Agilent Technolgies: "Build, partner, or acquire"

On factors driving the OSS/BSS market in India and growth prospects

• Impending 3G deployment
• New GSM operators
• MNP initiative
• Quality conscious high value customers who will be ready to switch operators when they do not get desired quality of service, while retaining same telephone number after MNP
• Operators need to drive down cost and drive up revenues
• Availability of highly skilled manpower due to complex technologies like 3G, VoIP, IMS etc.

On challenges and opportunities faced by the OSS/BSS vendors in India

The entire service provider community is facing challenges posed by an unprecedented growth in subscribers, traffic volumes, and inability to maintain the QoS. Planned MNP (mobile number portability) will add more challenges to service providers to retain the customer base. Voice calling is becoming cheaper day by day; operators need to look in to VAS for generating additional revenues to offset the drop in voice revenue. Service providers are challenged to reduce costs and increase revenue while simultaneously attracting and retaining profitable customers. Some other specific challenges faced by mobile operators include:

• Wireless data services can be expensive to deliver and complex to manage - a lot more opportunities for users to have 'finger trouble'
• Mobile alliances-preferred roaming partners threatening your valuable international roaming business.
• Managing content providers QoS - which is perceived by customers to be your QoS!
• Perception of quality of service versus reality - the whole customer experience is important
• The threat of non-traditional branded competitors: Yahoo, Microsoft, Google, ESPN, Skype, etc.
• Mobile Number Portability - churning made easy
• Wire-Line operators using Wi Fi/Max to overcome licensing restrictions

The Indian OSS/BSS market has been growing at relatively faster CAGR of 10-12 percent in comparison to the global CAGR of 6-7 percent, over the past five years. The market, which is price sensitive and fragmented with a mix of global players and local product/ SI vendors, shows a lot of promise in the global market. Much of the growth in the OSS/ BSS segment came from operators deploying streams to cater to NGN rollouts. As networks move toward 3G/4G, VoIP, WiMax etc the focus is towards the next generation and other standardization across integration layers. In addition, the new operators in India would fuel the growth of OSS/BSS in the next two years.

Specific to India, there are a large number of opportunities that have sprung up

• A large number of Greenfield operators have acquired spectrum licenses for deploying and operating new networks. This provides a good opportunity to Indian vendors.
• A whole new breed of communications companies like media, entertainment, and MVNOs have evolved offering new avenues for OSS/BSS vendors.
• Many existing operators are looking at venturing into multiple technologies; for example CDMA operators have also started providing GSM services. This creates new requirements in the market landscape for OSS/BSS vendors.
• The Indian operators are also looking to get into long-term relationships with large vendors who could, either themselves or through integration partners, provide managed services. This not only saves costs for the operators, but also frees them from handling multiple vendor relationships by having a single interface. Managed services make for a big opportunity in India.

While we enter 2009 with fear and uncertainty due the global economic plunge, the silver lining is that the telecom sector is expected to grow in emerging markets while maintaining a balance in developed markets, 300 million new subscribers are expected to be added by 2010. However, for operators this is a challenging year as vanilla services will become a commodity, normal voice calls will undergo price wars, and operators will need to adopt creative and innovative services to keep the customer engaged. More than just any entertainment service, customers are now demanding services that enable them in their day to day activities and deliver value for money.

For the communications industry, this change in consumer behavior and attitude will create some interesting challenges and new opportunities. As with each new service added, it will add to the operator's cost. To avoid this operator's OSS/BSS will be central to its ability to reduce cost through a convergent platform and increase ARPU. All future expansion, new services and adaptability must be part of the equation to successfully benefit from the OSS/BSS system. The operators must optimize their OSS and BSS platforms to get the highest ROI.

QoS measurement has become increasingly important, particularly with the growth of IP enabled services, including voice, content, and commerce applications. A number of specialist vendors have developed products to provide measurement and metrics as part of a broader OSS infrastructure.

For some time there has been discussion within the industry of the idea of charging based upon differential levels of QoS. With IMS enabled services for example, this becomes increasingly possible, as voice and data traffic is controllable and is not restricted by best effort routing. This is all well and good, however QoS measurement has tended to be defined around measurable in-house metrics, rather than metrics associated with external subscriber satisfaction. This is now changing with the introduction of a new phrase, which describes a quote traditional idea, which is the concept of customer experience management.

In highly competitive markets, differentiation becomes increasingly difficult. The US and European operators are now focusing on superior customer service as a key area where they can excel against their competition, reduce churn and increase revenue. In many Asian markets operators have tended to focus on price and customer acquisition, but strategies are now changing to focus more on margins and customer retention. Customer retention strategies are varied and complex, but one area to consider is simplification of the customer experience, to make it as easy as possible for customers to interact with operators and services.

The shift to a focus on simplifying the customer experience is evidenced by an increasing emphasis on subscriber needs, not only by those parts of the operator's organization that are directly involved in dealing with customers, but also finding its way into other areas. When operators are thinking about replacing legacy billing systems, they want to be sure that they consider how this will impact the customer, and what business processes and interactions the entire OSS/BSS has to support, rather than just concentrating on the billing component. This is a major shift from previous years.

Service providers are transforming themselves to become multi-services provider including data and content along with voice. Hence, there is a need for real-time charging of data and voice services on a single bill. This poses a good potential for convergent billing solutions to overcome the challenge.

Determining what customers really want is only half the battle to winning their business. The price must be right. All revenues generated from services must be captured, billed, and collected in a timely manner. Accurate billing and effective bill presentment are critical to safeguarding revenues, as well as promoting customer satisfaction. Very often, service providers use separate, non-integrated systems that are each dedicated to a specific network or service line, making it virtually impossible to create offers with price tags that appeal to the market and meet the organization's target margins.

Billing and revenue management solutions should provide accurate, real-time capture, and application of revenues to customer and partner accounts as services are consumed on the network. This will enable service providers to have an up-to-date view of revenues, receivables, insights into customer profitability, service profitability and overall health of the ?business.

Analysts estimate that the external spend for OSS/BSS at USD 26 billion (Rs. 1,30,00 crore). For the last 5 years the market has experienced a CAGR of 6-7 percent.. Taking insights from various industry experts, we believe that the global telecom billing market will grow moderately, owing to convergence and elimination of many existing systems as well, to reach USD 5-7 billion (Rs. 2500-3500 crore) by 2010. The biggest segments in this will be mobile postpaid billing and fixed line business billing; both to capture around 20 percent of the market separately. Mobile prepaid charging, convergent charging, fixed line consumer billing, and cable and satellite billing will have more than 10 percent share in the market. Other segments will be mediation and interconnect billing.

Much of the growth in the OSS/BSS market can be attributed to the NGN market growth. This becomes more prominent in India with high wireless penetration and increased VAS offerings by operators to combat competition. These IP and content transactions require a different perspective altogether, which is mostly not supported by the operators' existing billing systems.

Large operators are also looking towards a single system across their line of operations, to enable them not only to cater to these new services, but also enable them to cut costs, and have an integrated view of all the service subscriptions from a customer. Nevertheless, faced with the enormity of such projects to overhaul their IT infrastructure, the operators simultaneously look for plugs that can help them in their immediate need to tap this new VAS market.

On sales of OSS/BSS solutions in 2007-08 and expectations from 2008

Also the next generation applications and services are on the cards for operators in 2008 and 2009 to differentiate themselves from competition and also to increase their market share

On factors driving the OSS/BSS market in India and growth prospects

• Huge investments by operators in upgrading new technologies
• Expanding/installing networks
• Launching of new and innovative services
• Rollout of NGN
• Reducing operational costs
• Differentiation in operators offerings

On key factors that a buyers must consider while procurement of OSS/BSS products

• Telecom service providers have to seriously look at the interoperability of the OSS/BSS products, which they buy from product vendors. Before investing into these products service providers must carefully study the current requirements and assess these products against their requirements.
• Extensive vendor and product evaluation, complete with reference checks and site visits, must be instituted.
• Some of the critical aspects that telcos should follow are scalability and performance of the products, financial stability and credibility, support infrastructure, and feature roadmap of the service provider product vendor.
• The fundamentals for choosing an OSS/BSS vendor are ability to suggest solutions effectively and cost efficiently, customer references, faster ROI, and domain expertise.

With the implementation of NGN networks traditional barriers to entry are being progressively eliminated, multi-service play is becoming the norm which is leading to the dilution of revenues. Securing long-lasting relationships with customers has become a top priority for most operators. They are scrambling to extend their portfolios by three major options: build, partner, or acquire. Building is costly, but arguably the best option; acquisitions are similarly costly, but for many inevitable; and service bundling partnerships as useful, but mere stop-gaps.

This transition as an Internet service provider, a content Provider, an entertainment company, and a wireless company is introducing huge challenges in the way the operator is organized operationally. It necessitates the total revamp of existing OSS/BSS infrastructures in order to be able to support the nuances of individual business models. That apart there have been gross changes to the way the business has been organizing in the roles of a wholesale provider, a retail service provider and across prepaid and post-paid businesses. Operators—faced with new customer paradigms like self service, zero touch, real time; convergence of communications and computing; new models of collaborative business with partners and customers; and regulatory changes—are looking beyond the stove piped processes, systems, and data towards a 360 degree view of customer to better cross-sell and up-sell at all touch points.

On market dynamics

Xalted rates the telecom market by operator type. We have different offerings for Tier I, Tier II, and Tier III operators and a completely redesigned package for new incumbent operators. The Indian OSS/BSS market is expected to witness unprecedented growth over the next three years through innovative offerings and convergent solutions. As new Tier II and Tier III operators enter the fray, the focus will be on managed services and single package solutions delivering complete service delivery, billing, subscriber, and service management platforms. It is expected that 1 percent of the total telecom revenue will come from OSS/BSS and fraud management in the coming years. For example, in India this revenue is estimated at around 4.8 billion by 2010.

On challenges and opportunities faced by the OSS/BSS vendors in India

Customer expectations are increasing by the day, as is the need for the services and facilities. In the past, the basic requirement from billing and customer care systems used to be retail billing, inter-operator settlement, service management and customer care systems. Today they have transformed to incorporate total solution maintenance, customer retention systems, converged rating and billing systems, and settlement systems with integrated RA and fraud solutions.

On complexities that an OSS/BSS vendor has to take care of

OSS/BSS solutions in the past concentrated mainly on subscriber management, inventory management, and revenue realization through basic voice and related services. With new services being launched daily, the service management model has changed. Today the industry needs complex revenue settlements from BSS platforms, personalized subscriber management and service delivery by subscriber type. BSS applications must evolve further to match the volume of transactions that occur per customer. From 10 calls and 4 SMS per subscriber in the past, the volume has arisen to 20 calls and 6+ SMS per subscriber. Added to it is a plethora of content via GPRS, SMS, MMS, mobile payments, etc. This increases the complexity of revenue settlements and subscriber billing. With the advent of MVNOs and MVNEs, it will increase in complexity as billing patterns continue to change.