Mobile payments are predicted to grow in value and volume, but the business and operating models are still up for grabs

Mobile payment can mean many things, from using a phone to buy an item of digital content, and then be billed to your telephone bill, to using the phone as a contactless payment tool to authorise deduction from your bank account, or other payment service. Whichever way we choose to understand mobile payments, there's no doubt that it is a market that is driving forward.

Mobile money transfer and contactless NFC (Near Field Communications) will together account for 50% of the overall mobile payment market globally by 2013, (based on the gross transaction values), according to Juniper Research's Mobile Payments Study, released at the end of October 2008.

The Juniper report found that the mobile payments market, which is today is dominated by purchases of digital goods such as ringtones, music, and games, will in future be driven by subscribers transferring money and using NFC features on their handsets to make purchases. This will drive the overall mobile payments market to grow by a factor of ten between now and 2013.    

Report author Howard Wilcox explained: "We see significant opportunities for new services making it easier for the ‘underbanked' population and migrant workers to make remittances, using their mobile phones as mobile wallets: the services already in operation are seeing rapid growth." Wilcox added that mobile wallets will incorporate NFC which will enable people to use their mobile phones to pay for small value items such as refreshments and magazines.

However, there will be hurdles to be addressed for the market to reach its tipping point, including NFC handset availability, workable business models and financial legislation. 

A survey conducted by Oliver Wyman shows a significant increase in activity across the advanced payments sector in Europe. Advanced payments enable consumers to transact through a variety of non traditional devices, such as their mobile phone, contactless cards and the internet. The survey encompassed 30 of the leading European new players and ventures in this fast growing industry, companies with an expertise and specific focus on advanced payments including Monitise, LUUP, paybox and Margento.

This survey found that in developed countries, the industry in the near term will focus on competing for the most compelling contactless card payments solutions as well as mobile banking solutions. In contrast, contactless mobile payments will take a much longer time to evolve as they will require collaboration between banks and telecom operators.

Zilvinas Bareisis, Senior Manager at Oliver Wyman added: "Europe's fragmentation means a lot of ‘pretenders' are pursuing a niche strategy at present focusing on a particular geography, proposition or customer segment, and to a certain extent it's land grab time. However, lack of common standards implies that future profits are limited. In order to be successful, the players in the industry will need a sophisticated strategic marketing capability, a workable business model and clear approaches to interoperability. The winners will be those who can break out of their segments and constraints."

Certainly, there is plenty of activity on a spot by spot basis around NFC.

In Wels, in Austria, a city shop quality alliance "Shoppen mitten in Wels" is using gift vouchers based on a contactless chip that are processed by an NFC enabled mobile phone. The distribution, reimbursement and administration of the system are achieved through a threeway partnership between Stadtmarketing Wels (Town Center Management of Wels), mobilkom austria and Nexperts. Around 130 merchants in Wels have been equipped since March 2008, with the technology to take contactless payments from mobile terminals. Research has shown that the approach is extending the time shoppers stay in the town.

Technology provider Nexperts has also implemented a new mobile client / server application to manage gift vouchers based on contactless chips embedded in paper gift vouchers, as system that went live as of November 1st.??

Each of the 70.000 vouchers is simply issued and redeemed by a simple touch with the Nokia 6131 NFC phone. The NFC Voucher software by Nexperts manages all transactions from the 130 mobile clients, performs all clearing tasks every night and can generate report by a web interface.?

"This project is a perfect example of a successful go to market approach for what NFC can do already today", says Kurt Schmid, CEO of Nexperts.

Yes this sort of small scale approach is not necessarily the kind of interoperable approach defined by the analysts as crucial to success.

One initiative that might bear fruit if the StoLPaN project, and EU project that intends to turn NFC enabled mobile handsets into multifunction terminals with bi-directional interaction between the wireless NFC interface and mobile communication channels and to demonstrate the use of this generally applicable new technology in the retail logistical value chain, and also in mobile payment, ticketing and other use cases.

Results will be submitted to the relevant trade bodies for adoption by the payment, mobile, transit and ticketing industries with the goal of creating a standardized NFC ecosystem. It wants to develop a JAVA based mobile host application that provides a transparent environment for the simultaneous operation of various NFC based service applications. It also sees the need to establish the back-office architecture and necessary communication protocols to ensure the secure, remote management of the various NFC applications hosted in the mobile handset. As well as this the Project forsees overseeing the porting of selected contactless applications to the StoLPaN specification.

In Italy, Consorzio Triveneto has recently announced the first Payment transaction between an NFC mobile handset and a PayPass EFT-POS terminal. The handset was equipped with software developed within the StolPan EU

"This is the very first step of the evolution of the Payment Industry and, following the Chip Cards rollout, will allow both Person to Person and Remote Payments to grow," said Claudio Canella, Consorzio Triveneto's Director Strategies Products Markets. "Using mobile handsets for making payment transactions is an important step in creating a real mobile wallet application that may soon replace traditional cards, tickets, coupons and perhaps even IDs." said Andras Vilmos, Coordinator of the EU Project.

The technology industry too is reacting to the need for interoperability by forming its own partnerships.

When it comes to allowing service providers to manage NFC applications, NXP Semiconductors says within the next few months it will launch its MIFARE4Mobile Application Programming Interfaces specifications which will manage MIFARE-based applications in mobile devices. This new specification will provide mobile network operators and service providers with an interoperable programming interface for NFC-enabled phones.

The MIFARE4Mobile will manage MIFARE applications from their over-the-air installation to the end-user interaction via the phone user interface. NXP proposes a Global Platform-compliant JavaCard applet to orchestrate all MIFARE services securely hosted in the mobile device.

NXP says it is working to deliver the certification, compliance and rules for the MIFARE4Mobile specification in consultation with NFC stakeholders. Licenses for the use of the MIFARE4Mobile APIs technology will be free if used in conjunction with MIFARE secure elements sold by NXP or licensed by NXP. The first release of the APIs will support MIFARE Classic and will evolve to include MIFARE Plus and MIFARE DESFire to guarantee total compatibility with existing and new contactless infrastructures, according to NXP.

And two French companies – contactless chip maker Inside Contactless and Fime, a smart card and terminal testing solutions provider, have partnered to "speed up the attainment of NFC interoperability". The two companies hope to identify and resolve potential conflicts in NFC devices and develop a process for testing and certifying NFC-enabled handsets.

Inside and Fime plan to offer their customers greater visibility into the testing and certification requirements at an early stage of development of their NFC mobile handset products, and provide them with products, tools and services to ensure compliance. The partnership also intends to consult with various standards bodies, including the NFC Forum and payment and transport associations to boost or amend current certification standards.

The secure element
Yet if there are signs the industry is working together on standards, there remains an issue over where the secure element (SE) will reside in the handset.

The Rathenau Institute takes a close look at these issues in a recent report. In its reacrchers' opinion, there are three potential locations for SE chip placement: namely, embedded in the phone, on the SIM, or on an external memory card, such as a micro- SD card. All of these proposals serve different stakeholders' interests, and have both advantages and disadvantages. An alternative approach would be for an intermediary company to manage the SE, wherever the latter had been located on the phone. 

The report says that of the three scenarios, embedding the SE in the mobile phone would allow service providers the most freedom. It is unlikely that handset builders would attempt to charge service providers for using the SE and this option is supported by the Mobey Forum, the international association responsible for promoting mobile financial services that is backed by many banks, and to date this has been the model chosen for introducing NFC phones.

The disadvantage of this option, however, is that it gives little impetus to the integration of NFC in phones. Handset manufacturers do not stand to make money from NFC, but they do face (limited) costs. Discounting interoperability issues, in the absence of consumer demand driving phone sales, handset manufacturers will see few advantages for themselves, and will be unlikely to push the large-scale introduction of NFC. For users, moreover, there is the added disadvantage that many people change their phones relatively frequently. Opting for this scenario would thus necessitate addressing the portability of NFC applications. It is also unlikely that telecoms operators would be receptive to this idea; if SEs were embedded in phones, then the role played by telecoms operators would be substantially reduced to that of merely ensuring that data was flowing correctly from A to B. 

Mobile network operators and their industry association, the GSMA, instead support a second option, that of embedding the SE on the SIM that is located in all GSM phones. In a "smart move" that has increased participating actors' support for the fledgling technology, the NFC Forum has sought close cooperation with the GSMA in developing specifications for applications. In 2006, 19 actors joined to form the GSMA Mobile NFC project, a group that included KPN. Perhaps most notably, this working group has developed a communication standard for the NFC chip in the phone and the SE on the SIM card, known as the Single Wire Protocol (SWP). The GSMA is using the SWP to actively experiment with developing a scheme for NFC-based mobile payment, called Pay-Buy Mobile. Placing the SE on the SIM is clearly advantageous for consumers, offering easy portability in an environment in which users tend to change their phones more often than their SIMs. The SIM's capacity might prove to be a limiting factor, however. This model places service providers at the greatest disadvantage. Telecoms operators are planning to let the capacity on SIMs to service providers in much the same way that real estate owners let apartments in buildings. According to Rabo Mobiel, telecoms operators plan to charge service providers between four and five euros per application per user.

So it's clear that despite technical advances, there is still a lot of negotiation to be overcome on the commecial side.

Do operators understand what mobile social networks are for, and how they work? If so, how can they generate revenues from them?

Ad-funded social networks will provide the bulk of revenues in the mobile user-generated content (UGC) space by 2013, according to a new report from Juniper Research.

The report says that the total value of the UGC market – comprising social networking, dating and personal content delivery (PCD) services – will rise from nearly $1.1 billion in 2007 to more than $7.3 billion in 2013, with social networking overhauling dating to become the largest revenue generating segment by 2009. The report also notes the increasing importance played by advertising, which will account for nearly one-third of total revenues in the UGC space by the end of the forecast period, and more than half of mobile social networking revenues.

According to report author Dr Windsor Holden, "It's clear that we have seen an industry wide shift regarding the implementation of business models in this area. Whereas initially there was a perception that users would pay a small mobility premium to access social networks on their handsets, it rapidly became clear that to achieve truly mass adoption, it would be necessary to offer free membership and then to augment that with advertising and the sale of premium content."
The Juniper report also observed that, while the iPhone had substantially increased public awareness of mobile content services, there was significant scope for improvement with regards to the marketing of such services within the industry as a whole. It also stressed the need for operators to reduce data costs outside of bundles to encourage casual use of social networking and dating services.

Other findings from the report include:
– The number of active users of mobile social networking sites is expected to rise from 54 million in 2008 to nearly 730 million in 2013
– The Far East & China region will be most popular in terms of mobile user number for mobile social networking and PCD throughout the forecast period, but the Indian Sub Continent will become the largest region for mobile dating services by 2010
– There will be more than 9 billion downloads from PCD sites by 2013, of which 32% will be ad-supported.

Operators say 'me too'
This looks like nothing but good news for operators, as they struggle to do what the main brand social networking sites have so far been unable to, and that is make a profit.

So far, European operators have responded to this trend by offering mobile versions of the main brands. The thinking is that this leverages the brand power of the social networking site, whilst keeping operators in control.

In Russia, the local version of MySpace has announced a partnership to develop and promote solutions for the subscribers of MTS Russia. Under the terms of the partnership, MTS and MySpace will develop an exclusive service for the subscribers of MTS Russia that will become part of MTS' WAP-portal. In addition, the companies are planning to launch an MTS-branded community on MySpace Russia website to drive usage and support the partnership. MTS?thinks it has hit on a good strategy. "We are looking forward to introducing over 60 million customers of MTS in Russia, the largest subscriber base in the country, to the leading social network, MySpace," saysPavel Roytberg, product and service development director of MTS Russia.

"This partnership fits well into our strategy of providing Web 2.0 and social networking capabilities for our subscribers. The new service from MySpace on our WAP-portal will also allow us to explore innovative marketing initiatives, such as viral marketing. The pairing of the leading mobile and social networking brands will bring increased portability and greater access to customers of both MTS and MySpace and enrich the mobile user experience."

"MySpace is known for its networking and creative solutions which revolutionized social networking. It is a place for everyone – whether you are a global celebrity or an aspiring artist," noted Aleksandr Turkot, general director of MySpace Russia. "This partnership with MTS is a key strategic move for MySpace, allowing us to give Russian customers unprecedented access to networking via their mobile phones. Our brands are built on providing high quality communication and networking experience and our partnership will allow us to develop many new exciting services for our customers."

Meanwhile, Orange is bringing the leading social network sites together within Orange World. It has a new service that combines access to the sites' popular functions into a single destination, following the completion of partnership agreements with MySpace, Facebook and Bebo whose members will be able to view their profile updates – emails, comments from friends, recently uploaded pictures – alongside others from Skyrock, Pikeo, Flirtomatic, DailyMotion and  Meetic.

The service, which lets users keep in touch with their friends wherever they are, has launched in France and will follow soon in the UK, Switzerland, Spain and Portugal.  It works by displaying the most popular functions of multiple social networks side by side these so that they can be accessed far more simply with one click.  Consumers will now be able to receive and send messages, upload photos and check status updates without having to browse individual URLs or log into separate sites. Orange plans to evolve the service from Orange World to an embedded application, accessible from the home screen of Orange Signature phones. The ultimate goal is to bring these communities together across all three screens: mobile, PC and TV. 

"Our partnership with MySpace shows that mobile is a seamless extension of the online experience, not an alternative to it," said Olaf Swantee, Head of Orange's global mobile operations."This service illustrates how Orange is aggregating digital content to simplify access to social networks from mobile devices. In future, Orange will deliver digital entertainment across mobile, TV and broadband, giving consumers content not just where they want it, but how they want it."

Paul-Francois Fournier, Senior Vice President for Portal Strategy and Online Advertising at Orange says: "At Orange, we are committed to giving over 170 million customers the best and most user-friendly multimedia experience possible, whether on the mobile, the Web or IPTV. This new service will give our mobile customers easy and optimised access to the most popular Internet online communities on their mobile, so they can take it with them wherever they go." Francois concludes, "It also supports our cross platform advertising strategy with a compelling offer for advertisers to reach all those different communities in one single place on Orange World portals".

Yet this approach, while clearly of utility for those established users of ISP sites, keeps mobile at one remove from "core" online sites. How can users get a mobile experience? Experts are agreed that mobile operators need to build services around their strengths.

A mobile experience
One company that is trying to build its presence in this area is GeoSentric, through its GsyPSii brand. GyPSii is the geo-location and mobile social networking provider, and as an example of its "get integrated" approach, has entered into a multi-year worldwide agreement with Garmin, the specialist in satellite navigation.

Under the terms of the agreement, GyPSii will provide technology, products, worldwide data center infrastructure, development licenses, and GyPSii branding rights to Garmin, on a worldwide non-exclusive basis for a range of Garmin products. Garmin anticipates that future products will include friend finding applications that support the GyPSii-powered location-based social networking services platform.

The agreement provides development licenses to Garmin, to leverage the GyPSii location-based geo-social networking services infrastructure for internal development and integration with its products. The agreement also has provisions for revenue sharing between GyPSii and Garmin.

GyPSii incorporates a wide range of location-specific functions and mobile lifestyle services – including mobile search, user generated content-sharing and social networking – in a single platform.
Thor Johnson, SVP Media Markets at GyPSii, says that in his view, a partnership like this will enable brands to offer better ads to users.

"In the main, the types of ads in the mobile space are still 1990s-style advertising. With something more cutting edge, as with PNDs, we may see a BP?logo on the map as you drive through a town, showing you where the nearest filling station is, for instance. We believe we are starting to see evidence that advertisers are starting to embrace this sort of advert. It allows them to target much more accurately than desktop internet ads, because they know where people are and what they are looking for.

But dedicated deals between technology providers, handset manufacturers and operators is not the only route being mooted. The mobile agency RingRing Media, has launched 'I'AM'.

I'AM is said to integrate with a broad range of local and global mobile ad networks (including Admob, Millenial Media, Adshandy, Mkhoj and BuzzCity), automatically routing traffic to the most relevant ad network which is achieving the highest revenue for that particular user, handset and demographic.
Typically mobile publishers appoint an ad network to serve ads into their mobile site. In contrast, I'AM is said to dynamically segment and route traffic to the highest yielding ad network to provide publishers with 100 per cent fill rates.

Harry Dewhirst, Co-Founder of RingRing Media, says, "Our vision of mobile advertising 2.0 is dynamically selecting from a pool of ads the most targeted and highest revenue generating ad for a specific user.

"With the launch of I'AM I believe we have fulfilled this vision, creating a platform which creates a win-win situation for ad network, advertiser, publisher and user alike."

Christophe Hocquet, CEO of mobile social networking site Moblr says, "Having previously worked with Google's Mobile AdSense, our new partnership with RingRing Media's I'AM platform has transformed mobile advertising from a hobby to a viable business prospect for Moblr, helping us to turn our mobile inventory into money at a much faster pace than with any other individual ad provider."

Missing the point?
Yet it's possible that operators everywhere are missing the point about social networks. Norman Lewis, of Wireless Grids, points out that operators have traditionally misunderstood the motivations of their customers.

"Why do people make phone calls? When I worked at Orange, I asked this question, and nobody knew. Operators need to start looking to the social meaning of communication interaction, and not their function. The business models for telephony need to extend from what happens during a call, to what happens before and after call."

Lewis' point is that by thinking of social networks as some markedly different or "other" type of communication, operators risk misunderstanding their customers, and hence risk missing the chance to profit from the services their users are using.

For Lewis, users of social networks are really just defining themselves in the same way that youth, especially, have always done. They are forming groups of like-minded users, expressing and forming their identities in ways they have always done. It's just that the platform for doing so has changed.

"When I presented this to the Orange board, the question was, "Should we launch a teen portal?" And I just lost the will to live."

Lewis says that operators need to make their users not the recipients of advertising, but the originators, and recommenders, of it.

Grinding down the road of trying to make money from a model that is already proven to lose money is not the way, he says.

Operators are investing now in multi-service, high bandwidth backhaul solutions. How can they ensure operational flexibility, meeting current and future demands? 

If you talk to those on the supply side, there's little doubt that operators are now really beginning to see increased 3G usage drive high bandwidth services. This in turn has meant that the old ways of carrying traffic from base stations back to the RNC and into the core network just won't scale. A typical 2G base station serving an average population of 1000 subscribers requires a connection of only a few megabits (or a few E1/T1 lines). But with HSPA driving usage, and 4G around the corner, operators are looking at massive growth in backhaul capacity requirements.

At the moment, there is agreement that operators will be spending money now in order to avoid spending more later. That means that operators know they are moving to an all-IP network in the core and RAN, using Metro Ethernet in some way to provide the transport. But there is hot debate about the best way to arrive at the goal, and whether all the barriers to that vision have been overcome.
Infonetics Research says that mobile operators and backhaul transport providers spent $3.7 billion worldwide on mobile backhaul equipment in 2007, and are expected to increase their spending in the high double-digit percents from 2009 to at least 2011. This is encouraging the vendors of Ethernet based network equipment.

"All market indicators support continued growth of the mobile backhaul market. Manufacturers and service providers have had residential broadband and corporate services as the main thrust of their businesses for a long time, and now mobile backhaul makes up a third area that nearly all of them are focusing on. We expect to see the Ethernet mobile backhaul revolution really kick off in 2009," said Michael Howard, principal analyst of Infonetics Research and lead analyst on the report.

Infonetics highlights three major factors forcing a migration to packet backhaul: the first is the increasing numbers of mobile subscribers, reaching 4.4 billion worldwide in 2011. The second, as we have mentioned, is an explosion in mobile data and video use, requiring providers to significantly increase bandwidth offerings rapidly. The third is the growth of competition, forcing operators to upgrade their network capacity to improve and add new subscriber services. These upgrades will include IP/Ethernet BTS/NodeBs, WiMAX, and LTE New cell site backhaul connections, which drive equipment spending that will roughly quadruple worldwide from 2007 to 2011.

Crucial to this is the forecast that the IP/Ethernet portion of worldwide mobile backhaul equipment revenue is set to skyrocket, racking up a triple-digit five-year compound annual growth rate from 2007 to 2011.

By 2011, service providers using PDH, ATM over PDH, or SONET/SDH for their mobile backhaul connections will be paying roughly 3 to 40 times as much in service charges per connection as those using Ethernet, DSL, coax cable, or PON, Infonetics estimates.

There is no single technology solution that can alleviate the backhaul bottleneck as mobile networks migrate to 3G and HSPA technology and services. Rather, a mixture of technologies and solutions are required to address the challenge. Technologies addressing the backhaul bottleneck may be divided into two categories:
1. Technologies that increase backhaul infrastructure capacity
2. Solutions that enhance network performance through traffic aggregation and optimization – maximizing traffic and service delivery over existing infrastructure

Since there is no single solution for the backhaul bottleneck, operators will be using a mix of solutions from each of these two categories.

Increasing Capacity through Infrastructure
When considering increasing backhaul infrastructure capacity, there are different solutions for the leased backhaul network and the owned or self-built network.

For the backhaul network based on leased capacity, adding conventional TDM leased lines (E1/T1 and STM1/OC3) may partially address the backhaul challenge at the cost of a significant increase in network OPEX and delay in the introduction of new services due to lead time of additional leased E1/T1's.

New wireline access technologies, like xDSL and Metro Ethernet, may also be used as a cost effective alternative to backhaul cellular traffic. Initially, these services were planned to carry only best effort mobile data services, but they will migrate in the future to provide a converged IP RAN for all mobile services.

For the owned or self-built network, several solutions are available to increase backhaul capacity. Evolution of PTP microwave with adaptive modulation, new PTMP microwave technologies and WiMax are some of the alternatives to increase capacity on microwave backhaul infrastructure. The ultimate solution is, of course, deployment of fiber down the access network close to the cell sites. However, this solution is often unviable, since today's fiber technologies can provide bandwidth relief only with huge up front investments and very long lead times to deployment.

So until they can reach this networking nirvana, most operators are looking at a hybrid approach to mobile backhaul, keeping 2G and 3G voice on current TDM technology, and using packet technology for the growing data service EV-DO, EDGE, and HSDPA traffic. The T-Mobile, Swisscom Mobile, and Telecom Italia contracts for IP, Ethernet, and pseudowire cell site backhaul are the first of many to come over the next 18 months.

Steve Dyck, Director of Mobile solutions at Alcatel, says that operators can choose to upgrade where necessary, whilst keeping future demands in mind.

"Where they can, they can go for Ethernet backhaul. And even if it's not something that they can get to every cell for a long time, they can get to the hub sites, using TDM products for immediate growth at the individual BTS. Then with the IP based platforms being deployed in 2008. As RAN equipment moves to IP, then operators have the equipment they need in pace already to support that move.

"Operators that adopt a hybrid approach can really take three main approaches. The first is BTS that have an Ethernet port as well as an ATM port. HSPA traffic can be carried natively over Ethernet and transported to the network. With TDM traffic bring carried over TDM. The second option is where you have a BTS with no Ethernet port, possibly where legacy equipment has not yet been upgraded. In this case you need a device at the cell site that can peel the different traffic off and then send it over Ethernet. Another option is to  carry all traffic directly onto a Carrier Ethernet network, with legacy interfaces supported with an interworking function or circuit emulation service."

The demands of the latter approach, is that it requires stringent timing and synchronisation, high availability, scalable bandwidth and hard QoS. Yet because of the problems it solves, and the potential of greatly reduced operational cost, that latter option is the one that nearly all operators are interested in getting to.

Reduced OpEx resulting from operating a single network rather than several parallel networks would be derived from improved statistical gain from statistically multiplexing all backhaul traffic onto one network; Maximum network flexibility to handle real time traffic demand changes, as well as long term traffic mixture changes, by dynamically sharing converged network resources across all mobile services.

In the past, TDM switches and access cross-connects were used in 2G networks. Today, with the rollout of 3G technologies, packet switches based on ATM or Ethernet/IP technologies are used. Some of these switches use traffic optimization in addition to standard layer 2 aggregation, in order to multiply the network capacity delivery performance. Such switches can also provide dynamic bandwidth allocation for all services, increasing network flexibility by handling real time variation in traffic demand and long term transition from traditional 2G to new 3G and HSPA services. These switches support QoS in order to properly allocate network resources, maximizing service delivery and ensuring operator revenue streams.

Timing issues
Timing over Packet (ToP) began as a sideshow of the Circuit Emulation wave that flooded the telecom industry in the early 2000s. Reinforced by the emerging new PWE3 family of pseudowire (PW) standards in the IETF, more and more carriers began looking for cheaper ways to carry their legacy TDM services, giving up traditional expensive leased lines.

Back in those days, ToP was merely considered a way to enable timing "transparency" across a physical layer asynchronous network (today called Adaptive Clock Recovery or ACR). The term "transparency" is placed in quotation marks, as the performance of early ToP mechanisms fell short of what was needed to ensure true end-to-end clock transparency. This has radically changed today as modern ToP mechanisms are rapidly approaching the performance envelope of their SDH/SONET counterparts, enabling conformance to the latter's most stringent timing requirements.

"As the experts in Carrier Ethernet demarcation, we offer a comprehensive portfolio that allows carriers and providers to start a service over fiber, terminate it over bonded SHDSL.bis and manage it end-to-end, even in cases where third party networks are involved, without affecting the end user's experience,"states Ron Agam, Director of Product Management at RAD Data Communications. "RAD's EtherAccess technology provides carriers and service providers with the ability to deploy lower cost, highly reliable standardized Ethernet services according to predefined SLAs regardless of the underlying access infrastructure or transport network."

"The industry clearly recognizes that ATM pseudowires over packet networks are a key requirement in supporting 3G and 3.5G traffic such as HSPA, and this is another area in which RAD's ACE cell site gateways were tested successfully," Agam continues. "Cell site gateways are proving to be a necessity, especially for transport providers and operators with self-built networks," he concludes. "Depending on the capabilities of specific NodeBs, intelligent cell site gateways provide the only technologically viable solution."

"Mobile operators are facing a significant spike in bandwidth demands in the backhaul due to the proliferation of 3G and eventually 4G-based data services and the emergence of high-speed air interface enhancements such as HSPA," said

Michael Howard, principal analyst at Infonetics Research. "At the same time, these operators are seeking to dramatically reduce their operating costs and are looking at migration from separate, legacy ATM and TDM networks to more cost-effective converged IP/MPLS-enabled multi-purpose networks. During this migration, mobile backhaul networks have become the bottlenecks in these new network architectures, and the work from the IP/MPLS and Metro Ethernet Forums offers viable solutions to the problem."

The goal of the IP/MPLS Forum's work on Mobile Backhaul is to provide guidelines on the architecture and technology choices for IP/MPLS RAN backhaul within the various network environments (legacy, IP, converged). The IP/MPLS Forum's MPLS Mobile Backhaul Initiative (MMBI) proposes a framework for the use of MPLS and Ethernet technology to transport RAN backhaul traffic over access, aggregation and core networks. The framework includes a reference architecture that is intended to be broad enough to cover all possible deployment scenarios, providing recommendations on how to deploy MPLS in each of these scenarios. This will create a reference guide that will allow vendors and operators to select the appropriate feature sets for their specific scenario.

The focus is on a shared network infrastructure that is able to support (or replicate) existing legacy services (2G, 2.5G) as well as new services based on 3G and 3.5G (Eg: HSPA). Emerging technologies such as LTE, mobile WiMAX and UMB and are also considered. This will enable a migration path between existing legacy ATM and TDM backhaul networks to a more cost-effective, converged, MPLS-enabled, and multi-purpose network.

With an increasing number of applications and services to provision and bill for, operators need flexible BSS that can provide a single customer view across all services, says?Gabriel Matsliach

In the increasingly competitive telecommunications market, success is no longer about identifying and delivering just the one "killer" application. In fact, there may be many "killer apps". Success has become about getting new services – and bundle of services – to market before your competition. In today's changing telecom environment, there are many moments of opportunity, those with the best market agility will capture the value of those moments and win. First to market can be a differentiator. Agility and responsiveness are what demonstrate innovative, forward thinking to your customers – and what helps to capture profits from early-adopting trendsetters.

Subscribers – consumer and business – are increasingly savvy when it comes to anticipating the next wave of services. Most importantly, they hear the hype and don't want to wait. If you describe something as "coming soon", a need to wait might drive a subscriber to another operator. The number of subscribers who are "digital natives" is also increasing, raising the bar on service expectations, while at the same time opening up new opportunities to interact with your customers. With these in mind, shortening time to market and leveraging your BSS (business support systems) as a strategic marketing tool, are essential to success. And of course, all this must be done in an efficient manner.

Speed to Revenue
Accelerating time to revenue starts with the basics – systems that deliver comprehensive monetization, i.e. the ability to rate, charge and bill for any service and support any type of payment mode. This ability is fundamental to creating the multi-service bundles – along with cross-product promotions – that customers demand.  Moving beyond the basics, a marketing-driven product catalog will ease the actual creation of the bundle – quickly and efficiently define, test and launch new service promotions and bundles – across multiple channels.

This single product catalog is possible only if your BSS is unified around a single data model. A single data model also means that all your subscribers and accounts – prepaid, postpaid, hybrid (converged), consumer, business, any line of business – are supported by a complete customer view accessible by every touchpoint. This enables you to give a consistent customer experience across the web, call center, and device, strengthening loyalty.  Nothing will drive customers away faster than the frustration of an operator that doesn't deliver as promised. A single data model provides a "single source of truth" for marketing, self-service, customer care, ordering, billing and financial management, which is absolutely essential to ensure a top-notch customer experience.

The second way to accelerate time to revenue is to ensure that the growth and evolution of your business is not constrained by system limitations; a need for major infrastructure overhaul in order to adapt to change is a system limitation. Certainly, you need the confidence that your BSS will gracefully handle huge increases in transaction volumes, new markets, or new services. A system that can be deployed in one manner today – tailored to your unique business needs – and then be expanded over time to support changing business needs or to address legacy migration issues gives the utmost confidence of its ability to adapt and grow. This flexibility translates into increased business agility, including faster time-to-market.

Active Customer Management
Today's consumers have more ways to communicate and be entertained. They use more services and have complex demands relating to their accounts. They're looking for family plans, relevant offers, personalized packages, and control over spending – including multiple identities and balance transfer.

In this world, the ability to manage your customers in a real-time, interactive manner, that is consistent across any touch point (web, call center, IVR, device) – and accessible "on the go" – is a must. This concept of active customer management is essential to maintaining customer satisfaction, generating interest in new offerings and increasing customer spending.

Personalized promotions and notifications applied in real-time can increase usage and enhance the customer experience, turning your BSS into a marketing tool. Customer loyalty programs are easy to implement when you know what your customers are doing in real-time. Leverage your customers' usage data to offer promotions that will keep them coming to you for more. Take this a step further and allow customer to tailor their own service plans or offers, for the ultimate in satisfaction.

These scenarios assume interaction over a mobile device. They also assume self-service capabilities – over the web as well as over IVR or through the device. Self-service is a proven way to encourage positive and constructive subscriber interaction of all subscribers – consumer or enterprise – increasing possibilities for cross-sell and up-sell. Self-service that is based on the same data model as the underlying billing and ordering system brings unique advantages in that the customer's self-service experience is consistent with his experience across all other operator touch points. This increases both customer satisfaction and operator efficiency.

An Eye on the Bottom Line
Equally important to growth is the need to keep costs down. Efficient implementation plays a major role in reducing time and costs. When a billing and active customer management solution is developed as a comprehensive whole – i.e., a single product solution – and doesn't require customization or extensive integration during the deployment process, deployment time and costs are predictable and manageable.

Having a single system to handle customer management, ordering, and convergent charging for all service and payment types, brings savings in the areas of training and operations. Furthermore, coordinated customer order orchestration and flow-through provisioning ensure service delivery accuracy and tighten order-to-cash cycles.

And finally, the ability to monitor usage and balances in real-time (even for postpaid subscribers) is a new tool for financial risk management that helps ensure that while capturing the moment of opportunity, you are not over-exposing your business.

Today's Operator Reality
While it seems clear that most legacy infrastructure is ill-equipped to address the challenges of today's market, it is also true that each operator has unique needs and priorities with regards to legacy system migration, and some may include business transformation objectives as part of the migration process.

A common thread throughout the endless variety of strategies, plans and requirements for such a significant task is flexibility. Operators need flexibility in both their billing and customer management solution, and in a migration approach. When a solution is built as a single software base that can be deployed in a variety of ways to meet individual business needs, it delivers that required flexibility. It is only when all the pieces are derived from the same software base that a multi-phase approach is possible since each piece can be deployed incrementally at the most strategic time. It is only when a solution is engineered from the bottom up as a unified platform, rather than patched together from multiple vendors, architectures, technologies or development methodologies, that the cost and time-to-market advantages of true convergence are realized.

Operators need a BSS solution that can support prepaid and postpaid modes and can be evolved to support hybrid (converged) accounts. They will benefit profoundly from scenarios where real-time credit control can be added to postpaid deployments; and customer care can be added to prepaid deployments. These are the kind of options that allow an operator to reach business goals in a changing market.

Working with a field-proven vendor in the delivery of charging, billing and customer care solutions to telecom providers around the world is key in achieving success. The most optimal partner has expertise in both in-network and IT systems and deployment. These are the two critical areas of expertise for success in the "always on" world. Operators should work with a partner who has expertise in both areas and can therefore determine the appropriate phasing and implementation timetable, tailored to enable each operator to achieve strategic goals at its own pace. Of course, a proven track record in legacy system migration is also essential.

Capture the Opportunity
Your business is changing, and changing quickly. That's why you need an active customer management and billing solution built to help you accelerate revenue growth – efficiently. You need the agility to capture new revenue opportunities and adapt to changing markets. At the same time you need to reduce complexity and keep your operations efficient. With the right BSS system, and the right deployment partner, decisions you make today won't limit your choices tomorrow, enabling you to capture every moment of opportunity the new world offers you.

About the author: Gabriel Matsliach, Ph.D, is General Manager – BSS Line of Product, Comverse.

As operators roll out new services across new network elements, the network operating environment becomes increasingly complex, and the need to assure performance increasingly important. Keith Dyer hears from Tekelec’s Vice President of Product Marketing, Vince Lesch, how operators can meet these challenges

MOBILE EUROPE:
Vince, we talked to Tekelec in this space back in April, principally about how carriers are evolving to next generation signalling environments, and how Tekelec supports that. Now we are picking up on an important aspect of that migration – how carriers can monitor and assure services at the service and customer layer. How does that network evolution impact the monitoring and performance management of the network, and the services it supports?

VINCE LESCH:
I think we are seeing a couple of key trends. The first is that this evolution is creating hybrid environments.

As operators move to an eventual all-IP architecture, they are integrating SS7 and SIP components across their service architecture. This means that, for instance, if they want to look at call flows end to end across the network, they need to monitor the call as it moves from the TDM/SS7 space, is transported across the IP/SIP domain, and then back to SS7.

The second key trend, alongside this creation of hybrid networks, is the exceptional growth we are seeing in wireless data usage. Across the industry we’re seeing the evolution of flat rate data plans, and a sharp increase in the types of service used.

These services are crucial to raising incremental revenues for carriers, as they face declining profit levels in their core activities.

MOBILE EUROPE:
So what demands does this combination of new services in hybrid environments create?

VINCE LESCH:
There is now a pressing demand within carriers for the ability to create and display KPIs (key performance indicators) and indices that allow them to monitor network and service performance for an increased number of services, in more complex network environments.

As new services and network elements are rolled out in a hybrid network, real-time visibility into everything going on within the networks is essential to understanding and tracking network performance. For example, before launching new services and networks, extensive interoperability testing is required. The ability to supervise the transactions between domains – PSTN, mobile, VoIP and IMS (IP multimedia subsystem) – and monitor the protocols as they convert across gateways is essential to test and assure interoperability and ongoing network performance. Additionally, carriers must be able to identify failures between gateways, trace registrations in the SIP domain and track authentication.

From a customer perspective, providers require real-time and historical data to determine why subscribers are unable to access e-mail, troubleshoot download failures from ringtone servers, and even identify issues with traditional intelligent network services such as calling name and number portability.

Carriers also need to track issues such as service utilisation across their portfolio of data services and devices. They need to see, for instance, how much WAP (wireless application protocol) traffic is going in to which providers. Another example is mobile email, which is a big growth area. Carriers need to see how much these services are being used and by what types of user. They can then react accordingly if they need to troubleshoot a specific issue related to that service.

MOBILE EUROPE:
So how can carriers meet this need to provide customer and service plane information, as well as monitor the underlying network domains? It sounds like a recipe for increased investment and complexity.

VINCE LESCH:
Well, what this means is that it’s important to have the ability to produce integrated KPIs for typical types of services on an ongoing basis. Operators can then use these KPIs to see if any element, service, or usage indicator is trending negative, to take action, and troubleshoot any problems that are occurring. They can either do this by monitoring service degradation, or by looking at the customer experience and highlighting when certain services are under-performing.

But they need to be able to do this in a way that can take information from across the network, as well as service layers, and correlate that information in a holistic manner, rather than relying on a series of disparate reports from differing domains, element management systems and service monitoring systems.

Most solutions on the market today collect performance data locally from network elements, making it difficult for operators to get a holistic view of subscriber experience and QoS.

The better approach is to have a network-wide performance and service management system that collects control and user plane information and generates accurate performance indicators. By collecting real-time, network-wide data from a single vantage point, operators can evaluate and characterise network usage to maximise network resources and reduce operating costs.

MOBILE EUROPE:
What type of solutions can provide this cross-system and service monitoring?

VINCE LESCH:
The requirement is for something that can correlate data from the whole variety of network types operators are faced with managing, from TDM and SS7, to an IP or packet-based network with SIP. The crucial fact is that with very few exceptions, operators are faced not with simply the management of one or the other, but a changing landscape.

Tekelec’s Integrated Applications Solution (IAS) provides operators with complete visibility to everything going on within their networks.

IAS provides real-time data and reporting as well as alarming capabilities to ensure proactive responses to network issues. Operators are able to quickly isolate problems in the network and respond accordingly, cutting troubleshooting time significantly.

The key differentiator we have versus our competitors is that we are able to offer the monitoring and service assurance capabilities of our IAS fully integrated with Tekelec’s EAGLE Integrated Signaling System (EAGLE ISS).

This integration of the data we can feed back from our knowledge of the signalling platforms in the network means we can collect and forward information to the IAS with no delay.

Integrating the signalling level information with the IAS means operators do not have to depend on individual probes into all the different network elements into the network. And it also means that any configuration can be carried out automatically and efficiently, rather than having to make manual changes.

We can build KPIs around different service sets that allow operators to build and monitor their own service level agreements (SLAs), and deliver that information to the relevant skill bases within the carrier, whether that is in a manner that delivers value to the customer care teams, to the marketing departments, or the technical operations team.

It’s incredibly powerful being able to flow data from all the network interfaces to a core correlation engine. We can integrate all that hop-by-hop information to view, for example, all services to a specific IP address, or from a content provider, and look at how that performance is trending against the whole network.

It’s a holistic view that means you can move from the general to a per-service or subscriber level, and then allow for action to be taken, either to troubleshoot a problem, or maintain an SLA.

MOBILE EUROPE:
And what evidence do you have that this approach meets the demand of operators?

VINCE LESCH:
I think one of the biggest indicators is the success we have with IAS in the market. Of the product areas in which we operate, the IAS is the second largest that we have in terms of revenue, so it’s a very important part of our overall business. We have achieved market success across wireless and wireline operators, building on the leadership we have in signalling. The IAS is a natural addition for customers who have purchased our EAGLE 5 signalling solution. In fact, Tekelec has added 37 new customers in the last seven quarters on the strength of these products.

Customers love that we can operate this high level abstraction of the data, enabling them to create their own KPIs.

It means they can do more with less, which is vital in these capex-constrained times, whilst supporting the migration and evolution of their networks.

Customer Case Study: Improving the Mobile Web Customer Experience

Problem

As subscribers surf the internet more and more, via their mobile device, operators need to be able to track the quality of service related to the display time of the first page (WAP, HTML, etc.). The operator also needs for this page to arrive in less than five seconds.

Solution

By using ProTraq (Tekelec IAS module), the service provider is able to set up key performance indicators (KPIs) that look at various parameters being sent, including the timing between messages. Using this tool they can set alarms on their KPIs to indicate if the average display time goes above their five second goal.

Benefits

• Improved customer experience results in lower number of complaints, support costs, and customer churn.
• Quickly resolve quality issues
• Information is used for marketing, including differentiating themselves from other operators

As the industry debates what the role of operators should be in mobile applications, Kirkup told Mobile Europe that the company “still very much viewed carriers as key partners in our value chain.”

Kirkup said that whilst some new entrants had tried to “minimise the utility of carriers”, RIM has done several things that show its commitment to the carrier channel.

First off, the next version of Blackberry’s  App World implements carrier billing, to enable users to put the acquisition of apps onto their mobile bill. Carriers will get a slice of the revenue for supplying this service. For developers the upside is that it is easier for them to bill, and the consumer experience could be made simpler, Kirkup said.

Kirkup added that RIM has negotiated pre-loaded applications onto its devices prior to launch, giving carriers a higher revenue share of that particular application, in return for the real estate of the application on the handset.

RIM is also working to share metadata across advertising networks, Kirkup said, including into the networks that operators either run, or sell into.

Finally, Kirkup said that Blackberry’s focus on compression, and efficient use of bandwidth, helps carriers reduce the data load they have to support, and also keeps users within capped data plans. The Blackberry 6 platform has a web rendering engine that can render a web page at about 33% of the amount of data carried compared to competitors, Kirkup said.

“Our background may have been in email,” he said, “but the way we developed our product means that efficiency has extended into how we deliver Facebook, or Twitter, or our core messaging applications.”

So what can carriers add to app developers and what, in Kirkup’s view, should operators be focusing on as their core capabilities?

“This really lines up with what we told them back at the GSMA board meeting back in February. The first is the billing relationship, which presents a huge opportunity that they have barely scratched the surface of. The second thing is they need to step back into their organizations and find the core pieces they have to add value – things like location.”

Kirkup acknowledged that operators had made some steps towards doing this, and mentioned the OneAPI initiative. “You might say they are two years too late doing this,” he added, “but we will see.”

Kirkup’s comments show that although there is a tendency to view the app stores as automatically a challenge to operator revenues, there is still a role for operators in the applications space. The door is open, but operators must work out if what they have to bring through the door is of value to those already at the party.