Feature Article

December 19, 2013

As Policy Market Reaches $3 Billion, Mobile Operators are "Kicking It Up a Notch"

There is a new study out by ABI Research. The findings are part of ABI Research’s report entitled “Next Generation Optimization, DPI & Policy,” and this research identifies the key monetization aspects and pricing plans for the various policy strategies.

The report states, “Faced with rising operating costs, declining average revenue per user and a need to invest in next-generation networks, operators are looking for optimization solutions to make their networks more efficient. The data tsunami coming from peer-to-peer sources and mobile video alongside the notion that 20 percent of subscribers account for 80 percent of traffic means that carriers need a better understanding of traffic and subscriber behavior. The role policy, analytics and management functions and their interaction with pricing strategies are a key driver of network profitability.”

We are now seeing a lot of startup companies that offer new technology for the optimization of mobile broadband data. There are also managed services providers who as part of their service solutions are now offering optimization.

According to ABI’s research in a report called “Policy 3.0 and Monetization Techniques: Reality vs. Hype,” the mobile telecom industry is migrating from a legacy voice centric business to WebScale mobile broadband firms. 

Something that is considered to be a key aspect is the transformation of the business model, policies, and pricing plans that are a direct outcome of the transformation. The implementation and execution is performed in the 3GPP Policy and Charging Control (PCC) platforms.

The 3rd Generation Partnership Project (3GPP) is a collaboration between groups of telecommunications associations, known as the Organizational Partners. The initial scope of 3GPP was to make a globally applicable third-generation (3G) mobile phone system specification based on evolved Global System for Mobile Communications (GSM) specifications.

The result is that the leading PCC vendors are “kicking it up a notch” in order to aim operators increase financial performance. This is especially true with respect to their mobile broadband operations. The next level, or step up is a combination of relationship and prescriptive to deliver greater customer satisfaction coupled with operator performance.

Joe Hoffman, who is research director at ABI said “Everyone knows that a one-price-fits-all is not an optimum pricing solution and we see the 3GPP PCC vendors innovating to address operator’s needs. Now we have the advent of Policy 3.0, and that leads to the Smart Network of Tomorrow.”

The expectation is that in five years the PCC market will be close to the $3 billion mark. The growth will come from the fact that subscribers will acclimate to innovative, granular and personalized price plans. The goal of the advanced Policy 3.0 solution is to equip operators so that they can quickly develop new plans and packages. As they are doing this, they will also discover the subscriber’s willingness to pay.

ABI’s research identifies the key monetization aspects and pricing plans for the various policy strategies. In addition, key policy features of policy vendors are profiled. These profiles range from the BSS/OSS/policy vendors, to formerly independent policy vendors, to emerging upstarts in the Policy and Charging Rules Function (PCRF) market.

OSS or operations support systems are computer systems used by telecommunications service providers. The term OSS most frequently describes network systems dealing with the telecom network. BSS or business support systems is a newer term and typically refers to business systems dealing with customers, supporting processes such as taking orders, processing bills, and collecting payments. The two systems together are often abbreviated BSS/OSS.

Edited by Cassandra Tucker

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