November 2012

LTE Rollout: Make it a Smashing Success with Risk Assessment, Controls, and Marketing Offer Analytics

by Gadi Solotorevsky

Being in the telecom industry for many years has given me numerous opportunities to smile.

For instance, just the other day a mobile operator PR guy was quoted as saying , “Our LTE deployments give us a big advantage over our competitors.”

I smiled because of what the PR guy left out. To be accurate, he should have said, “Our LTE deployments give us a big advantage over our competitors, until those competitors catch up to us.”

Why am I so cynical? After all, as mobile users, you and I are going to love LTE. It feels 5 times faster than 3G, and we’ll no longer have to endure those annoying 15 second pauses in YouTube streaming.

But we cannot afford to look at LTE with rose-colored glasses. While the technological advances that LTE brings are incredible, the best LTE can do for any individual telecom is to give it a temporary advantage in the period before its competitors catch up.

Is 3G a differentiator today? Well, it depends. If a market is mostly 2G today, then sure, those operators offering 3G are going to have an advantage. But in markets where 3G is widely deployed and mature, that advantage goes away because it’s hard to convince consumers that one operator’s 3G service is much better than another’s.

My hunch is that the same scenario will play out with LTE. It pays to be the first to roll out new wireless technologies.

To delve deeper into the specific advantages that LTE brings to operators I did a little research and came up with these four key benefits:

LTE reduces an operator’s cost per byte;
LTE eases wireless congestion;
LTE delivers better QoS and larger data volumes;
and finally, LTE enables advanced services.

OK, let’s look at these benefits and see what the business implications are:

Reduced cost per byte — It’s true that LTE lowers the per byte cost to transmit. But don’t forget, consumers expect their operators to pass along those savings. In fact, if the operator’s not careful, the margin per byte might actually decrease to the point where LTE is either not profitable or only marginally so.
Eased wireless congestion — LTE may decrease congestion in the short term, but as more operators get into the LTE game, the congestion problem will be similar to 3G. Operators will no doubt continue to offload LTE traffic onto WiFi networks as they do with 3G, but WiFi offload is limited by the power of each hotspot.
Better QoS & data volumes — Superior QoS and bandwidth capacity is certainly one of the biggest consumer drivers to LTE. Unfortunately, an operator must always deal with an increase in customer expectations. LTE will essentially set the bar higher and a lot of work will be required to ensure customers experience standards are kept high.
Enables advanced services — I don’t claim to be an expert here. I know that LTE offers some pretty amazing capabilities such as allowing your network policy to follow you as your mobile phone roams. Once again, I think LTE offers some nice advantages here for early adopters, but once these service categories are widely available, they will no longer be differentiators.

How to Differentiate in the LTE World

OK, so why am I knocking LTE before it’s even fully deployed? It’s because I want to make a larger point about the real differentiators that cause people to select one LTE service over another.

Let me explain through an analogy. When I go to a large grocery store these days to buy something simple, like pasta or spaghetti, I’m bound to find a dozen different pasta brands being sold on the shelf. And each brand seems to have its own way of standing out. One brand is a low price, no frills pasta with plain packaging. A second brand is sold at a high price and has beautiful packaging. Another brand’s advantage is that pasta was grown from organic flour, etc., etc.

So here are a dozen brands that offer almost the identical experience — the eating of pasta, but some pasta brands will be highly successful national brands and others will be barely profitable.

My point, then, is that while LTE service is a fresh and exciting category today, in 2 or 3 years time, the technology itself will become a commodity product in the same way that pasta is a staple food today.

Long termer, what sustains any product — from pasta to telecom service -- is not the technology the product was built from, but the marketing and customer experience behind the product.

On the Road to LTE Excellence: Revenue Risk, Controls, and Marketing Offers

Happily, revenue analytics professionals are well equipped to help with the marketing and customer experience aspects of LTE. I think we can make our biggest contribution in three areas: Revenue Risk Management, Business Controls, and Marketing Offers. And I’d like to discuss each of these in the context of three different stages in the deployment of LTE, namely: Planning, Rollout, and Business as Usual. The points I’ll make are summarized in the diagram below.

LTE Deployment Guide for
Revenue Analytics Managers

Phase 1:
Design & Planning

Phase 2:
Rollout

Phase 3:
Business as Usual
(BAU)

Business Goals

~~Plan the LTE service~~

~~Execute a smooth rollout~~
~~Maximize customer satisfaction~~
~~Encourage adoption~~
~~Attract new customers~~
~~Port from old to new platforms~~

~~Optimize service operations~~
~~Maximize margins~~

Revenue
Risk
Mgmt.

~~Conduct risk assessment: identify risks, plan controls, look both at roll-out and BAU stages.~~
~~Verify that OSS/BSS will support the price plan and service offerings.~~

~~Update risk estimations based on reality (controls results).~~
~~Refine the risks estimations for the BAU phase.~~

~~Update risk estimations based on reality.~~

Controls

~~Start planning the controls you will need.~~

~~Implement relevant controls to prevent and quickly detect problems that might impact customer satisfaction.~~
Control not only the rollout results but the rollout process e.g., do not just control the result of porting data/processes from system A to B, but monitor and control the porting process itself, that data transition.

~~Add controls to prevent and detect revenue leakage, margin issues, fraud issues.~~

Marketing Offers

~~Plan attractive price plans both for roll-out and BAU stages.~~

~~Rollout of price plans adapted to the LTE rollout phase.~~
~~Monitor and update price plans as needed considering both customers behavior/ feedback, and competitor offerings.~~
~~Offer your customers the best plan, considering both their and your welfare.~~

~~Rollout of new price plans adapted to BAU.~~
~~Monitor and update price plans as needed considering both customers behavior/feedback, and competitors offerings.~~
~~Offer your customers the best plan, considering both their and your welfare.~~

Phase 1: LTE Planning

In the planning stage of LTE deployment is when you start planning what controls you will implement. It’s also the time when you begin your initial assessment of revenue risks.

Clearly one of the most crucial planning steps is around pricing. Early adopters of LTE such as AT&T and Verizon have put a lot of emphasis on pricing schemes to attract customers. Their biggest initiative here is Shared Data Plans that put all family members under a single consolidated usage plan. Verizon’s Share everything plan is one example.

Of course, Friends and Family style plans have been around for 3 decades, but the newer capabilities of LTE may prompt operators to get far more sophisticated, using new elements such as:

Pricing based on the Quality of Service (QoS) experienced by the user.
Throttling schemas in which the users data bandwidth is reduced automatically when a usage threshold is passed.
Data pricing based on network congestion

As ideas like these take hold, they will increase revenue risks dramatically. And it will be job of Risk Officers to do three things: 1) measure those risks; 2) gage whether underlying BSS/OSS/Network systems have enough dexterity to deploy those schemes; 3) and deliver “go” or “no go” recommendations to management. Another key will be to determine whether or not customers can control and use these schemes on their own and require only minimal support from call centers and trouble desks.

For some early adopter examples of these advanced pricing schemes, check out: Cricket Muve Music who features limited “general data” but unlimited “song download” data; free France who features unlimited data with throttling; and T-Mobile US who is offering, at least apparently, completely unlimited data.

Phase 2: LTE Rollout

The rollout of LTE service is a critical point because it’s here where you’re proving to customers that the LTE service is a valuable one. The idea in this phase is to bring in new customers, win them over, convince them to upgrade handsets and plans, and increase their loyalty.

Now the LTE rollout shouldn’t only be successful, it needs to be fast. The CSPs who can roll out service quicker will get a lot of the early credit and positive market perception. The danger, of course, is that if there are rollout problems, it can actually hurt customer satisfaction and create a negative perception of the LTE service. So revenue assurance is key here to quickly squash customer experience issues such as over-billing or people not getting the LTE service they paid for. And it’s also important to verify the correct “porting“ of information from old systems to new ones e.g., HLR to HSS, errors here could cause denial of services and unsatisfied customers.

By the way, the actual revenue you collect is less critical during this second phase because you are bound to be spending extra money and resources to build customer satisfaction and iron out early problems.

Phase 3: LTE Business as Usual

The final phase of LTE deployment is what I call the Business as Usual stage. It’s here where the detection and correction of revenue leaks finally gets real important.

Now just because LTE has become an on-going service doesn’t mean things are static. Actually the service remains in a very fluid state because you are continuing to modify and optimize the marketing offer you give to the customer.

In the States, that innovation is mostly around pricing today. The competitive battle is not over service quality — it’s happening around the price plan. The Shared Data Plans that Verizon and AT&T offer for LTE appear simple from the consumer’s standpoint, but they are highly complex from an infrastructure point of view. It’s hard to ensure all the billing and order components get synchronized — and that presents an excellent opportunity for revenue assurance to step in and show its value to the organization.

Incidentally, a lot of mobile operators are using the movement to LTE as an opportunity to migrate customers to more profitable usage streams. Having said that, there’s considerable disagreement about how LTE should be positioned for customers: some operators are treating LTE as a premium service, while others are saying LTE should be standard service for everyone.

One other factor that looms important in the “Business as Usual” phase is margin analytics (also called profitability analytics). The complexity of LTE service deployment and its marketing offers is such that service bundles can easily become unprofitable if usage and revenue streams are not constantly monitored, so that course corrections and adjustments can be applied.

Conclusion

LTE is a new enough technology that operators can still make money being the early adopter in their markets.

But whether your organization seizes that window of opportunity or not, revenue analytics professionals are well-positioned to support LTE deployment with their expertise in revenue risk assessment, business controls, and the analysis of pricing plans/marketing offers.

Gadi Solotorevsky

Dr. Gadi Solotorevsky is the CTO of cVidya Networks and a has years of experience developing and deploying Revenue Analytics solutions and methodologies. He is one of the founders and the chair of the Revenue Assurance team of the TM Forum, and leads the development of the Analytics Big Data Repository (ABDR) concept. He is also a TM Forum Distinguished Fellow and Ambassador.

Dr. Solotorevsky holds a PhD in Computer Science from Ben Gurion University. He is the author of several scientific papers on Distributed Artificial Intelligence and Resource Allocation, and the inventor of patents in the fields of outlier detection, and time series and utilization forecasting. Contact Gadi via

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