulatory environments result in layering of incumbent operators, broadband service providers, MVNOs, 3G-only network operators, managed service providers and retailers. Each of these have different technological preferences and deployment roadmaps. Third-party VoIP providers and content/service firms abound. Corporate users still like the familiarity of PBXs or the flexibility and value-add of new IP-PBXs. New access networks like WiFi, WiMAX and OFDM add additional disruption to FMC value chains.
The net result is that any future FMC service provider will have to contend with a unprecedented number of ‘moving parts’. Although future technologies like IMS and all-IP communications would, theoretically, simplify the process of deploying FMC services, Disruptive Analysis expects to see huge innovation in FMC, well in advance of the promised “IP everywhere, single device/bill/number/ provider” utopian future.
This is not to say that “elegant” FMC solutions will not appear. For example the BT Bluephone and the Motorola/Avaya/Proxim PBX-based solution, are finely-crafted technical approaches, using complex dual-mode devices and end-to-end management. However, Disruptive Analysis believes that while these and other sophisticated, engineering-led approaches will probably succeed in the medium term, there will be a lot more marketing-led or service/billing-layer FMC offerings emerging, while the inevitable glitches are ironed out.
Many FMC providers will not own the complete set of underlying networks, especially on a broad geographic basis. Instead, most will work with partners to develop joint services.
WiFi aggregators, in-building coverage specialists, corporate managed service providers and 3rd-party content and outsourced service providers may also be involved in many FMC business models. This will mandate that operators pay close attention to the underlying contractual details made between each other and partners. This goes far beyond traditional interconnect, and will have to cover myriad new business relationships.
Providing this type of offer will mean that FMC operators need to ensure that their back-office systems are capable of dealing with the necessary subtleties to enable effective wholesale billing and revenue-sharing.
The business marketplace
Although the residential marketplace is larger in terms of absolute number of potential customers, it may well be that many FMC services start to be deployed in the enterprise first. This is an area that poses particular new complexities for mobile operators. Although in theory they could offer outright “fixed-mobile substitution”, especially to SMEs, it is clear that historic services will need far greater richness to compete with fixed systems like PBXs (eg contact centre functionality, free/low-cost “on-net” calls between employees, call transfer, integration with CRM and salesforce IT systems etc).
Apart from anything else, most corporates own and operate extensive and high-performance IP-based data networks, and these are already proving a strong platform for integration of fixed voice solutions like IP-PBXs. At the same time, increasing numbers of mobile workers are driving up businesses’ dependence on cellular and other wireless technologies. Consequently, there is already a large and growing demand to tie mobility-related voice and data communications more tightly to the IT and fixed-network domain. At the same time, many corporates are closely
scrutinising their existing cellular spend, which is often spiralling higher at a rapid pace, and is typically poorly controlled and lacking centralised policies.
In many ways, the trends from the fixed/IP side of the market are running ahead of cellular innovation, particularly with the current huge emphasis on WLAN and VoWLAN. Compelling arguments abound for reducing “wasted” in-building cellular spending, when existing fixed/WLAN networks could provide cheaper or free “on-net” calls. As a result, IP-based fixed/wireless integration may end up setting the agenda for subsequent fixed/mobile convergence, to the detriment of the slower-moving cellular providers.
Many corporates also have cellular coverage blackspots in their buildings, a situation which is likely to worsen with the move to 3G. A variety of solutions exist to provide coverage. By definition, this could also be deemed to be a form of FMC, especially as an increasing number of such solutions look to leverage the existing copper or fibre plant in the building. In the case of IP-connected picocells, coverage may link directly with the company’s LAN, while “local” softswitches are also emerging, facilitating tight integration with the firm’s PBX, even to the extent of treating ordinary cellphones as ordinary “extensions” on the private voice network.
Given that few cellular service providers have strong enterprise network/PBX skills, there is a need for many to partner, either with fixed operators, systems integrators or managed service providers. Unlike residential offerings, corporate FMC is likely to involve the internal IT/telecoms department in order to deliver complex communications services. The boundary between “public” and “private” brings a new dimension, which underscores the value-chain complexities discussed in the previous section, especially as the “business model” used in corporate private networks is usually oriented around free “on-net” calls.
Once again, this will put traditional operator back-office processes under considerable stress. Billing and contractual revenue-sharing with partners will have to go far beyond simple interconnect reconciliation. For example, a company may expect its cellular tariffs to zero-rate in-building “local” calls, or discount ones made by employees from their homes.
Larger enterprises may also look towards web-based policy management interfaces for their employees’ mobility usage. If carriers are unable to support this type of tariff structure, it will provide further impetus for the enterprise-based solutions which attempt to minimise service expenditure, through the use of “plain vanilla” IP pipes and least-cost routing intelligence. Operators have a narrow window of opportunity to prove the value of integrated services through flexible and sensible pricing, billing, ordering, support and other customer-facing processes.
Billing is critical
From the foregoing sections, it should be clear that billing, customer interface and the management of multi-provider joint services are fundamental underpinnings for commercial FMC services.
There are huge differences between traditional business models in the fixed and mobile worlds. Combining these into commercial FMC tariffs and acceptable customer experiences will be complicated, and will probably need several rounds of trial-and-error to perfect. Platform flexibility will be critical. Among the most difficult aspects to reconcile will be:
* Prepaid billing: Virtually unheard-of in fixed telephony, outside discount international operators.
* Subsidies: Mobile phones are often “locked” to a given provider. Conversely, most fixed telephony devices are bought independently from service provision.
* Bundled Minutes: Most mobile postpaid contracts include bundles of minutes, and maybe SMSs and other data components, whereas most fixed telephony bills separate out a fixed “line rental” charge and strictly pay-as-you-use call charges.
* Tariffing Variations: Costs vary substantially. For example, calling non-geographic numbers is often much more expensive from a mobile phone. In data pricing: cellular networks often charge $1-5 per MB of data, while even stringent “capped” broadband services usually offer 1-2GB for perhaps $30 per month.
* Discount Call Plans: Many fixed operators’ networks/IN and billing systems are capable of allowing discounts on user-selected frequently-called numbers and business hierarchies, whereas this is not typical of most mobile operators
* “Local” FMC calls: Fixed-line services are tied to a specific location, and usually have different tariffs for local and long-distance calls. While calls to/from mobile networks can easily be priced separately, when the services are separate, this may not be commercially-viable in the context of FMC offers.
* Individual users vs. Households: Mobile phones (and services) are typically geared to use by a specific individual, while fixed phones, especially in domestic situations, are usually shared among all family members. New billing/tariffing mechanisms, like “shared family minutes”, with ways for the bill-payer to “permission” individual family members’ usage allowances, may be needed.
* Revenue-share: Fixed operators do not generally collect payments on the part of 3rd-party content owners or service providers (except for interconnect), whereas mobile operators usually “own” the overall bill and conduct direct revenue-share among the various participants in their “ecosystem”.
* Separation of Support and Control: Customers’ interfaces with their operators differ between fixed and mobile. Integrating these into centralised FMC functions, perhaps spanning multiple providers, raises significant issues around authorisation, provisioning and fault management.
Architectural battle
Having asserted that billing and associated OSS (Operational Support Systems) functions will be of paramount importance to the success of FMC services, it is important to delve deeper into the most appropriate way of delivering those capabilities. Already, it seems likely that something of architectural battle is brewing, between the IN (Intelligent Networks) and traditional billing/OSS camps in enabling this type of flexibility.
The battle relates to the “location” of the business logic, controlling what services a subscriber can access, under what conditions and to what tariff and credit terms. This may end up being more “IT-centric” or more “network-centric”.
In this context, IT-centric billing involves putting the “customer’s view” at the centre of the operator’s system, and enabling a variety of services and features to feed into that hub, even if those services are only “loosely coupled” at a network level. This approach makes it easier to consolidate the various services the customer is signed up for, enable fully online customer management, such as service, configuration and authorisation features, and bring in assorted 3rd-party offerings and marketing and bundling approaches. The level of integration work required is dependent on the openness of current networks, and the tools to interface separately with each of the nderlying technology/network platforms. It may also make it difficult for the platform to have complete and uniform access to real-time operational data, such as fault status or forecast availability of capacity, as the different networks’ sub-systems may have differing abilities to provide such information or functionality.
By contrast, the network-centric approach involves unifying the various network and device platforms as far as possible, in order to gain process efficiencies and enable the billing/OSS function to “see and control” everything. However, this is only feasible for those networks that can be easily integrated, and, as previously discussed, the FMC world is quite far from a homogeneous IMS/IP/SIP Utopia, in which everything involved in a hybrid service shares a set of common technical standards.
While certain “point” FMC services may be more suited to this network-centric approach, especially where a single operator controls the whole system, there are likely to be many more instances where this level of proscriptive service provision is simply not possible.
An example of appropriate service for a network-centric approach might be a technically-rich variant of in-building wireless, connecting a PBX to a local softswitch to enable “on-net” calls to be routed/billed separately. Some of the UMA-style services extending GSM signalling over residential broadband, from a cellular network core, may also fall into this category. Here, voice remains the main application.
In all, though a customer-centric approach is preferable — the late adoption of network to open APIs such as OSA/Parlay and Diameter will make pure customer-centric solutions difficult to achieve. Similarly, the current network-based approaches provide insufficient customer lifecycle management. A hybrid approach — best of both worlds — will best meet the needs driven by fixed mobile convergence.
Conversely, the types of content-oriented service described above (eg FMC gaming or music, spanning PC and mobile phone), are heavily oriented around portals and service delivery platforms, with highly-fluid revenue-sharing and partnering arrangements, which cannot be “hard-wired” into the network. As applications and devices move towards SIP and standardised open interfaces, easier creation and deployment of new forms of interactive service will also tend to favour the IT-centric approach.
The number of “starting points” for an average FMC customer, in terms of existing service contracts, legacy CPE equipment and individual usage modes, budget and payment preferences, is likely to make it difficult for operators to create “standard” packages and service bundles. Some customers may want a single bill, while others’ preferences (or the regulators’) may mean multiple ones are necessary.
Furthermore, given the traditional differences between fixed and mobile operational, billing and tariffing approaches discussed above, FMC offerings will need a long period of evolution and trial, before a particular structure can be safely “enshrined” in the network.
Lastly, the complex multi-operator FMC value chains will place a premium on those billing architectures that enable rigorous cross-checking of wholesale/accounting data, as well as facilitating the development of new types of multi-party contractual relationship. Margins will be driven by the ability to negotiate favourable contracts with “suppliers” and the ability for software infrastructure to support and bill for those contracts appropriately. Security authentication and service authorisation across networks or operators may also be a difficult test for the network-centric approach.
Customer self-service
When one considers the already bewildering number of permutations and options for a typical single-user mobile phone tariff, the notion of easily-accessible and packaged FMC offerings starts to appear ridiculous. Instead, it seems probable that ‘menus’ of service components will be needed. Using the web, to provide an FMC customer with the equivalent of an online retailer’s storefront, is likely to be a good analogy of the type of interface required.
This would allow the customer to self-manage his or her family’s (or company’s) services in great detail. A manager could have visibility of a salesman’s overall time spent speaking to clients, across both fixed and mobile networks, and temporarily permit expensive cellular data roaming and WiFi access, during a critical customer conference abroad.
Perhaps even more compelling is the use of this type of customer-facing system to deal with support queries. It is highly probable that many early FMC offerings will fall down on technical calls from customers, that their existing agents and processes are ill-equipped to deal with. Diagnosis of problems that might involve a corporate customer’s internal IT department and network may generate more acrimonious bouts of finger-pointing and blame-deflection. While a web-based troubleshooting or fault-reporting system will not solve all these problems, it may reduce the cost of customer support, which is likely to be substantially higher for FMC services than traditional, better-understood offerings.
DIY FMC
The performance of operators in marketing, billing, and supporting FMC services has another dimension.
Over the last 10 years, the advent of the public Internet and dedicated corporate IP networks has reduced some of the value of fixed operator-provided services. Core voice traffic has started to move to VoIP, often as a “user-owned” application or from 3rd-party competing service providers.
Meanwhile, cellular operators have generally been able to keep control of applications, either by “owning” them directly, or at least controlling gateways to 3rd-parties. This, coupled with the acceptance of “paid-for” network-resident services like SMS, has enabled profitability, and a limit to the risks of commoditisation and value-erosion.
As IP capabilities appear in the mobile domain, a major challenge for operators will be to maintain control of services and applications. It will be theoretically possible for customers to bypass their operators and build/buy their own FMC applications. The availability of powerful smartphones and PCs, coupled with Internet-centric software will facilitate arbitrage. Mobile SIP may accelerate the type of commoditisation of voice services seen in the fixed/Internet world, especially through VoIP providers like Vonage, or “free” VoIP services like Skype.
Put simply, whoever controls the most valuable aspects of an IP communications system (i.e. the routing, switching, security and network-resident applications) will gain the most economic benefit.
Carriers need to recognise this, and raise their collective game, to make their own services more accessible and attractive than roll-your-own DIY alternatives. To avoid IP-based commoditisation, they will need to deliver customers far greater value in terms of application packaging, service and convenience. Billing and customer-centric capabilities will come to the fore.