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July 2013

Raising a Telco’s Value in the Digital Ecosystem: One Use Case at a Time

Raising a Telco’s Value in the Digital Ecosystem: One Use Case at a Time

We humans are creatures of familiarity.  We’re comfortable with the people and companies we know -- and that familiarity gives us a sense of assurance and trust.

But what does “familiarity” truly mean in the age of Facebook?  Do the many “faces” of a high tech company -- logo, website, LinkedIn, Google search, newsletter, Wikipedia, Twitter, and people we meet -- actually make the company more familiar?

Yes and no.  There’s certainly more knowledge about what a company did yesterday and five years ago.  Still, the company you knew 12 months ago has probably changed quite a bit.  And that’s because survival amid telecom’s wicked business pace forces solution vendors to change their business models all the time.

Surprise!  Your pet lizard is not an iguana after all: he’s a chameleon who’s constantly changing color to match the ever-shifting landscape.

Allot Communications (NASDAQ:ALLT) is a software company well-acquainted with Darwin’s laws and one who has successfully adapted its telecom business to the times since its founding in 1996.  In 2012, Allot grew its revenue by 35% to $104 million.

In this interview, Allot’s AVP of Marketing, Australia-born Jonathon Gordon, explains the company’s interesting evolution and how it’s making its mark in the mobile operator ecosystem as a chameleon with a colorful palette of value-creating use cases.

Dan Baker: Jonathan, please describe Allot’s technology roots and how your business has changed in recent years.

Jonathon Gordon: Dan, our core technology is deep packet inspection (DPI), which is key to determining the type of traffic flowing across a network.  Now back in Allot’s early days 10 years ago, we mostly served the wireline industry, so shaping traffic was at the forefront of what we did.

But when the iPhone came along, it changed everything.  At the time, mobile operators knew nothing about data at the time.  They were excited about revenue from SMSs and MMS and many networks were operating at only 2% capacity.  And the whole concept of getting services for free was a totally new world at a time when people were paying for everything from ring tones to wallpapers.

So today, our goal is to help the operator monetize or capitalize on the traffic that is there.  How can the operator make money on the traffic that is flowing across their pipes?

And how do you play in telecom analytics?

We are certainly not an analytics vendor by any classical definition.  Our business is to optimize applications and traffic flow, and yet we are very much involved in helping operators generate additional revenue.

The first thing we do is give the operator a deep dive on what’s really going on in their network:

  • Is one particular cell congested?
  • How is that affecting other subscribers and other traffic?
  • Where in the network is the impact being felt?

Traditionally, analytics is about collecting a lot of data to be analyzed later.  But for us, analytics means making use of intelligence that’s available right now -- use that data in real-time to change the way the network is configured.

So if a peer-to-peer download of a movie is congesting traffic in a certain network pocket, we can adjust in real-time to affect the quality for those customers whose experience we want to improve by pushing policies into the network.

Much of the data mobile operators want to look at are around video and voice.  So we can look at Skype traffic and tell you that 10% of your traffic was Skype, and we can further breakdown that segment to tell you what percent was Skype voice, Skype video conferencing, Skype chat, and even Skype file transfers.

Your website talks a lot about helping operators support the “digital lifestyle”.  And I understand you’ve used your DPI engine to conduct an interesting analysis of digital life.

Yes, we conduct an annual study on trends in mobile digital lifestyles.  Data for our most recent study was based on a sample of over 60,000 digital users from several mobile operators in different geographic regions.

Based on the way subscribers use mobile services, we came up with five distinct digital lifestyle profiles; Info Seeker, Info Guzzler, Social Monitor, Social Mingler, and Digital Mover & Shaker as shown in the diagram.

Mapping Digital LifeStyle Profiles

The Info Seeker is probably the easiest for an operator to manage because they typically use the internet to gather information, say, to check bus arrival schedules or read the newspaper.  As a group they don‘t do much social interaction.  Almost a third of mobile subscribers are Info Seekers, but their traffic usage adds up to only 12% overall.

At the other end are the Digital Movers & Shakers.  These are the folks who live on-line.  They connect socially, via Twitter, Facebook, etc., and they create content such as blogs and even upload movies.  Digital Movers & Shakers are only important because of the heavy traffic they generate, and their activity spawns even more usage on the mobile network.

In many ways, the secret to mobile operator success is to match subscribers to a particular digital lifestyle.  In fact, many of our operator clients use these segments to start a migration conversation with customers.  So heavy Google+ social network users might be told, “Considering the way you use your mobile phone, we suggest our Social Mingler Plan.”

And the feedback we get is that subscribers find these categories useful.  Because they imagine themselves as a particular online persona, they can be more easily moved to the particular plan that’s appropriate for them and that helps the operator achieve its network usage and profitability goals.

Great, and that takes us to your method of generating revenue based on value-adding use cases.

Yes, where our solution comes together is around implementing specific use cases for the fixed or mobile operator.  And the chart below highlights eight of them.  Actually your readers may want to download our booklet of twenty use cases, which contains a deeper explanation of each.

These use cases are all over the map: everything from parental control and premium video to VoIP optimizing and DDoS security protection.

As far as revenue generation is concerned, a use case doesn‘t have to always be a premium.  There’s a big segment out there -- my mother, for example -- who only needs email and the capability to see pictures and use Skype.  So a use case for that segment might be to deliver a cut-down service plan that doesn’t use heavy resources like video.  And that could be a very profitable service, even if offered at half price.

On the flip side, of course, we have plenty of use cases that focus on increasing ARPU.  Take video.  Now when you say “video”, the word doesn‘t really convey the resources the operator needs to deliver it.  Video could mean someone watching a CNN video clip; or it could also mean someone watching a super-high definition movie on Netflix.  There’s a whale of a difference between those two, so each would call for an entirely different use case.

One way to increase revenue is to wrap a premium service around video by guaranteeing a certain quality of service.

Many of our use cases are focused on different ways of charging.  So tiered pricing you can deliver as a gold, silver or bronze plan with a variable data cap.  Instead of charging for chunks of data, a popular alternative is to look at the application and build new charging and policy strategies around certain apps.

The choices usually boil down to: what’s the best way to generate revenue.  And to answer that question you need to find out:

  • What type of traffic is it?
  • Who’s the source?  and,
  • What resources does the network need to ensure a good quality experience?

Value-Adding Use Cases for Mobile Operators

And how do you deliver these use cases to the client?

Certain use cases are considered almost off the shelf: tiered-pricing, peer-to-peer control, VoIP control.  Sometimes we roll these out as a package across operator groups.  Other times, specific countries will need special use cases.

Now having a chart such as the one above might suggest these are canned solutions.  Actually they are not.  They are only canned in the sense that we carry with us a wealth of use case experience gained at other operators.  These use cases are highly complex to implement, especially considering the many elements involved -- intelligence gathering, charging, and adjusting policy.

And every operator wants something a little bit different.  That’s what pushes our bread basket along.  Sometimes there’s a policy vendor at the other end we need to integrate with.  Or the operator asks us to work with a small technology vendor to implement our use case with.

Great briefing, Jonathon.  One final question: what’s driving the business for Allot these days?

If there’s a constant in our business, it’s that every RFP asks us to help the operator generate revenue.  Of course, that wasn‘t the case a few years ago when mobile operators were more interested in saving money by optimizing the network alone.

What gets mobile operators excited?  Earning another dollar of ARPU off the same traffic.

Copyright 2013 Black Swan Telecom Journal

 

About the Expert

Jonathon Gordon

Jonathon Gordon

Jonathon Gordon is the AVP of Marketing at Allot Communications a leading global provider of intelligent broadband solutions that put mobile, fixed and enterprise networks at the center of the digital lifestyle.  Jonathon joined Allot in 1999 and has held management positions in Customer Support, Product Management, and International Sales where he has garnered broad and diverse experience in the many facets of the broadband industry.   Contact Jonathon via

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