Long live the dumb pipe, new metrics for mobile

Joseph Waring
23 Apr 2010

Two Asia-Pacific billing conferences last month drew healthy crowds (reportedly over 100 attendees at each) and demonstrated that operators are exploring OSS/BSS improvements and looking to invest in customer-facing systems. While IDC forecasts 3% growth in telecom spending this year, the billing segment is expected to expand by 6-7% worldwide over the next five years - with higher growth in Asia Pacific. The OSS segment is forecast to grow 11% this year.

At the Frost & Sullivan event in Singapore, keynote speaker Malcolm Rodrigues from Nucleus Connect, giving an update on the country's next-gen NBN project, had the quote of the day when he stated: "We are a dumb-pipe provider and proud of it. We provide low-price, high-value service." With 80% of web traffic P2P, he said video is the killer app and telcos have to move into this market. Frost & Sullivan's Manoj Menon in his opening comments said that ARPU is forecast to drop another 25% after falling over the past 18 months. He said in India ebidta margins will fall 7% over the next three years.

Out with ARPU He called for the industry to evaluate telcos based on new metrics and move away from ARPU, which has fallen as operators have been forced to cut prices to add new subs. And many users now have multiple SIM cards, which inflates the actual number of subscribers. He said ebidta margins used to be an effective indicator of the effectiveness and efficiency of an operator. "But as we look at growing the business and the markets are entering some level of maturity, I think people will start focusing on absolute ebidta numbers and the net growth in ebidta numbers they can generate over time." Telecom Fiji group CIO Omid Saberi talked about some hard lessons learned in its recent OSS/BSS transformation, which was needed to fight new competition and improve customer satisfaction.

The IT infrastructure was 15-20 years old. After a smooth phase one, he said "we had six months of pain. Everything had to stop as there were major deployment issues." Saberi said the problem was phase one was too big and too intensive. "We later regretted that as phase two grew from six months to 15." He noted the risk of handing off too much responsibility to its SI. "We handed over everything and stepped back. I learned we still had to go through everything, which we didn't do and that hurt us later." At Beacon's next-gen billing event in Bangkok StarHub VP of IT David Skinner explained how its focus on household ARPU required a broader view of its subscribers than its IT systems supported and why it went for a big-bang BSS transformation. "Why risk a big bang? We had a limited amount of time and a limited budget, so we went for a two-year consolidation program, moving from four billing systems and four CRMs down a single billing system and one CRM." The main technology drivers behind the move were to replace customized components with COTS packages and standardize the technologies. On the business side, StarHub needed faster time to market to compete, the ability to create new revenue streams and reduce TOC. Some of the main challenges he said were replacing legacy skills and figuring out how to keep people interested. There was also a period of reliance on vendors.

"The knowledge is retained by the SI, but we wanted to be self-sufficient, so we set a timeline on reducing support." He candidly outlined the lessons learned, notably "you can't communicate too much and need management buy in from the top. You also have to keep asking 'why are we doing this?' and stay focused on the critical success factors." Mike Willett, previously director of fraud and RA at Telstra and now an OSS/BSS consultant with Waywick Management, said that because billing is a major touch point, it is now seen as an enabling technology to allow operators to provide a differentiated customer experience (see billing survey "The winning ingredient: customer care" INSERT URL). "Most complaints come from billing and payment, so there is an opportunity to differentiate by improving." He suggested that giving users the ability to create and control some of that experience through personalization is the key. He advised telcos to realign their billing strategies to support a better customer experience. "Move from decentralized to centralized, from mass market to segment specific, from cost focus to value focus. And this has to be aligned with the corporate objectives." Hugh Roberts, a consultant with Patni Telecoms, reminded the audience that technology must support new business models, not drive them. "Having technology at the center was not a problem when we were just competing against ourselves. But now we can't compete with those that put business opportunities at the center." He said the credit crunch has refocused our attention on ebidta margins and the basics, with operators focused on things like reducing customer service costs.


David Skinner, StarHub

Omid Saberi, Telecom Fiji

Manoj Menon, Frost & Sullivan

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