Openet wp 3-g+ & lte charging_07-2012

White Paper
3G+ and LTE Charging:
How to Evolve B/OSS to
Monetize High Speed Data

© Copyright Openet Telecom, 2009
2012

3G and LTE Charging: How to Evolve B/OSS to Monetize High Speed Data
2

3G and LTE Introduction

Charging: Monetizing high speed data will be key to determining which operators succeed and which
operators become also-rans in the race for market share, profitability and happy customers.
Voice and messaging ARPU is declining and data represents the real opportunity for
How to Evolve B/OSS
operators to deliver a wide range of services that will drive profits.
to Monetize High
However, more than ever, in order to be best placed in this race for profitability, operators will
Speed Data
need to assess the current B/OSS (Business and Operational Support Systems) they use.
What works well for monetizing voice and messaging services, may have serious limitations
when it comes to monetizing high speed data.
The traditional approach of having a charging system for pre-paid subscribers on an
Intelligent Network (IN) platform and separate billing systems for post-paid subscribers, may
have serious limitations for monetizing 3G+ and LTE based services.
The mobile business model is changing, and many traditional batch based billing systems
have had expensive add-ons developed to help with new rating and billing functions.
However, the roll out of 3G+ and LTE may be a change too far for traditional B/OSS and force
a ‘tipping point’ where operators may need a new approach to monetizing services.
This is due to many factors but the main ones are:
¨¨ Introduction of new value based pricing models
¨¨ Multiple devices per subscriber (smartphone, laptops, tablets, internet enabled TV’s)
¨¨ Increasing importance of the network experience to subscriber
¨¨ Real-time contextual subscriber intelligence driving services offered
¨¨ Ability to quickly react to new business models and opportunities – marketing, OTT,
advertising, new business areas (e.g. security, M2M, e-Health)
¨¨ Subscribers using a range of services, with different payment mechanisms
Most operators have several billing platforms, so advocating a new approach for all billing
could be somewhat onerous if looking at swapping out all existing billing systems. A cost
effective system evolution approach using an adjunct real-time charging system for high
speed mobile data services could be an option worth consideration.
3G+ and LTE demonstrates the evolution of mobile networks. Coupled with this are
continuous advances in devices, customer behavior, and expectations. This industry
evolution needs to be supported by evolved charging in order to provide the foundation for
monetization.


3

Section 1:
Providing a Platform for Evolved Charging for 3G+ and
LTE Services
In order to provide evolved charging for high speed data services, there will be a need to look
at new designs that can break down the silos of legacy architectures and provide a foundation
to achieve the following key goals for B/OSS.

Key Operator Goals for Evolved B/OSS

Quickly set up and launch new plans
Faster Time to Market Streamline new service launch process
Support high number of plans and services

Opex reduction through decreased system changes
Improved Cost Control
Capex reduction through plans which optimize network usage

Ability to quickly configure and support new business models
Support New Business
Content / Over-the-top (OTT)
Models
Machine-to-machine (M2M)

Shared Plans
Bring your own device (BYOD)
Easily Support New Offers Service Passes
Hybrid accounts
Enable compliance - e.g. bill shock, roaming legislation

Table 1: Key Operator Goals for Evolved B/OSS

To achieve these goals, operators need to put in place a centralized evolved charging
platform that incorporates the following key capabilities, summarized in figure 1 below and
then discussed further:

Figure 1: Centralized Evolved Charging Platform


4

Flexibility and High Performance: With Real-Time
Charging, Rating, and Balance/Account Management
Capabilities
With an evolved charging platform that incorporates real-time charging, rating, and balance/
account management, operators will be able to achieve a number of operational and
marketing benefits:

Ability to quickly develop innovative data services and incorporate third party
services: Content billing and revenue assurance
Operators will have the capability to easily develop flexible, sophisticated charging models
that can include charging on behalf of third parties. This will allow them to quickly configure
and launch new, innovative services and promotions to generate new revenue streams. When
charging/billing on behalf of content partners, it is important that this is real-time and the
funds for the content purchase are collected before the content is provided to the customer.
Otherwise, if the customer defaults on paying for the content delivered, the operator may still
face the wholesale charge for that content from the content partner. Applying such content
revenue assurance processes in real-time is essential if operators wish to ensure that they are
not financially exposed. Further, there will be cases of customers buying third party content
without fully being aware of the charges. Content revenue assurance also needs to provide a
full audit trail of retail transactions in order to handle wholesale content dispute management.
Evolved charging will also allow operators to support very high volumes of transactions,
offer very fast response times for seamless delivery of 3G+ and LTE data services, and be
backward compatible to support existing 3G services.

Timely response to market opportunities
By having more flexible charging and rating, marketing departments will be able to respond
to market opportunities in a timely manner, and launch personalized offerings/promotions
triggered in real-time according to the specific subscriber context. Offering personalized and
dynamic offers/promotions that are context sensitive can be expected to increase the take up
of new offers/promotions due to the increased timeliness and relevancy of the offer.
An example of operators quickly developing flexible offers in response to market conditions
is illustrated in figure 2 below. This is an operator providing data roaming packages for
customers. This ‘service pass’ approach to time sensitive data roaming – e.g. being able
to buy roaming data bundles that are valid for a certain time period, gives the customer
transparency and control over data roaming usage. It could be argued that operators launch
data roaming service passes, not only to give greater service and transparency to customers,
but is also designed to ensure compliance with forthcoming European Union legislation on
data roaming.

Figure 2: Example of data roaming offfer

Ease of configuration by marketing teams
Marketing teams should be provided with the capability to undertake some key administration
tasks usually undertaken by the technical teams (e.g. configuring bundles, setting up
promotions). This capability considerably accelerates time to market and again provides a key
competitive advantage.


5

Self service provisioning by subscribers
Another important aspect of a flexible platform is the capability to offer subscribers the
freedom to activate and pay for their services at their own convenience and to have the
service delivered immediately, without needing further assistance from the operator’s
customer service staff. This is made possible with mobile devices that enable real-time,
over-the-air service activation. It allows operators to accelerate revenue creation by making
purchases very easy and at a low cost, as less customer service resources are required.
Examples of new type of services that could be offered to subscribers include:
¨¨ Innovative pricing plans and offerings: Session based pricing - data service passes
for those who would not commit to a contract but want the speed, single data plan for
multiple devices, etc.
¨¨ Flexible, real-time balance/account management: balance transfer to another account,
multiple balance types, personalized spending limits, shared family account, hybrid
pre/post-paid accounts, etc.
¨¨ Real-time, personalized promotions: special offer on your birthday, try before buy, free
today for balances over $x, discount based on usage, etc.

Support for Pre-Paid, Post-Paid, and Real-Time Payments on
a Single Platform
With the capability to support pre-paid, post-paid, and real-time ad-hoc payments on a single
platform, operators will break down the payment silos. This will enable them to develop new
business and payment models, offer their services to all subscribers regardless of payment
type, and allow subscribers to use multiple payment methods for the same service according
to their preferences. They will be able to offer hybrid accounts rather than an account per type
of payment and support among others payment via credit cards, Paypal, or loyalty points for
example.
As a result, operators will be able to:
¨¨ Reach a wider subscriber base: This will drive more revenue
¨¨ Enhance the subscriber experience: Subscribers will be given the flexibility to pay for
their services as they want it, access any service available, and have a centralized view
of their services, usage and spending
¨¨ Achieve a better cost performance and fast time to market: Less resources and time will
be consumed as services are developed and launched on a single platform
Some examples of new business and payment models enabled by this approach:
A single user using multiple payment methods: network connectivity could be bought
as part of post-paid subscription, applications bought using a pre-paid purse, or content
(e.g. movie) bought in real-time using a credit card. Such a set up would be of interest to
corporate accounts where approved applications would be charged to the corporate post-
paid subscription, and employees would pay for their personal usage separately using their
chosen payment method.
Support for BYOD (Bring Your Own Device): a subscriber can have work related usage billed
to his employers post-paid account, and his personal usage charged to their own prepaid
account. With employees often preferring to use their own tablet and /or smartphone for work
purposes BYOD is forecast as a significant growth area. Figure 3 illustrates how one leading
operator is marketing BYOD.

Figure 3: BYOD Messaging


6

Charging Integrated with Network Resources,Context
and Subscriber Engagement
By taking into account the context and network resources, operators can create more
personalized, innovative services and charging. This will increase revenue and customer
satisfaction and, at the same time, control network costs and open up a personalized dialogue
with the customer.

Context concerns information on the subscriber, their usage, and their experience on the
network. This can include personal information (e.g. birthday), service subscribed, usage,
special offer, location (home/roaming), time, restrictions (e.g. parental control), application
accessed, device, etc. Having this type of information about a subscriber can drive
personalized offers and services, which can lead to more effective and efficient marketing
to this subscriber.

Information on subscriber context can be used
to dynamically allocate network resources in
real-time. This enables operators to better link
revenue to related traffic and cost. It also allows
them to supply an appropriate, uncompromised
quality of service that protects subscriber
satisfaction. For instance, a video session would
be allocated much more network resources than
a simple e-mail service, and would therefore be
priced differently.
Communications directly to the customer with
information on usage, controls, and offers can
be provided in real-time and can also be context
aware. A high level example could be a roaming
subscriber hitting a threshold and receiving a
notification to enable compliance with legislation.
Spending controls can also be set for groups/
families. This is illustrated in figure 4 where
individual spend in a family plan is controlled by
the mother.

Figure 4: Example of Family Spend Controls Direct to the Device

With high speed data operators will develop an increasing range of business models to
deliver personalized services. Examples of some business models that evolved charging
supports includes:
¨¨ Tiered services allowing segmentation of users to offer differentiated services
depending on usage patterns
¨¨ Service passes with device agnostic access to network, applications, and content for a
limited period of time, volume of data, or number of events
¨¨ Application-specific and toll-free pricing which can use value based pricing (e.g.
dynamic based on different criteria such as number of days since release for specific
content – e.g. a game, or a video). This can also cover zero rating of data for specific
content – e.g. a subscriber downloads a song from a content partner’s site. The data
usage is zero rated and does not count against the subscribers allowance. In this case
the content partner pays a wholesale rate for the data.
¨¨ Real-time, personalized promotions where offerings can be triggered depending on the
subscriber information (e.g. birthday) or when a usage threshold is reached for example
¨¨ Roaming controls to offer real-time spend and usage controls to enable compliance
with bill shock legislation and regulations
¨¨ More service controls such as partner service controls, device controls, parental usage
controls, and spending limits


7

Convergent Architecture, Ease of Interoperability to
Enable Adjunct Billing
Any charging platform that an operator uses for high speed data needs to have an underlying
convergent architecture. The reason for this is that with a charging platform that can support
multiple services delivered over different networks, operators will be able to develop more
flexible business models and offer subscribers all their services in a unified way, breaking all
the legacy infrastructure silos whether pre-paid/post-paid, data/voice, or fixed/mobile. This
enables:

More sophisticated plans and bundles
Operators can also develop more sophisticated service plans and bundles incorporating data,
voice, fixed, and mobile services for example. They will also be able to offer the same service
across different devices and network type, offering a seamless experience to subscribers.

Better total cost of ownership
Operators will achieve a better total cost of ownership with a single solution to deploy and
manage all services that can easily support their network evolution plans, as it is network
independent and standards-based. Furthermore, operators can considerably reduce
hardware costs by using commodity hardware to run the solution instead of being dependent
on expensive hardware based IN pre-paid platforms for instance.

Reduced billing OpEx: Enabling adjunct billing
Providing an evolved charging platform that supports high speed data and convergent pricing
and charging, and replacing existing IN platforms and post-paid retail billing systems for all
voice, data, and content services may look good on a Power Point slide, and is a good vision.
However, for established operators who may have numerous different billing systems, it can
be a daunting prospect to say the least. Organizational and IT issues are often cited as the
main reason for not introducing new systems into an operator’s IT architecture. This results in
significant investment making customized developments to existing systems.
A cost effective solution exists by taking an adjunct approach. Utilize real-time charging,
collection, rating and balance management initially for 3G+ or LTE services, and provide
a feed of rated CDRs to the existing retail billing system. This enables high speed data
transactions to be listed on mobile bill, but also the real-time benefits (e.g. real-time upsells,
bill shock legislation compliance) associated with evolved charging to be enjoyed by the
subscriber. This approach is also applicable to integrate 3G+, or LTE transactions with the
existing IN platform for pre-paid subscribers. This adjunct billing approach enables operators
to leverage investment in current (legacy) systems, and use the new platform to enable
capabilities that cannot be easily supported in legacy infrastructure. It also enables operators
to forego the high opex costs of re-engineering an existing batch based billing system to
make it close to real-time.


8

Section 2:
High Speed Mobile Data: Challenges to Traditional Pre-
Paid and Post-Paid Charging and Billing
As operators look to fully monetize 3G+ and LTE services, they will be limited by the use of
traditional charging and billing systems. Traditional legacy charging and billing infrastructures
are typically defined by two main silos based on payment types with:
¨¨ Post-paid billing systems, consisting of mediation, rating, billing, which are typically
batched, software based, and reside within the IT domain
¨¨ Intelligent Network (IN) pre-paid charging platforms, which are hardware based and
were introduced a number of years ago within the core network to provide the real-time
capabilities needed to manage, rate, and charge for traditional voice services

This traditional approach of separate IN and billing systems has evolved over time, and many
systems have had expensive, customized add-ons developed in order to enable them to cater
for data services (e.g. GPRS and 3G data). 3G+ and LTE enables a wider range of services to
be delivered direct to the mobile device at faster speeds. This will further open up the mobile
market and provide increased choice for subscribers. In order to increase ARPU and usage
of data rich services enabled by higher speeds, operators should examine the packaging,
pricing, and delivery of data services and review the challenges these will place on existing IN
and billing systems.
The challenges operators are facing due to their silo based legacy infrastructures (e.g., pre-
paid charging, post-paid billing silos) are represented in the table below.

Legacy System Challenges:
Below is a representation of the five key challenges operators will face due to their legacy
charging and billing infrastructure, followed by an analysis of each challenge:

Challenge 1: Limited Support
Limiting offer development
for Marketing and New
Limiting new content revenue streams: wholesale and retail
Business Models

Challenge 2: Lack of Not supporting convergent plans – FMC, multi-payment type
Convergent Architecture Limited support up-selling

Challenge 3: Inability to
Lack of business investment in systems
Quickly Build and Launch
Slow time to market for new services
New Plans

Challenge 4: Lack of Real- Limiting customer experience
time Support Inability to support legislative requirements – e.g. bill shock

Challenge 5: High Opex Impacting profitability
Costs High cost of ownership

Table 2: Legacy System Challenges


9

Challenge 1: Limited Support for Marketing and New Business Models
Many IN pre-paid platforms were designed to only charge by volume/time and are often
unable to support more sophisticated charging models based on content, context, and value.
For example,a movie may be charged at a fixed rate, and the operator needs to ensure the
transport cost is zero rated and is not counted against a threshold monthly data volume. This
approach to ‘toll free’ data charging, where the subscriber only pays for the movie, and not
the transport cost, is good for subscribers, operators and content partners, as it provides a
transparent and equitable pricing model for content.
Furthermore, not only are subscribers becoming more data hungry, but they want ever richer
content from variable sources; the demand for applications, especially video, is growing
particularly fast. This is forcing operators to better co-operate with third party application and
content providers. The implication is that they need to find innovative ways of charging and
managing access to these third party services in order to effectively monetize them and play
a key role in the value chain. As these business models evolve, charging platforms must also
evolve and have the flexibility and extensibility to support these new models.
Increasingly marketing departments in operators are driving functionality, features, and
design capabilities for B/OSS. In 2011, research firm Telesperience carried out a survey on
the level of personalization in the telecoms industry. This involved interviewing marketing /
product management and IT professionals in 63 operators, and examined the involvement of
marketing and IT in developing and implementing personalization plans. This includes pricing
plans, which directly affect B/OSS.
Figure 5 shows who is involved in planning & decision making for rollout of new services,
tariffs, or offers.

3

3

Figure 5: Level of Involvement in Planning and Decision Making for Rollout of
New Services, Tariffs or Offers (source: Telesperience 2011)

Clearly, marketing plays a major role in setting prices, and it is anticipated that marketing’s
influence and demands on B/OSS will increase as operators move towards personalization
and offer increased number and range of data based offers.


10

Challenge 2: Lack of Convergent Architecture
Operators are no longer thinking about separate lines of business, each with their own legacy
billing system. Operators are looking for customers to take all their services and deal with
customers on the customer’s terms to deliver the best experience.
However, legacy charging and billing infrastructures–with their pre-paid/post-paid silos and
platform limitations—do not support a differentiated, compelling subscriber experience.
With a silo based on payment type, operators cannot usually offer seamless services to all
their subscribers across payment types, networks, and devices. This can result in frustration
and churn. For example, some operators don’t enable roaming or MMS for certain services
for pre-paid subscribers; vice versa, post-paid subscribers may not enjoy real-time advice of
charge offered to pre-paid subscribers. Also the same subscriber is often treated as a different
subscriber depending on whether their queries relate to their pre-paid or post-paid services.
As subscriber data is distributed in different systems, operators may not have a single view of
an individual subscriber. As a result, they could find it difficult to provide full, overall visibility to
subscribers for all of their services and usage/spending, which is a key loyalty driver. Without
this single view of a subscriber, neither can they effectively up-sell or cross-sell. The ability to
do this requires operators to be able to associate different services to the same subscriber
and provide strong real-time capabilities across the subscriber base to trigger timely,
personalized promotions and offerings for all. This inability to effectively up- and cross-sell
means less revenue.
Several operators are now offering different payment services for different services for an
individual subscriber. For example, a post-paid subscriber could have their basic bundle
(voice, data and text allowances) billed as post-paid, and any content charged to a pre-paid
account. Subscribers will want to pay for services in the way that is most convenient to them,
and catering for this can speed up new service adoption. However, some legacy charging,
rating, and billing platforms may not allow operators to create multiple, differentiated service
plans that provide more options to subscribers and better suit their specific needs.

Challenge 3: Inability to Quickly Build & Launch New Plans
Fast time to market gives a key competitive advantage to operators and tends to have a direct
impact on revenues. However, when an operator has multiple siloed charging and billing
systems, configuring a new service may involve working with multiple systems that perform
similar functions but are built on different technologies. This equates to more work, more
potential for human error, and more time (and money).
The service launch delays, due to legacy charging and billing system software changes and
upgrades, often leads to missed opportunities for operators to increase revenues or build
loyalty, whilst they are incurring high costs.
Looking at the Telesperience survey of 63 operators, the marketing respondents in the survey
were asked how easy is to change tariffs or offers, or to roll out new ones. The results are
represented in figure 6.

Figure 6: How Easy is it to Change Tariffs or Roll out New Ones (source: Telesperience 2011)

Clearly many operators see that making changes to tariffs is difficult. However, high speed
mobile data is bringing a move towards personalization and new business models, which
will result in increased number of tariffs, and increased number of plans, and more pricing
variables. Legacy systems–where it is difficult, costly and time-consuming to develop and
change tariffs–will be a major stumbling block in getting new products and services to market.


11

Challenge 4: Lack of Real-time Support
By their nature 3G+ and LTE are designed to provide high volumes of mobile data – fast.
This generates very high volumes of transactions which require strong real-time capabilities.
For example, a subscriber downloading video may use up their monthly allocation quicker
than expected. Real-time usage notifications and controls need to be in place to support ‘bill
shock’ legislation and keep subscribers informed. With high speed data, real-time charging
is not only central to flexibility and innovation, it also is needed to keep customers happy and
meet legal and regulatory requirements.
However, many operators’ legacy charging and billing platforms were originally designed
for 2G, (with customized add-ons developed for GPRS and 3G data). As discussed in the
introduction to this document, 3G+ and LTE are presenting new charging variables, and it
could be argued that a system developed originally for older mobile technology charging
or billing may struggle to create innovative, flexible pricing plans and business models that
incorporate third parties, with the ease and speed required by operators today.
Legacy post-paid billing systems do not support real-time charging, which is why IN pre-paid
charging platforms were introduced in the first place. So the question is that with high speed
data, how can operators offer real-time context sensitive charging for post-paid subscribers,
given that legacy billing systems are batch based systems?

Challenge 5: High OpEx Costs
In addition to increasing revenue opportunities to maximize return on network investment,
operators also need to better control costs and remove as much unnecessary IT and B/OSS
expenditure as possible.
However, the cost of adapting existing legacy, charging, and billing infrastructures to cater
for the new business models enabled by 3G+ and LTE, as well as meeting customer
expectations and regulatory requirements, may be significant. Adding custom development
add-ons is expensive and does not enable operators to benefit from the economies of scale
of software product development. It is much more cost effective to use a system that has
been designed for use in a high speed mobile environment than to take a system that was
developed for an older mobile technology and make alterations to try and make it fit the new
model. Even if an existing legacy system was tweaked enough to cater for today’s high speed
data models, then it will only be a matter of time before it needs an upgrade to cater to a new
business model variant. The cost of these upgrades needs to be looked at not only in terms of
the software enhancement, but also in the increase in on-going operational and maintenance
costs. The correct system architecture needs to be in place from day 1 to ensure the most
cost effective solution.

Figure 7: IT Department’s Main Barriers to Rolling out Personalization


12

When looking at cost, there is also opportunity cost to consider. If an operator cannot get a
service to market quickly enough, then what is the cost of the lost opportunity? As discussed
getting new products and offers to market as part a move towards personalization, involves
getting the offers and tariffs quickly set up on the relevant B/OSS platforms. The Telesperience
survey asked IT departments what their main barriers were to rolling out personalization.
As can be seen from figure 7, siloed and legacy systems are by far the main barriers in place.
If operators are looking to provide value based pricing for high speed data, that quickly
responds to market advances, then an alternative approach to siloed charging and billing
About OPENET systems needs to be examined.
Openet is a global leader
of high performance
transaction management
software for network Summary
operators, delivering real
Given the challenges operators are facing with their legacy charging and billing infrastructure,
time network engagement,
insight, monetization, and they should look at implementing new platforms to complement the legacy systems. This is
control. Used by more in order to have the B/OSS foundation to create profitable high speed services, effectively
than 80 customers in monetize the potential demand for data, and generate revenues with OTT and content
28 countries, Operators providers.
use Openet to innovate
how people, machines To increase profitability, operators are starting to move away from their reliance on silo based
and services interact with infrastructure with IN pre-paid charging platforms on one side, and post-billing systems on
their network. For more another, to build a centralized infrastructure based on evolved charging that:
information, please visit
www.openet.com. ¨¨ Incorporates real-time charging, rating, and balance management, providing the
flexibility and performance they require to monetize data services, create innovative
business models that can incorporate third party services, and achieve fast time to
market
¨¨ Supports pre-paid, post-paid, and real-time ad-hoc payments on the same platform,
breaking the payment silos to provide a seamless experience to subscribers, develop
innovative payment models, and save cost and time on service launches
¨¨ Integrates Policy Management, enabling innovative business models that optimize
network resource utilization whilst creating new revenue streams and providing a
personalized experience.

Providing such an evolved charging solution would enable operators to provide high speed
data services secure in the knowledge that the underlying system flexibility exists in order
for them to provide personalized offers, enhance the subscriber experience and have the
foundation for data monetization in place.

Dublin, IRELAND Reston, Virginia, USA Kuala Lumpur, MALAYSIA
6 Beckett Way / 1886 Metro Center Drive / Level 26, Centrepoint South /
Park West Business Park / Suite 310 / The Boulevard, Mid Valley City / Lingkaran
Dublin 12 Reston, VA 20190 Syed Putra / 59200 Kuala Lumpur
www.openet.com info@openet.com Tel: +353 1 620 4600 Tel: +1 703 480 1820 Tel: +60 (3) 2 289 8500

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