Revenue Management Group

Flat-rate interconnect? I’d like to see that!

Tony Poulos — Wed, 17 Mar 2010 06:32:46 GMT

There’s a revolution starting in the USA that could have a dramatic revenue impact on all operators in a few years. The Federal Communications Commission (FCC) ’s National Broadband Plan, formally released yesterday in Washington, provides a roadmap for revamping the Universal Service Fund (USF) and Intercarrier Compensation, two long-standing hot-button issues for telecom service providers.

A story, published in Light Reading mentions that, ‘Sharon Gillett, Wireline Competition bureau chief for the FCC, said the broadband plan will lay out a three-phased blueprint to shift intercarrier compensation over a 10-year period away from today’s per-minute rates and toward a flat-rate that's likely to be lower.’

"What the plan lays out in that 10-year transition is a three-phase decline in the intercarrier compensation curve - not really a decline, but a shift. The idea is to provide adequate cost recovery coverage, but not to do it on a per-minute basis."

In an all-IP world, it doesn’t make sense to try to identify the long-distance voice packets and try to count them for intercarrier compensation purposes, Gillett said, when flat rates are more logical.

Ms Gillett is a very bright lady indeed. Just as CSPs are grappling with the move from timed/volume services to ‘all you can eat’, flat rate packages it seems eminently sensible that the same pricing regimen should exist in the wholesale and interconnect areas.

This also raises the issue of whether it is economically viable, or even necessary, to measure IP packets and traffic and also try to disseminate their source and what service they belong to. As our demand for bandwidth and speed continues to grow exponentially this will become more and more a challenge that will increase costs.

By changing the wholesale billing structure the simplified pricing would carry through to retail. I suspect many people are crying out, “bring it on”! But let’s not get carried away, this could take years to be accepted and ten years to transition, but it is a start.

No longer a lonely voice

Tony Poulos — Mon, 08 Mar 2010 13:28:06 GMT

Now I'm really getting worried. Someone is actually agreeing with me. I've been harping on for so long about how 'billing' is the differentiator, I thought I was the lone voice in the wilderness. Commenting on the Wholesale Applications Community that 24 mobile operators are forming, dkainer on his Viva La Blog site writes:

"It’s ambitious, it will be wracked with technical challenges, and it will no doubt take way longer to achieve than planned. But it has to be done. Mobile networks have watched over the last 12 months as their content revenues plunged – cannibalized by the app stores of the very handsets they are selling. The only way to combat this is to provide a rival offering that can go toe-to-toe on a global scale, and the key factor will be billing.

Billing, or inability to easily perform billing, has been a thorn in the side of developers and distributors for time immemorial (okay, 8 years or so)."

I don't know who 'dkainer' is, but I like him!

Euroaming bill limits in place

Tony Poulos — Tue, 02 Mar 2010 05:57:46 GMT

New rules from the European Union have forced mobile service providers to create a ceiling for mobile phone charges, saving people from coming home to unexpectedly high bills.

Under the new regulations mobile firm companies must set a cut off limit of €50 and users will be sent a warning when they reach 80 per cent of their chosen limit.

The EU highlighted two cases from last year, one involving a German traveller who watched a TV program and ran up a bill of £40,000, and a UK student who ran up a bill of £8,000 in a month of roaming abroad.

Subscribers will need to make a deliberate choice in order to benefit from a cut-off limit until 1 July 2010. Those who do not make a choice by this date will have the cut-off limit set at €50 by default but they will also have the ability to set their own limit.

It may take years for regulators in non-European markets to adopt similar EU rules but progressive service providers may see a similar offering as a potential market-leading move. One can only wonder how many service providers are in a position to even offer roaming cut-off limits for post-paid customers.

Of course, reduced roaming rates, particularly in the Asia Pacific markets, would probably be taken up with a far greater zest.

Nice to show-off NFC for Management World in May

Tony Poulos — Mon, 22 Feb 2010 10:54:07 GMT

Just in time for this year's TM Forum Management World in Nice is the news that travelers will be able to pay for low-value tickets on the city’s bus and tram network directly via their mobile phone bills. However, mobile operators say they are offering the payment service for consumer convenience, not to compete with banks.

Each of the country’s three operators plan to put at least 1,000 NFC phones on sale initially, but they expect to sell more. SIM cards the telcos issue will store bank payment and transit-ticketing applications. At least four French banks are expected to participate in the launch.

Bruno Prexl, spokesman for French mobile operator group Association Française du Sans Contact Mobile and m-payment marketing manager at Bouygues Telecom compared the NFC trial to the downloading of content, “In the past, it was ringtones and Java games. Now we are downloading low-value tickets. It makes sense to have one- (or two-) click payment through the phone. And today, the only one-click solution is the mobile operators’ bill.”

Consumers in the project will also be able to tap their phones to make retail purchases, using bank-debit applications stored on the SIMs. The Nice launch, expected to begin around April 2010, will involve a number of other applications. French operators and other organizers hope the project will serve as a prelude to a national rollout of NFC services in 2011.

Under a European Union mandate, the Payment Services Directive, which took effect in late 2009, mobile operators and other non-financial institutions can offer payment without a banking partner or banking license. However, this low value transactions also have low margins, a situation operators are not necessarily accustomed to.

For Veolia Transport, the transit operator participating in the Nice project, enabling customers pay for single tickets or other low-value transactions on their phone bills will save time but for higher-value transactions, such as passes, it would require them to go through their banks. That might require them to enter account numbers for the first purchase then short codes to renew the pass.

For visitors to Management World in May, unless they have accounts with one of the French service providers involved with the trial they may have to resort to that tried and tested method of payment on the trams & buses - cash!

Read the full story here.

A pragmatic approach to roaming ‘bill shock’

Tony Poulos — Wed, 10 Feb 2010 11:57:23 GMT

I stumbled upon an excellent piece on roaming ‘bill shock’ written by Abraham Punnoose from Roamware that is recommended reading. Abraham makes some very poignant observations and even offers some tangible solutions to overcoming customer discontent.

He writes that: “Voice, SMS and data incur different charges; incoming and outgoing calls may cost different amounts depending on where you are, who you’re calling – and even who’s calling you. It all makes for a highly diverse and potentially confusing charging situation – and nowhere is this more marked than when roaming.

What’s behind bill shock? Ironically, it’s the very seamlessness of the roaming experience itself. Data tariffs in a roaming environment are commonly at complete variance with home network tariffs, but there is no signal to alert users to this. Poor data visibility leads directly to extreme subscriber discontent, high rates of churn, and declining roaming revenues, even within the lucrative corporate market.

Roamers are becoming less tolerant of what is increasingly perceived as operator greed and increasingly prefer cheaper alternatives such as Wi-Fi and VoIP.”

Read the whole story here.

Content may be the Emperor, but charging is king.

Tony Poulos — Thu, 04 Feb 2010 14:27:35 GMT

News Corporation was well advanced in setting up online charging for its newspapers around the world, chairman and chief executive Rupert Murdoch has stated declaring the company on the threshold of a new era of profitability.

News Corp was putting the finishing touches on the industry's biggest structural change in 30 years, Murdoch said as he boasted about the company's content.

"Excuse the immodesty, but News Corp's pre-eminence as a content creator comes as the debate over the primacy of content is over,” he said. "Content is not just king, it is the emperor of all things electronic.”

Murdoch said the latest gadgets such as tablets, e-readers and smartphones would be an "empty vessel without any great content".

"Without content, these ingenious and wonderful devices would be unloved and unsold,"”

Murdoch said he was having "very substantive conversations" with device makers, as well as other media outlets, around developing the right subscription model for News Corp's content.

The Wall Street Journal, which charges for online content and has about one million subscribers, recorded a lift in both advertising and circulation revenue in the second quarter.

In the UK, the Sunday Times is set to trial an unknown paid-for content model on a standalone website later this year.

The “content clan has gathered around our ideas,” Murdoch said, and “instead of an existential debate about value, we are now merely haggling about valuations.”

Let’s hope Mr Murdoch doesn’t underestimate the challenge of charging for online content. The TM Forum may well be his next stop.

iPad or iHammer - another nail in the CSP coffin?

Tony Poulos — Mon, 01 Feb 2010 12:14:26 GMT

Apple’s worst kept secret in years has been officially revealed and has received a mixture of ‘wows’ and ‘ho-hums’ from every conceivable quarter but for the service provider world it could be yet another nail in the revenue coffin.

Don’t be fooled for one minute with the news that AT&T will be Apple’s partner and that the 3G option will be a revenue generator for operators. AT&T’s $30 per month unlimited data is pretty amazing. Apple also offered a $15 per month 250Mb plan, but that is less than half a movie download, so it’s hardly relevant. It’s hard to imagine anything what will chew up bandwidth faster than this iPad with its big screen, fantastic browser and ability to download HD Youtubes and videos from the iTunes store. It’s even harder to see how the potential revenues will keep track with the network upgrades and backhaul boosts needed to feed these devices with data.

No surprise that AT&T has announced $18 billion to $19 billion for capital expenditure investment in 2010 which is about $2 billion more than last year on wireless network and backhaul. iPhone zones like New York and San Francisco are the main targets of this overhaul and the operator will increase its capacity, with 2,000 additional cell sites and 400,000 more square miles of 3G coverage.

However, for publishers, the iPad represents everything they could have wished for. Unlike existing eReaders, the iPad screen has high-definition and is brilliant with color. It has a rich multimedia offering with the notable exception of Flash, and means that magazines and newspapers can be easily downloaded and viewed. It is a truly viable alternative to paper and print, easy to handle, goes anywhere, etc.

It’s no wonder that publishers are reportedly lining up to provide content to Apple. They’ve seen the Empire transform the music and applications industries and have figured that it may just be their savior as well. Forget paying exorbitant cover prices for color magazines at the newsstand and subscriptions for your daily newspaper, complete with inky fingers and environmental concerns. Now your iPad will have the latest publications waiting for you at breakfast each day. And you’ll be very happy to pay for this content because it will be cheap and easy.

The New York Times is already talking about returning to the realms of electronic publishing and distribution and Mr Murdoch’s empire, long bemoaning the slowing revenues of paper editions, will be on the bandwagon with bells on.

Sadly, and unless the network operators are part of the value chain or can provide the much-needed billing option, they will miss out again and this time, the blow could be fatal.

Telco bashing alive and well in Australia

Tony Poulos — Mon, 25 Jan 2010 11:59:36 GMT

According to research done for The Sun-Herald newspaper in Australia, consumers are paying the highest prices in the world for text messages, reportedly more than 10 times what it costs in many parts of Asia and almost a third higher than in Europe and Canada.

An article in a sister publication went on to point out that texts cost the mobile networks practically nothing but earn them millions in profit each year. These are not the sort of headlines we like to see.

It went on to use a very strange collaborating argument that even though the cost of mobile phone calls has declined in the past five years, the standard flat rate for a text message at Telstra and SingTel Optus has remained unchanged at AU25 cents (US23 cents) and at Vodafone, a text is AU28 cents (US25 cents).

Chief executive of the Australian Communications Consumer Action Network (a new consumer body established by Federal Communications Minister Stephen Conroy), Allen Asher was ‘slightly’ evocative by claiming the Aussie consumer was being “abused”.

"The mobile service providers are pricing texts at a vast profit margin and, sadly, it shows just how far from the competitive world market Australia is," he said. "We are being abused by the Australian telcos.”

''Our service is among the worst in the world and our prices are among the highest. We are being taken for a ride by an industry that just doesn't care."

More fuel was added to the fire with the statement that the 25 cent cost of a text, for 160 bytes, means Optus and Telstra effectively charge AU$1,560 per megabyte. If comparing with a AU$30 internet plan with a download limit of 10 gigabytes, the charge per megabyte is 0.3 cents, including free email.

A Vodafone spokesman defended his company’s SMS charges by pointing out under capped plans the actual cost of SMS can be as low as 4 cents. An Optus spokesperson pointed to the range of Optus SMS packages such as one whereby customers could send 500 texts for AU$10 a month, which reduced the price of messages to AU2 cents.

Whilst this may be true, the average consumer cannot make head or tail of complex and often bewildering tariff plans that package voice and SMS together. Transparency in pricing is becoming a real issue in some markets and may be required to avoid negative press like this recurring.

Never doubt the importance of telecommunications

Tony Poulos — Mon, 18 Jan 2010 17:19:22 GMT

We may all take mobile communications for granted but in times of natural disaster making a call becomes matter of life or death. As the recent tragedy of the Haiti earthquake unfolds, and the magnitude of the disaster and massive loss of life becomes more evident, the critical role of good, resilient communications has again been demonstrated.

Re-establishing communications is a critical tool in disaster management to ensure timely dissemination of authoritative information to government entities and aid agencies involved in rescue and rehabilitation efforts.

Call after call from victims seeking help from emergency services in earthquake-shattered Haiti were simply not getting through because networks were destroyed and systems that connected different phone networks were not working.

Within hours, humanitarian organization, Telecoms Sans Frontieres, sent an emergency team with satellite mobile and fixed communications equipment to Haiti.

The ITU also joined the international effort to provide humanitarian assistance. Forty satellite terminals were being deployed to re-establish basic communication links and a further sixty units with broadband facility were dispatched along with experts to operate them.

Only today Digicel announced that its GSM network is back up and running in the capital, Port-au-Prince, with coverage in the rest of the country good. 70 percent of the network's cell sites are on air, with the remaining being worked on.

Digicel is also ensuring that all of its two million plus customers in Haiti can stay in contact with friends and family by giving each and every Digicel customer US$5 of free call credit, totaling US$10 million.

Amongst the many offers of help from abroad came a creative use of a mobile operator’s billing system. US operator AT&T made it easy for people to donate US$10 via text message to assist earthquake victims in Haiti.

AT&T customers were able to donate the money to the Red Cross International Relief fund simply by sending a text message with the word "HAITI" to 90999. After a confirmation message arrived, the customer simply replied "yes" to finalize the donation, which was added to their bill or deducted from a prepaid account.

AT&T said 100 percent of the money would be passed onto the Red Cross although standard text messaging rates applied. The company also donated US$50,000 to Telecoms Sans Frontieres.

This is a great example that combined efforts of the telecommunications industry is not only helping to restore communications but has been critical in saving lives. How do you think your network would stand up to something like this?

Coming Soon - The All New LTE Data Diet

Tony Poulos — Thu, 14 Jan 2010 00:34:56 GMT

If you thought ‘all you can eat’ data plans were here to stay, think again. Recent comments from two big US mobile operators hint heavily that the days of the ‘data glutton buffet’ may be limited. And the introduction of super high-speed LTE networks may be just the opportunity to re-train subscribers to become more frugal.

It was reported in the Washington Post that Verizon CTO, Dick Lynch said his company was looking to move away from the current flat rate ‘all you can eat’ (AYCE) data plans and instead begin charging users on the bandwidth they consume. Lynch used a very poor analogy by asking, “why should customers using an average amount of bandwidth be subsidizing bandwidth hogs?”

His comments came close on the heels of rival AT&T Mobility boss, Ralph de la Vega, who was looking at a pricing scheme that address usage, in order to deal with his network’s congestion issues. One sure-shot way of reducing any consumption is to charge more for it, but you also risk losing customers in the process, especially if they have become accustomed to something for nothing (or almost nothing).

Using the introduction of LTE is quite a good excuse. You can stay on the old 3G system on your current plan or you can move to LTE and pay a premium. That might work. Of course, a little billing creativity could go a long way. Take the example of mobile operators that offer capped plans. If you exceed the download limits included in the monthly subscription you pay for every MB after that, at a premium. There are also ‘AYCE’ data plans with a fair usage clause which have conditions clearly described in the contract. If that fair usage is abused then speed limits are applied automatically. This is better known as ‘throttling’. Some operators go as far as offering ‘AYCE’ data plans priced at pre-throttled speeds - pay more get more speed!

Smartphones may be getting the press for the increase in mobile broadband take up but judging from the number of ‘dongles’ (3G modems) attached to notebooks these days it is fair to say that the attraction of mobility over higher speed fixed-line broadband speed and the perception of greater security over WiFi and WiMax is pulling the high-end users in.

It looks like the feeding frenzy may soon be over and we may see enforced ‘data dieting’ when LTE is launched. This will, no doubt, bring some new challenges for billing departments to come up with creative and profitable data schemes. I can see the ads now, “Buy 5GB, Get 5 Free”!