Convergys Perspective Paper

4G Monetization
Turning 4Gs promise into profits

Executive summary

As of 2011, the BSS and OSS requirements of communication service providers

(CSPs) were on the cusp of dramatic change. According to the GSA, as of
September 1, 2011 there are 237 CSPs that have either launched or are trialing
LTE/4G services; including 26 commercial launches, a figure which is expected
to rise to at least 93 by the end of 2012.* This promises a new paradigm in how
customers use their wireless phones. 4G, with its faster speeds and increased
customer capacity, assures that communication service providers can offer exciting
new services, and customers are beginning to change their computing habits to
move away from their desktop, to devices like smart phones and tablets. Anytime,
anywhere computing-on-the-go is the expectation and CSPs are rising to the
challenge.
But the promise of 4G also comes with peril. Large investments in 4G licenses
and network infrastructure and declining customer revenues make it far less than
a sure thing that the gamble will pay off. CSPs have to know that they will have
both the ability and the tools to manage new 4G services, not only to assure they
are delivered profitably, but also to assure that the quality of service (QoS) of data
intensive services is maintained on wireless networks, which still impose limitations
to what they could deliver.
This white paper will explore the expected changes and present the solutions that
Convergys has been building to assure that our partners thrive by turning 4Gs
promise into long term and sustainable profits.
* Evolution to LTE report, The Global Mobile Suppliers Association (GSA), September 1, 2011

Next generation wireless The age of data

Google soon followed with its open licensed Android

platform which was widely adopted by handset
manufacturers. Androids me-too interface and
application store assured that Apple wouldnt have the
mobile computing market to itself, and offered a lower
priced device that could penetrate markets where feature
phones had dominated.
The age of the Smart Phone had begun, and around
the globe, anywhere people congregated, you could
see the top of peoples heads, eyes cast downward to
screens and keypads, as they whiled away time on their
handsets. The Silicon Valley technologist Paul Saffo
summed it up nicely in the New York Times: Before the
iPhone, cyberspace was some place you went to your
desk to visit. Now cyberspace is something that you carry
in your pocket.
CSPs were pleased with the smart phone trend, as
users were often required to purchase data plans to
accompany these phones, and this drove average
revenue per user (ARPU) higher. In addition, smart
phones usually were sold with a contract, and CSPs
battled each other for exclusive rights to new phones in a
kind of arms race to offer the latest and greatest gizmo to
a public that was all too eager to spend. But these heady
times also came with backlash as CSPs became victims
of their own success.

Before the iPhone,

cyberspace was some
place you went to
your desk to visit. Now
cyberspace is something
that you carry in
your pocket.

When historians study evolution in the

telecommunications industry, one date will loom large
as the day that communication became less about
telephony, and more about wireless data; June 29, 2007
the date that Apple introduced the iPhone. Prior to the
iPhone, there were several handheld computing products
from RIM, Danger, Palm, Compaq, and Nokia, amongst
others, which allowed customers to perform common
computing tasks like using email and browsing the web,
but those devices never rose above niche status. The
iPhone, with its app store and its simple to use interface,
assured that mobile computing could be used by anyone,
and that a whole generation of interactive data services
would be created to address this rapidly growing market.
After all, by the end of 2010, more than 73 million
iPhones were sold.

Paul Saffo
New York Times

3G networks, particularly those in metropolitan areas where cell towers were under-deployed due to zoning and planning
restrictions and not in my backyard mentalities, staggered under the weight of these new devices. A smart phone user
would often report that as much as they loved their new device, they loathed the carrier they were lashed to, and they
couldnt wait until they had a chance to move to a service that delivered on its promise. Churn and dismal customer
satisfaction ratings were the unexpected side effects of the mobile data revenue boom. Furthermore, the situation was
only going to get more pronounced, as data usage was projected to double every year for the foreseeable future.
This continued growth in data usage is a result of the data being used in a multitude of different ways, with some of the
key drivers for this growth being:

Streaming video

Cloud based music services

Voiceover IP

Gaming

Peer to peer file sharing

Machine-to-machine (M2M) communications.

The issue for CSPs is that new services began to create more traffic, but at decreasing revenue per megabyte. This
widening gap between traffic and revenue, as shown in the following graph, is the main cause for concern in CSPs today.

Revenue vs. Traffic growth

Source: Light Reading 2009

Traffic
Revenues & traffic
gap widening

Voice Era

Revenues
Data Era

New services create more traffic, but at decreasing revenue

per megabyte.

The arrival of 4G services is a chance at redemption for CSPs. Network element manufacturers created new technologies
that promised to deliver speeds dramatically faster than previous GSM and CDMA technologies, while handling an
increased volume of subscribers as well. Upgrading to these 4G networks requires significant investment. CSPs are
investing heavily in new spectrum, spending billions on licenses in government auctions. This heavy investment leads us
to question the following:atPo

How do CSPs maximize their return on

investments? How can CSPs replace lowering
revenues from texting and dialing with new and
reliable streams? In short, how can 4G investments
be monetized?

Next generation products

and previous generation
rating and billing
CSPs launching 4G data services face a number of
challenges in monetizing those services well. First
and foremost amongst them are the limits of previous
generation rating and billing solutions Most CSPs have
separate billing solutions that support two types of billing:

Prepaid rating and billing - Real-time services which

manage recharging, user balances against network
events, rating, charging, and balance management

Postpaid rating and billing - Where usage is rated

and billed in batch, after the network event has
completed, with the management of services mostly
residing within the network infrastructure of the CSP.

In order to support a 4G platform, neither of these

approaches is sufficient to achieve the degree of
charging and billing sophistication needed. What is
required is real-time convergent charging in order to
not only rate and bill in real-time and in batch on a
single system, but also to manage multiple products
and balances, and to mediate platforms which resided
both within and outside the CSPs network domain. In
addition, a 4G solution needs to support new classes of
M2M devices as well as wholesale capabilities. Clearly,
these requirements demand a new class of BSS and
OSS solutions.

Solution requirements for 4G

To create a superior 4G solution, its necessary to first
take a step back and look at the main business and
technical requirements. At a very basic level we can
group these in to two categories:
1. Real-time processing: this is needed to contro
services, to provide data for downstream uses in a
timely manner, and to ensure an overall improvement
in the customer experience
2. Scale: the volume tsunami of data could easily
swamp legacy systems, but tight cost constraints
mean that systems need to scale efficiently in order
to control the total cost of ownership.
It is essential to appreciate that these two categories
need to co-exist; there is no point to have systems that
scale without real-time processing capabilities and vice
versa.

Real-time processing
Real-time processing is a necessity in order to be able
to solve the challenge of how to increase customer
satisfaction at the same time as increasing the average
revenues per user.

Increase customer satisfaction

A 4G solution needs to drive increased customer
satisfaction even as it adds complexity to the overall
solution.

Customers are going to play a larger role in

managing their own satisfaction by selecting their
own services and add-ons from an a-la-carte
menu of options and by using self care to manage
complex capabilities cost-effectively. An effective 4G
solution will utilize the interactive capability of smart
phones, as well as facile web self care capabilities
to drive increased customer satisfaction for account
management, while also driving satisfaction by
delivering new and interesting services.

CSPs are moving towards tiered services and this

requires that customers are alerted as they approach
tiers, thresholds, and balances. This must be in realtime and not sometime after the fact as customers
will not stand for bill shock situations where their
charges are not as they expect. Further, customers
appreciate being given the option to buy extra
capacity when they actually need it.

In short, how can

CSPs monetize their
4G investments?

An effective 4G monetization
solution has to include both
real-time processing and scale.
There is no point having one
without the other - if you want
better customer satisfaction and
increased revenue.

Bundling of services is the only way that CSPs can

proactively compete against new entrants, whether
they are other telecoms operators or over-the-top
(OTT) service providers. Intelligently planned bundles
of services will create the customer stickiness that is
needed in mature markets where churning is easy.
These bundles need to represent a holistic view of
the subscriber or the family or corporate group in
order to be most effective.

Increase revenue
Here too, a 4G solution should assure its return on
investment by creating new revenue opportunities.

Real-time offers - Using a combination of real-time

charging and policy control, offers can be extended
to customers in real-time, enabling CSPs to sell
underutilized network resources that otherwise would
not be sold

Time-limited offers - Provide customers with the

option of buying a temporary data service or a
temporary upgrade to their data service.

Partner focused - This capability brings with it new ways

to work with OTT providers in highlighting their services
to the CSPs customers. They include:

Elevated QoS - CSPs can develop partnerships

with OTT providers to give a guaranteed QoS to
customers for designated OTT services regardless
of the level of QoS the customer may have for other
services

Customer focused - 4G Solutions should enable

creation of new products and services for subscribers
that need to be delivered with a fast time-to-market.
These include:

On-the-fly upgrades - Enable customers to upgrade

their quality of service on demand. This capability
allows customers to get what they want at a price
they are willing to pay

Revenue sharing - CSPs can develop new

revenue opportunities by creating joint revenue
share arrangements built around commercials and
subscription packages

Subscription packages - Customers can buy

quality of service packages for certain categories
of services, such as VOIP, Streaming Audio and
Streaming Video. They can also buy temporary or
permanent add-ons to their packages as and when
they choose

Walled gardens - CSPs can act as a trusted agent

for subscribers and create app stores that can help
promote and sell partner products.

Scale
Mobile data volumes are expected to continue to grow
exponentially over the next few years, but, as indicated
earlier, the bad news is that traffic volumes are currently
growing at about five times the revenue growth.
Therefore, systems need to be able to scale to support
much higher volumes, but they need to do this at a lower
cost per megabyte than has ever been seen before.

4G solutions need to be both scalable and be able to

process transactions with minimal latency in order to
meet the needs of real-time processing highlighted
above. It is, therefore, essential for 4G solutions to
be able to dynamically balance workloads and be
able to minimize data communication latency at the
same time.

In many instances the new volume of data is being

driven by transactions that are of little or no value to
the CSP. This means that concepts such as usage
aggregation and filtering also become critical. Even
on the most efficient system there is still some cost
per transaction handled and at least some of these
transactions can be eliminated before that cost is
incurred.

A subscribers view of a 4G
solution platform
A wireless subscriber views a 4G solution through the
prism of their handsets, tablets, and computers. They
utilize these interfaces to give them real-time control of
their subscriptions, which are tracked in a subscriber
profile database. Lets look at what they can do:

Manage sub accounts - Customers can utilize their

handsets to manage access to services provided by
the CSP, and even administer policy, controlling costs
and access to content

Managing subscriptions - Add or delete subscriptions

to the account in real-time

Self provisioning - Add new sub accounts and

manage customer supplied equipment. Even
manage multiple devices in the same account

Bill shock avoidance - Warn the customer of data

overages, and allow them to interact with the system
to authorize additional purchases.

In sum, customers can manage just about anything in

their account simply and effectively.

Partner service capabilities

A complete 4G solution also includes tools that create
new ways for CSPs to work with OTT partners and create
new shopping capabilities.
Offers
Create real-time methods for allowing customers to
receive offers via subscriptions they control, and redeem
the offers from their handset, tablet, or computer.
Rapid product deployment
CSPs can offer OTT partners a speedy deployment of
products and services, allowing them to capitalize on
time sensitive events.
Reporting
Create reporting that can track customer - purchases,
generate invoices, and provide insight into customer
behavior.

The Convergys approach to

monetizing 4G data
Convergys utilizes our rich history of providing innovative,
cost effective, and reliable solutions across telecoms,
cable, satellite, broadband, and utilities to create a 4G
monetization approach that delivers on the promise of
4G. Our solutions help reduce churn, build customer
loyalty, and lower costs while growing revenues. Because
we have a broad range of solutions, we are uniquely well
positioned to create solutions that offer the benefits of a
bespoke approach without the cost overruns and delays
in implementation seen with other vendors. Convergys
has a record of on-time and on-budget deployments that
puts us amongst the leaders in our industry. Here is a
look at some of the tools used to build a best in class 4G
Monetization solution.

Adjunct rating and billing

Legacy systems are usually inefficient in handling
products and services that are completely outside the
CSPs core platforms. Adapting them for non-core tasks
is often expensive and time-consuming while delivering
lackluster results. Many companies have found that an
adjunct approach delivers the needed benefits of speedy
deployment and cost effective capability to interact with
third party platforms, while avoiding conflicts with other
rating and billing platforms.

Convergys does this utilizing its real-time convergent

charging (RTCC) capability. The RTCC solution provides
convergent charging across all service types and
payment methods, while having the system openness
to integrate with legacy platforms for synchronization
of customer and account data. With RTCC, CSPs can
create diverse product portfolios that increase revenue,
lower operational costs, and reduce churn by increasing
customer satisfaction. While no RTCC solution fits all,
Convergys RTCC provides the kind of flexibility needed
to support 4G as a supplement to an existing rating and
billing implementation.

To assure your
4G investment
is recouped,
make new
BSSIOSS
capabilities part
of the rollout.
Thats essential.

Policy and charging control

Convergys Policy and Charging Control Solution offers
a complete set of capabilities for the management of
4G data networks. The solution consists of Convergys
Rating and Billing Manager, plus Convergys Active
Mediation for management of Policy in the network,
supplying PCRF capability. Using this solution enables
a number of clear benefits for the CSP:

Access control - Full capability to control the

quality of service (QoS) for any point on the data
network

Subscriber control - The ability to control QoS for

users

Threshold control - The ability to apply different

QoS settings based on predefined thresholds.

Policy and charging control is at the heart of

monetizing 4G and customizing solutions for
subscribers.

Shopping and ordering

Shopping and Ordering can manage the creation
of complex orders for convergent services while
simplifying the shopping services process. CSPs
can customize offers via discounts and incentives for
various service combinations, and the solution enables
front end and back end integration into disparate
systems.

Dynamic decisioning
Convergys Dynamic Decisioning Solution enables
businesses to create offers tailored to specific
customers with real-time decision making tools.
Convergys utilizes a unique customer data
management process to design a program using realtime, rules-based software to create offers that are
compelling and increase revenues. Whats more, those
rules are used to kick off automated policies that are
tailored based on the situation and start automatically without costly agent or customer intervention.
CSPs can use any combination of the above
Convergys solutions to create a 4G monetization
solution that supports the most sophisticated needs of
any 4G implementation.

Conclusions
These are still early days in the deployment of 4G, and the stakes are very high.
CSPs have made big bets, spending mightily on spectrum and new equipment.
CSPs need to create services that enable them to drive new revenues by deploying
wireless services that increase customer satisfaction and gross revenues in a
cost-effective business model as formerly lucrative products such as SMS and
roaming become increasingly less viable.
Of course the real threat is the Dumb Pipe Dilemma. CSPs can find themselves
providing ubiquitous, always on data capability that simply detracts from spending
services in their portfolios. Chat and Facebook replace SMS and Skype replaces
airtime - and the investments in 4G become the equivalent of handing your
customers coupons for reducing their bills by 50%.
In order to assure that the investment in 4G is recouped, its important that new
BSS/OSS capabilities are part of rolling out 4G. The essential components of this
solution absolutely need to include:

Policy and charging control - The heart of the 4G solution, it allows for throttling,
adjusted quality of service, and the creation of new business opportunities with
partners

Real-time convergent charging - A traditional prepaid or postpaid platform does

not provide the flexibility needed to manage multiple balances, apply real-time
rating to events, and incorporate third party offerings. Real-time convergent
charging capabilities will increase revenue by increasing speed-to-market for
product offerings

Self care - Incorporates self care and authorizations into the process to decrease
costs and increase customer satisfaction.

The use of these tools enables the introduction of new services, creation of new
partnerships, and increased customer satisfaction by empowering customers to take
control of their accounts. The proper mixture of these capabilities assures that a 4G
implementation drives profits by enabling the CSP to differentiate itself versus other
CSPs. A customized, dynamic approach to empowering subscribers assures that
customers get what they want, when they want it, and ensures that CSPs turn 4G
into profits.

Convergys Smart Revenue Solutions

Convergys has 25 years experience providing Smart Revenue
Solutions to the telecoms, cable, satellite, broadband, and utilities
markets. With its convergent billing and customer care solutions,
Convergys helps organizations better understand, sell to, and
serve their customers to build stronger relationships and turn
transactions into profit. Convergys future-proof solutions enable
clients to offer personalized, innovative services and delivery, build
customer loyalty, lower costs, and grow revenues.

Convergys is a global leader in relationship management enabling

leading companies in over 70 countries to deliver exceptional
customer experience. Convergys employs nearly 70,000
employees, speaking more than 35 languages, in 70 facilities
across the globe, and routinely handles over two billion customer
interactions every year. Convergys is globally trusted and proven
in the market, reflected by the fact that its top 40 telecoms clients
have been with Convergys for more than 25 years.

For more information visit www.convergys.com/smartrevenue,

or call:
United Kingdom: +44 (0)1223 705000
United States: +1 800 344 3000
Singapore: +65 6557 2277
Brazil: +55 11 5504 6800
2011 Convergys Corporation. All rights reserved. Convergys and the Convergys logo are registered
trademarks of Convergys. Convergys refers to Convergys Corporation and its wholly owned subsidiaries.
4G Monetization Perspective Paper - December 2011