Data Rules the Roost

With voice revenue stagnating or diminishing, Indian telcos are riding the smartphone wave with data streams
By Pupul Dutta

The poster boy of the country’s growth story—the Indian telecom sector—has seen a lot of positives in the last decade, led mostly by the surge in subscriber numbers. It seemed that Indians couldn’t get enough of cellphones and mobile talk.

However, of late, there have been concerns in the telecom industry. While some of these concerns relate to the fluctuating policy environment and high debts taken by telcos to finance their needs, equally important concerns include stagnating or falling talk times as well as revenue and growing subscriber saturation.

That’s where the entry of smartphones and data services (2G and 3G) seems to have come as a saviour. The operators are now looking for ways to increase their revenue through data, given voice is delivering stagnant ARPU (average revenue per user) which has not risen much since the past few years. According to some estimates, the data ARPU in India is at Rs 90 which is almost 44% of the national (overall) ARPU of Rs 203.

The rising data revenues are being driven by India’s 3G subscribers who consumed on an average 532 megabytes (MB) of data during 2013, a 23% increase over 430MB during 2012 (source: Telecom Regulatory Authority of India). The 3G data consumption is almost 3.6 times the 146MB of data that 2G users consumed on an average during the year.

According to a report from Nokia Solutions and Networks (NSN), data traffic on India’s mobile networks rose 87% during 2013. While it is slightly lower than the 92% recorded in 2012 (over 2011), the increase is based on a number of 40 million smartphones as opposed to 19 million in 2012.

Now the question that arises is: How do operators manage such huge traffic and are they managing it well? Also, is there anything they can do on the infrastructure side that can not only improve their network but also bring in more revenue?

“Basically, operators need to invest in business and service management systems that can support new revenue stream generators such as vertical industry M2M applications, collaborations with OTT (Over The Top) providers, monetisation of big data insights, etc.,” says Raghu Prasad, Head of Communications and Media Industry Solutions – Asia-Pacific, Oracle.

While the foundational BSS/OSS (Business Support System/Operations Support System) and enterprise applications that telcos use are still relevant, there needs to be additional investments for real-time charging and settlements, dynamic information discovery for insight, unstructured data analysis, large volume data storage and analysis, etc.

The technological hitches
Traditionally, telecom operators’ businesses were “minutes factories” where revenue was in line with usage and the key to generating more revenue was monetising the network more effectively. While service providers have been targeting additional revenue growth from data as voice subscriptions plateau off, the rate of growth of data revenue currently is far less than the growth of data traffic on networks.

Given the current scenario, managing revenue or rather creating new streams of revenue is a huge challenge for any operator. The challenge is further exacerbated by the large investments that need to be made on enhancing the network to support large volumes of data traffic over 3G networks.
Beyond technological challenges, there are other hurdles like lack of applications and content in local languages that prevent adoption of 3G by consumers.

Hence it is important that service providers are able to embrace multi-directional business models that involve a variety of non-traditional partners whose services will facilitate the revenue flows for the telco. This would enable them to move beyond just providing data connectivity services to value-added lifestyle services that their customers would pay more for.

Says Anthony Thomas, CIO, Vodafone India, “The customer focus has definitely shifted from voice/SMS packs to data and internet service plans. IT is supporting this segment of our business by providing intelligent analytics to derive quick and effective business insights that lead to the launch of strong products in the competitive market. A host of new applications are being introduced in the market by our enterprise business where IT plays a key role.”

“Also, with exciting services like online streaming, videos on demand, mobile gaming, there will be pressure on networks to deliver the consistent customer experience by optimising the resource usage. Now, to offer a variety of these services, we need to enable our IT system architecture to support integration with systems on diverse platforms not only within our own ecosystem but also a large number of external VAS providers who offer certain niche value added services to our end customers,” adds Thomas.

So, while there are many challenges, IT plays a key role in meeting them. For example, Oracle offers a suite of telco-specific solutions that help enhance data services monetisation as well as data monetisation. “Some of the tools offered by Oracle are tailor made to suit operator’s demands. Intelligent policy management (PCRF) that manages network utilisation in real-time and enables appropriate QoS (quality of service) and pricing for end-users is one such tool. Complete business management platform as well as embedded Java technology for devices for M2M and IoT (Internet of Things) services is another,” explains Prasad.

Managing lifecycle, OSS/BSS
Given the increasing competition and the pressure to improve the bottomlines, telecom operators are looking at a variety of tools that would make their lives easier and businesses lucrative. Initially, telcos preferred in-house solutions for these services (OSS/BSS, lifecycle) but with the complexity that often accompanies customised solutions, they now prefer the same from seasoned vendors, allowing themselves more time to focus on core services.

Also, in-house legacy applications aren’t agile and do not support rapidly changing technologies. By getting commercial off-the-shelf (COTS) solutions, telcos ensure they adopt the latest technologies, tried and tested in the market. This also reduces their overheads in management of large development teams, and helps them focus on key business functions.

“Telcos adopt COTS to get an industry-standard solution with best practices built-in. Taking this one step further, many telcos in India have outsourced their operations, including several critical functions. Examples include Bharti Airtel, Idea Cellular and Vodafone India,” says Amit Goenka, Senior Solutions Manager, TEOCO, a global provider of assurance and analytics solutions to telcos.
COTS enables telcos to streamline their business functions, and heavily simplifies vendor management as they now have to deal with one vendor—which, in turn, manages several third-party BSS/OSS vendors.

Currently, there are a variety of solutions available in the market from companies like TCS, Oracle, Wipro, TEOCO, etc. Most of these solutions are integrated with the workflow using various tools, and no single tool serves all lifecycle requirements. Lifecycle management solutions provide insights of customer behaviour and help customer-facing agents address service related problems, or offer customised services.

Such solutions also create opportunities for up/cross sell. As an example, a loyal high ARPU corporate subscriber may be offered a discount on voice roaming if he signs up for a CUG (closed user group) plan at his workplace.

Explains Thomas of Vodafone, “Traditionally, OSS platforms focussed on the technical control and management of network nodes. However, IP-based networks need end-to-end control of networks, services, and the customer experience, and this means OSS needs to be far more evolved. Similarly, legacy BSS platforms were built to deal with voice and simple data, but they now need to process rich and complex real-time data. The BSS stack needs to account for a range of new services and the associated network signalling traffic, as well as multiple, concurrent data sessions running from single or multiple devices.”

For most telecom operators, seamless customer experience is always a priority and both OSS and BSS are equally business-critical in assuring data network capacity, service quality, and enforcing charging parameters for data services. “Ensuring real-time service delivery requires agility, flexibility and greater levels of automation. Hence, we have our focus equally laid across network monitoring, fault management, product management, and real-time accurate billing,” adds Thomas.

Among the vendors that offer lifecycle tools to enhance customer experience is Cisco. For example, the company offers a tool that can customise the video offering according to the device being used by the customer. “We have tools for video optimisation according to the device being used like phone, tablet or a larger laptop. If the ecosystem knows what device the video is being streamed to, then it can accordingly standardise the resolution. This is device or network intelligence at the core. If the network knows a user is inside a campus, then it can decide to stream data from service provider Wi-Fi, helping save the company on broadband,” says Purushottam Kaushik, Director – Service Provider, Cisco India & SAARC.

Cisco recently acquired a company called Intucell, whose technology facilitates rapid network densification through plug-and-play capabilities. Using OSS data, the company’s technology detects coverage, overload and other issues in real time and automatically adjusts the network to answer them. For example, when too many users are connected to a single cell tower, Cisco’s system automatically adjusts the coverage by looping in assistance from nearby towers. The result is a “breathing network” that responds to actual changes in RF conditions.

“These solutions can help maximise usage with complete automation and improve quality of service. This reduces network opex, and the burden of managing the network manually is reduced largely,” notes Kaushik.

Network monitoring
In order to deliver a delightful customer experience, telcos have to ensure that there is no service disruption at any point in time. “To ensure this we have set up a Super NOC (SNOC) which provides a consolidated view of cross-domain network and services. The facility provides a unified view of the entire network infrastructure mapped to offered services, which results in proactive monitoring leading to early detection of any issue even before the customers can realise and complain. Any deviation from the KPI threshold value is tapped and action is taken on priority, ensuring continuous improvement in our services,” explains Thomas.

Reliance Communications, on the other hand, has been using automated solutions for network monitoring and management as well as for OSS and BSS. Says Alpna Doshi, CIO, Reliance Communications, “From the outset, Reliance’s network monitoring and management is automated and the same is true for the OSS. We are successfully using the powerful Clarity Assurance suite and Clarity OSS suite of products. The Assurance suite is implemented to automate important areas such as alarm management, trouble ticket management, etc., and the OSS suite is implemented to automate areas like service manager and inventory manager. This practice has helped us mitigate the risks present in OSS and network assurance has helped us reap the benefits of automation.”

Billing
With a complicated product mix and bundled pricing strategies, the billing process is getting more and more complex with each passing day. This complexity poses multiple challenges in a telco billing environment.

Some of these challenges include maintaining the billing accuracy, ensuring real-time billing, avoiding revenue leakage, keeping up with the offers and plans needed in the market, dynamic discounting, and accurate data volume processing. Further, billing of bundled services, enterprise billing, billing of new services like cloud, and machine-to-machine also pose greater operational challenges. Also, the large volumes of calls and data interactions pose additional challenges for service providers.
In any case, billing solutions have come a long way from maintaining two databases, about prepaid and postpaid, to a converged platform wherein both are integrated. But very little initiative has been taken by telcos to derive benefits through this convergence. It’s a fact that telcos in India have gained more from consolidating customer management (CRM) systems wherein data of both prepaid and postpaid customers has been consolidated and managed through a common platform.
However, it would be wrong to say that telecom service providers are doing absolutely nothing to bring in more innovation in this segment. IT teams of most telcos are driving a billing transformation program which not only offers richer features like dynamic discounting to customers across different segments like pre-paid, post-paid, wireline, data, etc., but also provides capability to offer one common bill to customers availing services across these segments—thereby simplifying life for them.
Some popular billing solution vendors include Amdocs, BSCS and Kenan for postpaid and Ericsson and Comverse for prepaid.

Dependence on IT for telecom operations differs from service to service. “While traditional services such as voice mail and short-messaging services are mainly network-based and require minimal IT involvement, newer services such as mobile email, download portals, unified messaging, social networking platforms, application stores and online billing is infinitely more IT-intensive. In the case of billing, managing two different platforms for prepaid and postpaid means double IT costs for operations, management and maintenance of systems too. Converged billing solutions deliver better RoI as the need for two different platforms to be maintained is eliminated. A single billing platform also enables the telcos to launch hybrid products and other innovative products and services in the market,” says Jagdish Mitra, Head – Mobility, Tech Mahindra.

The next chapter of growth
Clearly, data is going to be the next chapter of growth, given voice revenues will remain stagnant for years to come. There will be stabilisation in voice consumption/minutes, while data consumption is only going to increase by 100% at least for the next few years. Additionally, eGov apps powered on regional and vernacular platforms can increase data consumption.

With the number of data subscribers growing, revenue from data has also leapt up. Data revenue accounted for 7% of telecom operators’ overall revenue in 2012-13, and is expected to go up to 21.7% in 2017-18, according to equity research firm Phillip Capital India.

Bharti Airtel has almost doubled its 3G subscribers to about seven million, taking its data customers to 47 million, and data usage per customer has gone up 81% in the past one year. Aditya Birla Group-owned Idea Cellular’s data users rose to 31 million in the June quarter from 18 million in the previous year while data usage doubled in the same period. By the end of June, Vodafone had 41.2 million data customers with about 3.7 million 3G subscribers. Reliance Communications’ data users grew by half a million in the quarter ending June last year (source: Tech Mahindra).

Video accounts for the largest chunk of India’s mobile data usage today. Across the country, people are watching everything from reality shows and soap operas to cricket matches and music programmes on their handsets. At last count, Vuclip (initiative behind Re 1 videos from Airtel) had 37 million minutes of video streaming spread over 20 million mobile users under its belt.
“The mobile phone has emerged as a strong alternative to traditional entertainment media like television, as most of the users surveyed, regardless of region, watch videos from home (72%). The most popular genres among participants were movies and music, though in non-metro areas, the popularity of TV shows and lifestyle entertainment videos spiked. It’s notable that there is a growing interest in longer videos on mobile, with most metro users (59%) opting for videos over five minutes in length,” a latest report from Vuclip states.

It is also expected that telecom operators will see huge increase in data services usage as 4G/LTE networks roll out across the country. As in other countries, video and video-related services will consume a major chunk of the additional bandwidth available. However, only the smarter service providers will actually be able to correspondingly increase data services revenues even as the data traffic grows. Voice revenues are likely to continue their downward spiral even as absolute data services revenues increase.

Kamlesh Bhatia, Research Director at Gartner, notes, “Data remains the big growth focus for all service providers currently. More availability of content, smarter devices, etc., have contributed to this tremendous growth. This, however, also means that service providers can expect their networks to be heavily loaded and emphasis will have to shift on how they optimise this heavy traffic and, at the same time, on monetising this opportunity.”

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