Service Providers Tap New Solutions To Build Multi-Supplier StorefrontsSep 1, 2007 1:00 AM CDT
ScreenPlays Magazine
By Peter Lambert
Service providers have suddenly begun implementing a new generation of rating and charging platforms to meet two emerging marketplace mandates: to converge fixed and mobile IP and to transform themselves into retail storefronts for a surfeit of third-party merchant products and services.
Nascent competition to deliver any serviceto subscribers over any network or device is now spawning early deployments of charging systems based on 3GPP IP Multimedia Subsystem (IMS) or IMS-like frameworks. Those frameworks decouple applications, session signaling and support systems, including rating and charging systems, from individual underlying networks.
At the same time, the proliferation of Web services content, communications, social networking and commerce portals is prompting service providers to find ways to monetize these otherwise over-the-top IP service wares.
According to operations software vendors,the IMS charging framework affords a longterm opportunity for operators to provide thirdparty Web service merchants with monetization, packaging and marketing services they would not otherwise have, while in the bargain avoiding relegating operators to a bit pipe role.
"The difference between the telcos and the Googles is that the telco has a billing platform to manage rich service mixes, to balance hybrid usage, recurring fees and usage," says David McNierney, vice president, president, market development, for pricing and rating software supplier Highdeal. "That's a value-added service to the partner who doesn't have to go out and recreate that infrastructure. We see that as a huge opportunity for the bandwidth providers to start viewing the third parties as potential customers
of their monetization capabilities. They can become a clearinghouse."
End-User Ownership Options
To operate such multi-merchant storefronts, network operators face two fundamental August 2007 issue of ScreenPlays (page 8), lies with enabling customers buying certain content over the Web to charge their purchases to their telephone bills. The Advanced Payment Gateway underlying BSG Clearing Solutions' Bill2Phone solution, for example, provides e-commerce merchants a single point of integration with more than 1,400 network operators.
With that option, pricing, rating and charging tasks remain with the third-party merchant while the operator is essentially providing a payment mechanism and creating only a financial relationship with the end customer, says Lance Devin, vice president, product management, BSG. "To some extent, the payment mechanism is the service, and it binds the end user to the service provider."
Some operators also are starting to implement a more complex and costly option that more deeply empowers them to package both in-house and third-party services, price them and apply internal rating and charging systems to managing high-volume service transactions.
Through a joint venture with the company ClickandBuy, a BSG ClickandBuy solution launched in April 2007 combines BSG's underlying phone bill payment processing with two core ClickandBuy product components: (1) offer management tools that enable bundling, pricing, discounting and other functions that contribute to control of service creation, and (2) end-user ‘wallet' schemas that allow operators to control each subscriber's access to each service.
Together, offer management and wallet schemas comprise the business process interfaces where third-party merchants can integrate with the operator's monetization platform.
"The network operators can expand who they are as a service provider by being able to say these services are coming from them and putting their brand on them, even though they may be from merchants," Devin says. "You can get creative putting a service together with others in a discounted bundle."
In simplified terms, the options boil down to a basic credit card statement-like integrated billing approach and a white label retail packaging approach, both of which are feasible and emerging today, he says. The choice between them revolves primarily around price elasticity.
"Your margins will be larger on services you price and control, but the prospective market is smaller, because consumers don't want to be told who to buy from by their service providers," he says. "If you open to all merchants, the market will be larger and the margins lower."
Put another way, operators can "get a small percentage of huge traffic and not own the customers or own the customer and be seen as forcing applications on them," says Shane O'Flynn, vice president, managed services and support for real-time charging and transactional intelligence software supplier Openet.
Yet the two approaches are not mutually exclusive. An operator could maximize openness to Web and other merchants yet employ offer management and controlled access platforms to bundle, discount and help market select services among them.
Policy and Transaction-based Monetization
In traditional rating and charging, prepaid voice accounts established a simple form of online charging, where a debit account must be checked to authorize a phone call in real time. Otherwise, most fixed monthly charges and even long distance minutes have been processed offline, after a call but before the end of a billing period.
In the IP realm, says Highdeal's McNierney, online charging calculates charges on a real-time basis as service is consumed and even within the session. To avoid end-ofthe-month sticker shock, an online charging system allows the operator to notify the subscriber or bill payer as an early warning or alert, based on policy rules applied to each user's service profile, he says. "Policy also can go to rewarding off-peak-time usage, so it can be carrot and stick, rewarding and penalizing. We're going from the old set of
PSTN definitions to a new set under strict IMS definitions around online charging."
With more content and data services from third parties, "networks are becoming increasingly transactional, requiring very scalable software for event processing and transaction management," says Mike Manzo, vice president of global marketing for Openet. "It's not mediation and charging only any more. It's the intelligence to ensure that business objectives are met and the ability to extract increased
value from activity in the networks."
That "transaction intelligence" segment of the market is "growing four to five times faster than OSS/BSS industry itself, capitalizing on consolidation and IMS," he says, in great part because transaction categories continue to multiply. Among business problems that require processing events and transactions at large scale are service access and customer wallet policy enforcement, performance monitoring, lawful network surveillance, billing, revenue leakage and even outage isolation.
"What we're seeing is, while in the past, the simple voice or video services level of transactions was X, the new services create 10x events and transactions," says Openet CTO Joe Hogan. "We've replaced a bunch of systems that have been crushed [by transaction volumes]. Alternatives are either highscale
software like ours, or doubling the processing hardware, which is costly."
This marriage of policy with rating and charging constitutes the next big step beyond translating merchant charges to operator statements and payment processes.
"You wind up building a wallet around that user, which is commonly called a 360-degree view," Devin says. "What are their permissions, their credit ratings, their payment history? There's a notion of product
type and access based on who you are, including authorization, authentication, spending limits and other factors, such as parental controls over type of content by user. I think providers will do things at a basic level to start with and gain sophistication over time. Ultimately it's about how you support the end user and make them your customers in a controlled fashion."
Such real-time transactions require policybased automation and an online charging system as prescribed in IMS. In the past, offline rating and charging typically resided in billing as the database of record for all the rating. Going forward, online charging becomes a cache of the offline system, explains Rick Woods, vice president of product management for Intec Telecom Systems.
"It is cached for speed, but it's also cached so online and offline can dip into the same information, so the family can share the same e-wallet or the subscriber can have an online and offline account from same bank," Woods says. "There may be two physical systems, but it can't be two logical systems."
In this sense, he notes, real-time, policybased online charging is not just a way to get new subscribers in the way that prepaid services have attracted new categories of customers. "It's a way to control access to service delivery," he says. "One could make the case that the value of the bundled service is higher
than old voice service so you really want to be able to control access to those services."
In July, Intec announced availability of its Intec IMS Charging Solution, now in proof-of-concept trials by a number of operators. As defined by the IMS specification, the Intec Charging Collection Function (Intec CCF) delivers a comprehensive offline charging capability, and the Intec Online Charging Solution (Intec OCS) supports real-time authorization of requests for services as well as full provision of rating (RF) and account balance management (ABMF) functionality.
In early trials and deployments, Intec has been involved in interfacing both off- and online charging, integrating with the IMS core and with presence and other application servers, Woods says. With the advent of all- IP networks over past 24 months, "it is one of most interesting things we've found: we
used to talk to network people about offline rating and business people about online rating. Now you have to approach them as the same thing."
Although the rating and charging solution vendors agree that full online charging remains many months away, the operators are positioning themselves. Among Openet customers, FusionWorks software already processes some 1.3 billion events and transactions daily for AT&T Wireless, 3.6 billion events and transactions daily for Verizon Wireless and some 8 billion to 10 billion worldwide.
With 3GPP's mandatory charging interfaces in place, "large operators are now beginning to launch online charging systems," Openet's O'Flynn says. "Because online charging is more complex, a lot of larger companies are still planning. Those who have decided something are doing one or two services on IMS,
and based on how they go, plan to launch two more. In many cases, the online charging spec for IMS will be used not only for strategic IMS, but also for selecting the charging system for bridging what they have today to full IMS. So there are more IMS charging deals than overall IMS deployments."
All in all, adoption will be an evolution, not a revolution, he says. But with opportunities in both IMS service convergence and packaging third-party services looming on the horizon, the operators are not standing still.
"The last time I have seen a surge this large," says O'Flynn, "was DoCoMo in Japan when they opened their platform to everyone."