OSS: The Challenge of Change

Of late, the cliché that the BSS/OSS strategy needs to be driven by the
overall business strategy has acquired much more relevance than ever before,
with multifarious and far-reaching changes overtaking the Indian
telecommunications market. It is important to examine these changes and the
impact on business strategy and thereby, determine the impact on the BSS/OSS
strategy. And it is not only for the operators to re-examine their strategy, it
is also for vendors to take a long and deep look at their offers and revalidate
them in the context of overall market dynamics.

Indian Telecom Landscape

In the Internet space, 12 private ISPs have their own satellite gateways and
90 more depend on VSNL for bandwidth. VSNL’s own bandwidth infrastructure is
currently approaching 1 Gbps, far short of what the market might need. Demand is
anticipated to be 15-20 Gbps in 2004. While the number of Internet subscribers,
as per IDC projections is likely to be 35 million by 2008 (which is
approximately 2 million at present), and the number of actual users may reach
100 million. It is also a fact that driven by competition, the ARPU for even
large Internet operators has come down to $1.63 per month from $2.47. This, in
turn, has forced the existing players to look for consolidation as well as new
revenue streams–predominant among which are VPNs and cyber cafes.

In the mobility/GSM space, driven by deregulation on part of the government,
which allowed entry to the state-owned telcos like BSNL, MTNL into the cellular
market and which also allowed limited mobility services to basic operators, the
industry has witnessed consolidation. The fourth cellular operator will now be
allowed to enter the fray. The bidding for the fourth license has seen by and
large the same players and consortia looking to increase their footprint and
looking for regional consolidation. This goes hand-in-hand with the proposed
opening of the long-distance market. There is also a rush of cellular operators
to get into the basic services market in the remaining circles, driven by the
attractive possibility of getting a cheap limited mobility license. GPRS
services (no 3G yet) are still pretty much in their infancy with subdued
launches in the metro cities.

In the fixed services space, licenses have become doubly attractive now, as
the basic services operator can virtually offer the full complement of services.
IP technology has come strongly to the fore with virtually all the existing
operators opting for hybrid or pure-IP networks. Many of these operators are
laying DWDM backbones and broadband networks, providing bandwidth not only in
the core but also in access.

The move by the government to deregulate the long-distance market is
exciting, as the winners are likely to control the main channels and revenue
streams that emerge as and when broadband telecom takes off in the country.
However, the intra-circle business accounts for 46 percent of the approximately
$2.7 billion long distance market (in 1998-99) and hence the fixed services
operators operating in the circle command a lot of importance because they hold
the key to this segment.

Broadband could redefine the whole NLD market, driven by demand factors.
Data, which currently accounts for less than 10 percent of the telecom traffic
in India, could rise to 65 percent by 2005. Markets like web-hosting, ASP, ERP,
e-commerce and VPNs are billed to grow at 25 percent plus rates. IT-enabled
services and software development businesses in India could grow at the rate of
45 percent or more. Internet telephony has also been liberalized.

One cannot ignore cable operators, such as Zee Telefilms, which through its
subsidiary Siticable, has 5 million subscribers across 22 cities in India. There
are also DSL operators like Dishnet and large ISPs like Sify and MTNL, which
could be thinking in terms of broadband networks (broadband-to-home). There are
VSAT operators like Hughes Escorts, Comsat Max, Bharti BT and HCL Comnet who are
looking to leverage their existing infrastructure to have a VSAT-based broadband
network.

As bandwidth availability increases and it becomes a commodity, a new breed
of resellers may emerge. There could also be an emergence of bandwidth
resellers.

As the margins are driven lower, value-added networking, content and
applications will make money for broadband carriers.

The government’s permission to ISPs to own their
international gateway has meant that a host of them, such as Bharti Singtel,
Dishnet DSL, Sify, Caltiger, Pacific Internet, Zee, Reliance, and MTNL are
looking to make landing stations in collaboration with submarine cable networks
like SEA-ME-WE, FLAG, and SAFE, or with satellites like Europe Star, Loral
Orion, Panamsat, Eutelsat, ASC Enterprises.

The promise of fully deregulated markets will also make it
feasible for a single company or consortia to own or control an end-to-end
network. While we have already seen the consolidation process within a service
category, more deregulation will lead to consolidation across different service
categories.

Deregulation and rationalization will also lead to a more
intense competition. This will put the pressure on the service provider to
strive hard to protect the margins by expanding offerings in the growing market
to add more value, at least in the niche markets.

It is quite evident that the two business drivers that will
affect service providers in India are consolidation and service creation. The
BSS/OSS strategy in the short to medium term, will therefore be driven by the
need to consolidate, streamline operations and having the flexibility to
seamlessly add new revenue streams.

This will primarily be driven by the billing systems but has
the potential to bring the entire OSS within its ambit.

Gaps in Billing

In the context of the big picture, the key gap in billing, today, is that
most of the service providers, regardless of the domain they are in, have
adopted a piecemeal approach driven by largely short-term considerations. As the
demand for billing and OSS infrastructure grows in qualitative as well as
quantitative terms, this is the problem that will come sharply into focus. And
the problem is not unique to India. It is emerging as a major challenge
globally.

Clearly, from the product perspective alone, it is not easy
to find a panacea for these problems. Perhaps there needs to be a multi-product
strategy to address individual domains, but then, logically it needs to work in
a holistic fashion towards a common goal. The role of systems integrators will
therefore become important. But what value do the Indian SIs bring on table
today? By and large, they can all be termed as implementation partners. That
falls far short of what operators need. What one has seen, especially in the
Indian market, is that driven by cost considerations and also the inability of
the Indian SI partners to rise to the occasion, operators have tended to either
assume the role of the SI as well or impose it on the product vendor. Clearly,
both these approaches fall short of what might be an optimal approach.

The second issue that needs to be highlighted is that we have
so far not seen a great deal of awareness outside the IT departments of the
strategic role of billing and OSS. In the absence of that input and with capital
constraints, decisions on BSS/OSS have tended to be driven primarily by the IT
and budget considerations and not by the marketing/business strategy
considerations, to the extent that they ought to be.

The Right Strategy

The ideal way forward would be to:

• Recognize the importance of OSS and link it with
  marketing/revenue objectives

• Consolidate with a great deal of thought to future, and
  also invest strategically in the missing pieces, for instance, CRM

• Recognize the key role played by SIs and start factoring
  that as the key component of the BSS/OSS strategy. There is also a need to
  look at the SI partner as a partner and not merely a vendor. Consequently,
  there is need to look at the solution as not just a short-term fix to
  immediate operational issues, but in a larger strategic perspective with the
  involvement of other departments.

Priority Areas

Network management: With the current spate of mergers and acquisitions, the
key problem/gap to be addressed is network management. As one builds a
multi-vendor, multi-technology heterogeneous network, network management can
become quite challenging. It has an impact on revenue as well as customer
satisfaction. And the private telcos do not have the luxury as DoT had to decide
on an integrated network management systems very late in the overall OSS
considerations.

Service assurance: Service assurance is another key to profitability and in
very strong quantitative terms.

Quality measurement is something that will probably be driven by the market
addressed. I think there is a strong sensitivity, for example, when one is
selling pipes to call center operators or data services to corporates. On the
voice front, probably as a nation we have not yet reached that stage of
discrimination and may be expanding the reach is the more immediate problem to
be addressed for operators.

CRM: CRM is clearly one area where one may see investments, especially if
multiple billing systems are going to be supported.

Business intelligence solutions: Another area where one can expect some
activity is business intelligence solutions, so that operators can be better
informed about their customers and factor that into their business strategies.
Today, the customer information is quite fragmented and in our individual
experience in interacting with service providers of different hues, we have felt
that gap. There are definite opportunities to be tapped here, in terms of higher
ARPU if service providers have a holistic view of customers, and offer services
as an integrated package.

Deepak Mittal, director business development (billing and OSS), Hughes
Software Systems