Because policy means different things to different audiences, let's first look at what we mean by policy management. Policy management encompasses the rules that CSPs can set that enable subscribers to consume predefined services based on their profile; become eligible for select services while roaming; and set usage and service policies for others, such as employees or children.
Policies defining bandwidth allocation for particular services are critical to policy management because they help CSPs effectively manage and optimize their network resources. Effective policy management will provide CSPs with the tools to differentiate their services, be more creative in their service offers and enable them to protect their own interests by distributing and controlling their network resources more effectively.
Growing demand, diminishing returns and a more treacherous competitive climate should naturally lead operators to move beyond flat-rate business models as soon as possible in an effort to differentiate and remain viable.
Yet in fiercely competitive and mature markets like North America and Western Europe, the reality is that service providers are hesitant to introduce differentiated pricing models that may dissatisfy subscribers who have grown accustomed to a simple commodity service package. This hesitancy stems from the fact that although a number of new service models make sense in theory, most service provider's are unsure of the best way to build out the charging models in practice.
Further complicating the picture is the fact that NGN architectures such as IMS and the adoption of new service delivery platforms promise to change the dynamics of bandwidth allocation and management. Bundled services or individual services such as rich media content, mobile TV, video-on-demand, gaming and other next-generation services will need higher bandwidth allocations, which will significantly impact IP network resources. This will further the imperative for operators to adopt tiered service models and more nuanced bandwidth management techniques to avoid being relegated to bit pipes, as well as achieve a reduction in operational costs.
Especially in mature wireless markets, service providers can increase their profitability by putting visibility and control mechanisms in the hands of users to create a personalized experience. Additionally, operators can introduce intelligent bandwidth caps that control subscriber usage (thus conserving and properly allocating network resources) in a way that is sensitive toward maintaining a high-quality user experience. For example, operators believe that allowing subscribers to view and enable thresholds/spending limits gives subscribers peace of mind in terms of curbing overspending, and hence, should be an important policy management criterion.