Mobile network operators or, “MNOs,” have been looking for the optimum tariff model for several years. Charges based on the amount of data consumed were expensive to implement and proved to be unpopular. The move to an “all-the-data-you-can-eat” model for a fixed price was very popular and this kick started the ‘Mobile Internet’ revolution.  

This was fine when capacity exceeded demand, but HSPA combined with music and video downloads along with Facebook (News - Alert) and video/camera phones have shot usage way, way up. Networks are getting overloaded and consumers are experiencing congestion and outages.

There are various guesstimates about how far usage is set to grow. One figure that I’ve seen is anticipating a 100x increase in aggregate data versus a 2x growth of revenue in the next five years. However, the growth has been going at a healthy clip for some time. For example, Deutsche Telekom reported a 61 percent surge back in the Q4 2007.

In addition to increased use of data services and applications, traffic will also increase as a result of growth in the emerging markets. Nokia (News - Alert) Siemens Networks, “NSN,” expects the number of people who employ a wireless broadband to reach the Internet will rise to around 2.3 billion by 2015.

We’ve Been Here Before

One upon a time calls were based on time and distance and they were expensive: less so in the States. But, IP changed the model and it seemed to take the industry — MNOs and vendors — by surprise. 

In 2001, I wrote a short paper about the Wireless Internet and here’s what it said about tariffs:

“Billing is clearly the key issue right now. Unless it is addressed in a way that satisfies subscribers, operators and content providers, then the concept of the Wireless Internet will implode.” And it did: the bubble burst, but of course there were lots of other issues.

These words are equally valid today: “…the content is in the Internet where there is no charging mechanism.”

Thinking it Through

With the benefit of 20:20 hindsight it would appear that the industry has approached this key issue from a tactical, rather than a strategic perspective. Billing needed to be addressed as part of a holistic solution, one that recognizes the complementary roles of the Internet and CSPs. 

In a nutshell, content comes from the Internet and CSPs enable connectivity. Billing should therefore be based on a connectivity model that reflects the emerging flat, all-IP network architecture that CSPs are deploying. 

That concept was advanced by NSN earlier this year along with details of a flat architecture that addressed the key connectivity challenges: (a) reduce OPEX (News - Alert); (b) accommodate a 100-fold increase in traffic; and (c), cope with declining ARPUs.

The “Network of One”

In September this year, NSN advanced this concept and introduced their high-level “Network of One” view of how CSPs can transform their business models, infrastructure and operations in order to enable individual, efficient communications experiences. And of course billing would be a key component of those experiences. 

Services based on the flat rate model represent a lowest common denominator approach.   The ability to offer gold, silver and bronze services can be seen as state-of-the art, but the real marketing goal has to be personalized offers plus flexible, transparent billing along with the ability to check the amount spent in real time. And that is an evolving deliverable of the Network of One vision. 

It’s enabled by: one simplified network, one convergent service control, one view of customer data, one flexible service enablement, one unified management and charging, and one business-optimized operation.

 

 

 

Figure 1. In addition to enabling unified, customer-centric charging and billing, the Network of One concept will allow CSPs to introduce new, profitable business models into their operations.

That was a very short take on a lot of “ones” and I plan on going into more detail in a short series of articles. 

 

 

Within a few years broadband communication technology will be everywhere, across both fixed and mobile networks. By 2015 more than 5 billion people and an even larger number of devices to be ‘always on and connected’. Currently 24% of the world’s population (1.6 billion people) use Internet services and this will increase. Trillions of ‘things’ will be connected to the Internet along with hundreds of Exabyte (1018) of stored user-generated content. This will result in a data explosion with almost a Zettabyte (1021) of traffic generated per year!

In order to manage this explosion CSPs will need to make significant investments in capacity increase and technology upgrades such LTE. Evolving network infrastructures to the flat, all-IP model will, initially, add complexity since existing technologies, devices and services will need to be supported. For CSPs this will mean an increase in OPEX.

However, the rise in traffic will not result in an increase in revenue. Revenues are expected to remain flat or even decline. This combination of an increase in financial outflow and reduction in inflow will put immense pressures on a CSP’s (News - Alert) profitability.

 

 

There were six “ones” but they should be seen as focus areas, not silo-based stand-alone systems. At times it’s hard to avoid clichés when writing about technology, but they are convenient. The key to this concept is the synergistic relationship between these areas and the seamless interfaces.  

For example, unified management and charging will come by consolidating today’s heterogeneous silos into an automated system and blending it with customer-centric processes and the single view of customer data. In turn, the latter will come by consolidating the data that is currently distributed across multiple databases and applications.

This will provide the foundation for developing deeper insights into customer behavior, which CSPs can then use to provide those individual experiences and thereby create more value for themselves. 

Will it work? Only time will tell, but the current charging and billing model is broke and it needs fixing.