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April 2013

Crusaders Clash: The Battle for Control of Telco 2.0 Service Delivery, Billing & Policy

Crusaders Clash: The Battle for Control of Telco 2.0 Service Delivery, Billing & Policy

History will confirm that the success of iPhone and Android really caught the mobile telecoms by surprise.

In fact, mobile is still reeling from the shock of being taken out of the driver’s seat in terms of services offered on the handset.  Even the highly profitable SMS revenue is being eaten away by Over-The-Top (OTT) email and messaging alternatives.

So will telecoms make a services come-back?  Can they flex their networks and back office systems sufficiently to steal some of the thunder back from the app stores?

Stephen Rickaby is a guy with an expert perspective on these issues.  In the past few years, he’s held a couple key product marketing roles in the thick of Telco 2.0 transformation: at interconnect player Intec Telecom and more recently mediation vendor Digital Route.

In this interview, Stephen takes us inside the strategic issues that mobile telecoms are struggling with.  Along the way he also analyzes Oracle’s recent moves to acquire Acme Packet and Tekelec.

Dan Baker: Stephen, how do you think Telco 2.0 is going to play out?  Do you see the telcos getting into the over-the-top business?

Stephen Rickaby: The basic problem is that telcos won‘t offer over-the-top applications that are sufficiently innovative — something that would hold customer’s interest.  But I do see them creating an infrastructure and an ecosystem that would encourage over-the-top players to come and join that.

If you look at building apps for the Apple store, you’ve got to do certain things and follow their rules.  You can‘t send data anywhere other than back through the Apple platform and things of that nature.

But once the service provider has an LTE network in place, they could -- if you subscribe to their network -- expose certain features and functions of that network to the over-the-application developers.  So capabilities like that would support a competing ecosystem.

If you went back three or four years, Verizon were strongly hinting it would create this open network architecture to allow third parties to use these services.  People snicker at telcos for their “dumb pipes”, but if it’s done right, telcos can work with the OTT players to create a smart pipe ecosystem.

If you’re an app developer, maybe Verizon or AT&T can create tiered levels of service for you.  If you don‘t need anything other than a data connection, then a basic level of over-the-top service applies.  But if, say, a corporate customer wants a bit of control over the phone or integration with the services in the network, that’s a premium service and it goes up from there.

The further up the chain you move, the more you pay the service provider because they are opening up and exposing more of their network and allowing you to create sticky apps for customers to use.

Well, if mobile operators move in this direction, you can bet that mediation and the back office are key enablers.

Yes, in particular I think it’s in issues like online charging and network policy for individual subscribers where these issues come to a head.  Service providers want to do many cool things, but they need a better infrastructure to support that.

They are not there yet.  And they are trying to get there without having to rip out and replace their existing infrastructure.  Yet they also know that their existing billing and policy architectures aren‘t ready to support OTT partners at that more sophisticated level.

The biggest signal that change is afoot is the acquisitions you’re seeing on the vendor side, particularly Oracle’s plans to buy Acme Packet and Tekelec.

The prepaid systems of today have allowed service providers to offer certain rudimentary ad hoc services and price plans in a network-based system.  But what the market needs is more dynamic flexibility to build new plans without having to re-engineer the entire architecture each time around.

Those things don‘t lend themselves naturally to being deployed on the network side.  And yet, if you move all of that back into the IT environment -- the BSS -- the network organization start to get concerned about the performance of their network, that you don’t have full control over their environment -- all of those things.

Stephen, I’m sure that Grant Lenahan (Telcordia) has a bone to pick with you about the flexibility of the network-centric approach.  I interviewed him about that.

I have no doubt that the high end of the network-centric systems can satisfy many of the sophisticated requirements.

My guess is there won‘t be one answer.  Some of this functionality belongs on the network side and some of it belongs on the IT side.  I think the network groups need to insulate themselves from external forces so they can manage and engineer their networks accordingly, but they can’t control — nor should they control nor manage: flexible price plans, subscriber offers, new product offers -- things of that nature.  That now belongs more on the BSS side of the house.

I must say: a bit of a religious war is festering inside service providers as to exactly who owns some of these things and where the action belongs.  And uniquely, I think, mediation technology sits between those two worlds.  I think mediation solutions can be deployed today that go a long ways to satisfy both camps.

Let’s talk some more about the Oracle acquisitions of Tekelec and Acme Packet.  These companies are highly network-centric plays.  What’s Oracle after here?

To me, the more interesting Oracle play was buying Acme Packet who has the session border controller (SBC).  It’s not as if Acme Packet brings Oracle inside the core IMS or LTE fabric, but it certainly gets them to all the key touch points around that.

Tekelec owns a Diameter routing agent.  Diameter routing is a form of mediation: it’s intelligent switching that looks at the traffic coming through and decides where that traffic goes.  Or if it receives a rating request from a prepaid subscriber in Atlanta, Georgia, it can tell me which online charging system stores his usage balances.

What about the policy component?  Tekelec had previously acquired Camiant in the network policy arena.

Yes, Camiant was very strong in what I would call the Policy 1.0 offer, which is to me the equivalent of what the legacy prepaid platforms did with rating and charging in the network.  They can tell you what you can‘t do.  They can alert you that the user is consuming too much bandwidth, but they lack the flexibility to apply that across multiple service plans for a large customer base.

Look at these Shared family data plans that Verizon and AT&T are introducing.  They’re counting up the usage for multiple devices.  Here’s where I think it makes little sense to make those associations between devices and customer accounts in the network itself because it will significantly impact the performance of the network and how the network is engineered.

So with the Tekelec acquisition, Oracle now has enough of a beachhead on the network side to pull things back into the data center.  They can now make intelligent decisions like: “Oh!  This customer is on a family plan, but I don‘t know anything about family plans, so let’s route this back to the Oracle Online charging platform” or whatever it may be.

You can also use this to decide whether or not the customer is approaching his monthly limits, so you can notify them proactively with an up-to-date balance.  If the business changes the price plans, it doesn‘t affect the network, but only the back office side.

More and more, how you use policy and usage controls becomes something the business wants to control and that lends itself to belonging more on the BSS side.

So Oracle now has the opportunity to go in and present their online charging architecture as a solution to service providers who already have the Tekelec products.  And Oracle aims to show them how they can enable flexible pricing plans.

As I see it, this kind of in-between network and back office is critical to the guys on the BSS side.  It will allow them to stay competitive with the likes of Ericsson and others who are building their offers around more network-centric capability.

If I can rephrase what you’re saying: as a King on the BSS data center side of telecom, Oracle is buying these network assets to defend its business from encroachment by more network-friendly vendors.

Absolutely.  The line between network and back office is no longer clearly drawn.  This is a bid to keep more business on the data center side.

Now Ericsson is certainly a leading advocate for a more network-centric billing approach.  And the acquisition of Telcordia and the platform they deployed in Brazil and India is indicative of the direction Ericsson is going.

But I think the truth lies somewhere in between.  Clearly the edge has to be more intelligent.  We’re a long ways from the days when you had the time to pull that usage into the back office and process it on a daily or weekly basis.  More and more, usage processing has to be done in real time so that customers can make intelligent decisions about their usage patterns and what they are going to do with their services.

And then the mediation comes in because you have got to move that stuff really fast between the two environments.

Yes, unless the operator has standardized their entire back office architecture on a single rating and charging platform and balance management system, you need to move data around.  Usually there are multiple platforms you need to integrate with.  Some may live on the network side; others may live in the back office.

So how does a service provider integration all these platforms to offer customers a seamless service?  It’s here, I think, that all vectors point back to mediation.

You’ve got two pieces of fabric out there -- a network cloth and a data center cloth -- and they overlap each other.  People will argue where these cloths should overlap, but meanwhile you’ve still got to stitch the thing together with something solid — and mediation is that thread.

A country’s regulatory climate also matters when you’re deciding where to park billing functionality.  Telcos have PCRF systems that throttle the network during times of network congestion, but in the U.S. there are strong net neutrality rules that hamper the telco’s ability to give preferential treatment to individual customers in those cases.

But what about Brazil?  I’m not familiar with the regulatory landscape there, suppose their net neutrality laws are lax, what’s to stop Facebook from making a deal with a local telco to provide free priority service to Facebook.com?  In exchange, perhaps Facebook pays the telco a certain amount each month or massively advertises the telco’s data plans.

Now a service like is an interesting one.  The volume and relative simplicity of routing the service suggests it makes sense to put that on the network side.  But as soon as you introduce individual customers with multiple devices sharing usage buckets -- or maybe marketing gets creative with cross-account pricing rules -- then the cost to re-engineer the network becomes prohibitive.  That kind of sophistication best lives on the BSS side and getting the data back to the data center is mediation’s sweet spot.

Stephen, thanks for these timely and very strategic insights.

Copyright 2013 Black Swan Telecom Journal

 
Stephen Rickaby

Stephen Rickaby

A 20 year veteran of the telecom industry Stephen Rickaby has extensive experience working with tier 1 service providers in all markets across the globe.  How service providers adapt to rapid technology change and harness this value in the business world is Stephen’s passion.  His experience brings a unique perspective to this area, combining his roles in executive business management, technology development and product management.  More details on his background can be found at http://www.linkedin.com/in/stephenrickaby.   Contact Stephen via

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