OSS/BSS: Time for Consolidation

India is one of the fastest growing telecom markets in the
region and leading industry players in the OSS/BSS market expect the market for
OSS/BSS to outpace global trends in terms of growth rate. Though the telecom
industry is doing well, thanks to the phenomenal growth in the number of telecom
subscribers, almost all the telecom operators are losing revenue in the course
of their daily operations, and recent studies point to losses as high as 12-15%
of the total turnover.

Innovation and differentiation may be the key for both
enterprises and vendors to satisfy their customers. Changes in regulatory rules
have already opened up the market for greater competition and hastened
consolidation-providing significant opportunities for operators to enhance
their competitive position via innovation, differentiation and becoming more
agile and cost effective in rolling out new services or services in new areas.
Some of the main drivers for growth in turn will be the consolidation of
disparate OSS/BSS systems into one and to improve cost and enhancement of OSS/BSS
systems to roll out more complex or innovative services ahead of competition.

Increasing competition in higher growth telecommunication
segments such as mobile data, VoIP, IPTV and hosted application services are
driving the growth in OSS market. Due to this, CSPs should not only launch the
services quickly, but they must also bill them accurately and provision them
efficiently to stay ahead.

The CAGR of the global OSS/BSS industry in the past 5 years has
been in the range of 6-7% and is forecasted by some analyst group to grow at
this rate for the next 5 years. But there are many hurdles on their path to
achieve a consistent growth in the coming years.

Cost Concerns

This subject has been an interesting area for discussion in the Indian
context, a market that is price sensitive and flooded with too many players.
Surprisingly, the tendering approach has definitely not helped the incumbent
operators to achieve reduced cost of purchase and continued support and
maintenance. Competition, improvement in technology and options for shorter
timeline association with vendors is critical. Traditional methods like
seven-year maintenance, vague functional specifications, and focus on hardware
efficiency has sometimes achieved contradicting results. Billing system
implementations deal with mission critical parts of a service provider's
business-the management of customers and revenue. As such, it is vital that
implementations of billing systems are as smooth and low risk as possible.
However, this does not necessarily mean implementation cost will be high or
escalate.

Improve Process Efficiency

Quality, cost management and process efficiency are related issues. If an
OSS/BSS system is built using a disciplined approach to software quality and
includes rigorous testing processes then it will obviously perform more
efficiently. But this efficiency is also determined by the business processes
which it supports within an overall OSS infrastructure as well as the other
systems within the infrastructure.

A leading company's tailor-made product portfolio includes
products which broadly manage process quality and process efficiency in a cost
effective way, addressing sales and marketing processes, order management and
service activation processes, customer care processes, service & revenue
assurance processes, billing & collections processes and finally revenue
settlement processes.

Cost Efficient Systems

Management of cost will result into better bottom line and this can assist
enterprises to go ahead in turbulent times. Despite the overwhelming growth in
telecom market in India, revenue loss in the daily operations of telecom
companies is yet to be curbed in a big way.

These alarming losses come from an accumulation of apparently
minor individual errors such as a call rated incorrectly, a record arrives too
late to be included on a bill, or maybe an order processing issue resulting in
inconsistent provisioning. Multiply these by many thousands, it all adds up to a
huge drain on any organization and the fraudsters in the network. And the
problem can only get worse, as 3G brings further complexity to networks,
allowing a whole new set of fraud to take place. The focus on content brings new
partnerships and more complex revenue sharing models. Therefore, there is a need
for comprehensive revenue maximization solution.

Intuitively, business challenge in growing markets is actually
revenue generation/capture as opposed to cost efficiency. However, declining
ARPUs and growing competition from disruptive technologies force operators to
continually look at cost efficient models.

In India, there are companies whose products are designed
specifically to manage process automation to reduce costs and process data as
efficiently as possible. Another product line addresses multi-service mediation,
service activation and revenue assurance, focusing on accurate and complete
order capture and service activation, comprehensive event collection (from both
switching infrastructure and IP networks elements) and also error management, to
process errors before they become significant cost issues. Meanwhile, 'Charging
and Billing' product line from a leading player concentrates on retail revenue
management, charging and billing processes, to ensure that the company's
subscriber activity is properly and accurately captured and recorded,
significantly across multiple services and multiple subscriptions. This involves
not just billing, but also charging for services in real-time (in the case of
prepaid and some IP services), as well as credit and collections management and
the application of revenue recognition rules and processes for accurate
financial analysis and reporting.

One of the suggestions to improve quality/cost efficiency may
include ROC (Revenue Operations Center)-an integrated operational
infrastructure that helps telecom operators to monitor, control and assure
integrity of the entire revenue chain.

How to Select a Vendor?

With the advent of complex technologies and in a target (bottom line)
oriented business atmosphere that too undergoes changes, opting for the right
OSS/BSS player may be a tricky question for many. Quality of the services
offered by a vendor can be one of the benchmarks. However, certain qualities are
taken for a given-product quality, customer references, financial stability,
system integration partners and most importantly, commitment to India market.
The end user is greeted with a flux of new devices, services and technologies,
and the only way of ensuring that he continues to use the higher value feature
rich services continuously is to simplify the services and user experiences
without compromising on user expectations along the way. Therefore, it is
necessary to partner with an OSS vendor who not only provides the leading edge
solutions but also would be committed to simplify the way service providers do
business and create a strong competitive differentiation.

With operators being increasingly reliant on systems that
reflect their changing business processes as opposed to rigid systems discourage
change — long-term partnership with a credible OSS vendor who will be there to
address all operators pain points and challenges is vital.

The fundamentals for selecting a vendor

• Domain expertise

• Reference/customer list: Tier-1 carriers

• Faster delivery cycle — faster ROI

• Ability to analyze revenue assurance problems and suggest solutions
  effectively and cost-efficiently

Novel Technologies

New technologies such as video on demand, IPTV, VoIP, and wireless content
services have seen substantial growth this year. Other technologies that have
captured the mind share include next generation networks and services, while 4G,
Quad-Play and mobile TV are the new technologies in the pipeline.

Several industries are crashing together such as telecom, cable
TV, satellites, consumer electronics, broadcast TV and the Internet. Video
service is a perfect battleground for this clash as customers have multiple
choices-Google's YouTube, Apple's iPod, France Telecom's IPTV, DishTV,
etc.

Trends

Telecom carriers are now shifting their strategy from ARPU (Average Revenue
per user) to AMPU (Average Margin per user). They are essentially looking to
deliver services faster, better and cost efficiently to ensure sustained
profitable growth. In India, they in turn are looking at suppliers-both from
India and abroad-to provide solutions to make this happen.

OSS/BSS players are on an acquisition spree globally. This means
vendor consolidation will continue in the coming years within OSS/BSS space.
Though India is undergoing the telecom revolution and may become the second
largest telecom market in the world soon, spending in North America is the
highest. Whereas spending in rest of the world (non-NA, non-EMEA) is growing
faster. ROW will continue to lag NA & EMEA even in 2010.

Tips for Network Managers

Faster delivery of solutions, managed services, implementation and post
sales-support and staff training and educational programs are the main demands
of enterprises. As per the Annual Global Operators attitude survey carried out
by Subex Azure, telecom carriers loose nearly 12% of their revenue due to
various reasons such as fraud, interconnect, poor processes and other common
areas of revenue leakages. As the levels of loss become more apparent and the
complexity of managing the entire revenue streams grows, revenue assurance has
steadily moved up the corporate management ladder. Increasingly, CFOs and CEOs
are assuming responsibility for the revenue management function. There is a need
for an integrated revenue maximization paradigm.

The solution lies in ROC (revenue operations center). The
purpose of the ROC is to provide the finance community, in particular the CFO,
with visibility into the operation and performance of the revenue chain from a
business perspective so that operational costs and revenue loss, in all of its
forms, can be minimized and that new products and services are launched within a
pro-active revenue management framework.

Hurdles

India has one of the most forward looking regulatory practices in the
region. Changes in regulatory rules have opened the market for greater
competition and hastened consolidation.

On the technology front, Next Gen Networks with their open
connectivity fabric, IP components, and network complexity would call for a
different architecture for OSS/BSS.

Telecom operators now stand on the threshold of a new business
model dependent on their ability to deliver next generation all-IP services such
as VoIP, IPTV, etc. Competitive advantage will now be gained by demonstrating
operational dexterity, through reduced time-to-market for new services, rapid
service provisioning, maintaining high quality of service delivery and doing so
in a cost efficient manner.

Focus of Indian Teleco CIOs

The US is a matured market with a telecom landscape vastly different from
those in Asia and India. However, common themes which are the focus of telcos'
CIOs are similar:

• Increasing cash flow

• Enticing customers to buy more

• Are multi-service plays the answer?

• Maintaining core subscriber base, yet add new subscribers

• Do we really know what our customers want?

• Launching applications and services to increase average
  profitability per user?

• Time to launch NG services and how to price it?

• Wireless/video in the bundle?

• How do we make money from content delivery?

Enterprises and vendors are in talking terms as far as the OSS/BSS
market is concerned. Vendors are readying to offer the best and cost effective
services, while enterprises want more vendors to be part of their entire
implementation process and cost analysis. The objective of OSS/BSS players is
always to offer products that exceed current market demands, something they
achieve by developing close relationships with their customers and listening to
what they need as well as by carefully monitoring industry developments.

Baburajan K

baburajank@cybermedia.co.in