Tags Posts tagged with "Content Billing"

Content Billing

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The Scenario

Of late IoT has gained a lot of attention and every operator is at least thinking of leveraging this latest platform to offer innovative products, but the big question is how?

Many operators are relying on their vendors to come up with IoT use cases, the challenge here is that even the Vendors are still in process of deep diving as IoT is still a niche market.

One of the major factor that makes IoT an unknown area is the lack of visible use cases to be seen in our day to day life, though the developed counties have made significant progress, developing world is yet to embrace the “Smart” systems. With lot of emphasis on Smart cities, IoT business is here to stay.

When it comes to IoT Settlements, both Telcos and Vendors should start thinking out of the traditional wholesale approach. Telcos are looking for vendors who can support them with their traditional as well as new business areas with the centralized solution.

The Concept

Understanding “Internet of Things” concept is very simple, it is a network of “Things”. Things are physical objects that can be added to a network, have sensors and can be controlled using software. These things can be as common as day to day devices like a Fridge, a Car, a thermostat and so on. The purpose of connecting ‘things’ is to have a centralized access to their features and to control enormous data they are capable of producing.

One very obvious fact that can be identified from IoT is to have a medium for keeping things connected. This creates an immense opportunity for telecom operators to provide medium for supporting the connected items. According to Gartner by 2020, the Internet of Things will grow to 26 billion units installed which excludes connected PCs and smartphones. This will add $1.9 trillion to the global economy. Intel estimates 31 billion devices to be connected by 2020. According to Cisco by 2020, 50 billion devices will be connected, whereas Morgan Stanley feels that the number is much higher and it can go up to 75 billion.  The good news is, there is a substantial growth opportunity for everyone, right from smart device manufacturers to the smart service providers everyone can get their share of business from IoT.

The Process

Let us consider an example of a smart home. There are multiple interconnected devices which are installed for security, entertainment, utility etc. These are all connected to a centralized hub, which in turn is connected to the IoT platform. IoT platform consumes the data generated by these smart devices for insights and to make sense of this huge data.

To establish this network of devices connected to hub and IoT Platform, internet is needed. This gap is filled by the Telcos. So bringing in smartness requires lot of partners to work together. Let us enrich above example to get more clear understanding of the multi partner involvement.

A  leading furniture retailer has introduced a new Smart Home Solution, where consumer can install smart devices such as TV, Fridge, Air conditioner, Washing Machine, Radio, lighting solution, thermostat and security solution. Finally these devices are connected to hub to have a centralized control of the devices.

A smart Hub ensures all smart devices speak the same language, this enables user to remotely control the devices even if the user is far away from the home. To bring in more intelligence the data gets transmitted from smart devices to the IoT Platform. The IoT platform analyzes the data, apply rules and makes devices more smart based on the usage patterns.

Finally the most important piece of this setup is facilitated by a Telecom operator to ensure internet connectivity for all the devices to communicate. Telecom operators can also bundle voice and SMS services along with data to take actions based on the defined rules. E.g. in case there is a security breach, device can initiate a call & SMS to the owner and insurance company to inform this breach.

So in this particular eco system, we have seen multiple partners working together to establish a Smart Home solution.  Similarly there are multi partner IoT use cases for Smart Car Fleet, Smart Healthcare, Smart Grids, etc. In all the IoT use cases irrespective of the catered domain, Telecom Operators and IoT platform vendors will always play a significant role, directly or indirectly they will contribute to billions of dollars in the IoT economy.

For a Telco, providing backbone is not the only important thing in IoT space. With the complex partnership models, Partner Management, Billing and Settlements are other crucial activities that will result in the Cost and Revenue identification.

The Solution – Partner Management, Billing & Settlement

With the cut throat competition and reducing margins in the traditional Wholesale business, operators are adding new dimensions to their business with immense revenue generation capabilities of Internet of Things.

A new age partner Settlement solution cannot limit its functionalities to just traditional business models. There is a requirement for settlement solutions to be more agile in accepting and delivering new business requirements with short time to market. If we talk about IoT for a Telco, now partners are not limited to Voice or Content providers, rather the list is getting much diversified with partners coming in from various domains like health care, agriculture, utility, etc.

For a smart home solution, a telecom operator can provide IoT backbone to a furniture retailer , where the Telco will ensure internet connectivity and will enable IoT platform in collaboration with a cloud computing platform. Here the furniture retailer becomes the Telecom operator’s customer and the cloud platform provider is Telco’s vendor.

Partner Management & Settlement solution deployed at Telco should take care of partner (Customer & Vendor) lifecycle management, easy on-boarding, business transparency along with IoT billing & settlements. Partner Settlement solution should also be capable of managing plethora of Meta data that will be provided by the IoT Platform for billing and Partner analysis. The volume of IoT data can be much more compared to traditional usage data.

The system should also be capable of providing innovative products and should do billing accordingly. Key point here is to have personalized plans created based on the business need. Some of the products that can be offered as a part of IoT platform are:

  1. Flat Rating – Flat rates for data, call and SMS for each units.
  2. Fixed Charges – Fixed product price for unlimited data, voice & SMS
  3. One time & Recurring Charges – Product to support one time and recurring charge capabilities
  4. Device Based – Charge based on number of devices connected
  5. Slab & Tired based – Data, Voice and SMS to be defined, rates varies based on the slabs & Tiers
  6. Pay-as-you-go – Charge only based on the usage, deduction from Prepaid Balance
  7. Cross Domain Products – IoT clubbed with content or other interactive services

IoT billing & settlement is not just limited to the Telco and their direct partners, it has to be extended to the associated MVNOs in from of Billing as a service. There can be a multi-level partner involvement as well, say based on the movie genre analysis information available in meta data generated by a Smart TV, a latest movie can be suggested for subscription through an entertainment company , and hence the entertainment company can become 2nd level Advert/Content partner.

IoT is still evolving, there can be many aspect that are yet to be explored. This is the right time for Telcos, platform and equipment vendors to start investing in IoT to stay ahead of the competition.

Infographic :

partner-settlement-solution

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Content and data services are fast growing areas among CSP offerings and are a climbing source of revenues. Profits made by CSPs from content services ranges around 60-70% of the cost of sale. Though there is the occasional threat, mostly around reduction in Revenue shares due to an increase in regulatory charges, this market cannot be neglected.

Operators are now seeking to deploy sophisticated “User Engagement” based models in order to ensure partners/content owners are paid based on the actual consumption of the service and not just based on subscription, thereby determining the actual value addition that the services in question provide.

While operators acknowledge the potential in the VAS market, many are struggling to manage the operations when it comes to content billing and settlements. The sheer growth on Content and VAS offerings and increase in number of players in the market, content billing can no longer survive on Microsoft excel and access based manual computations.

Although the retail billing of content services may be based on their offering structure, like Subscription based billing or event based / on-demand billing. The Interconnect settlements prove to be a greater challenge. Due to a multi-party environment, it is essential to calculate the Revenue share per party keeping in mind the margin which the operators intents to earn. Some of the common models which govern the agreements between CSPs and their Content Owners are the tier based agreement; slab based rating; flat revenue sharing; subscriber based revenue sharing.

Content market is not a static business environment. New services are launched regularly. The on-boarding (or off boarding) of a new offering should not be a cumbersome. The ever changing contracts between the operator and their partners need the settlement solution to be extremely flexible. One of the vital criteria of the system should be the ease with which it can be con­figured in order to positively impact the go to market time.

While future of content seems to be bright, Operators need to be mindful that:

  • “OTT players are growing” and here to stay
  • “All you can eat” usage models is coming to an end and “Capped usage” models will prevail
  • “Targeted” content era begins

Read Whitepaper for an in depth understanding http://bit.ly/Tqa2Fr

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I’m sitting in the Spring sunshine (it’s the UK so it’s cold) preparing my talk for the GSC conference in Windsor which starts tomorrow. This is a great venue as it gets representation from major carriers globally mostly concerned  with Trading international traffic and the subsequent business processes that support that seemingly simple activity. Few thoughts are paramount, one of them is that I’m presenting on Thursday so there will be a lot of information sharing by then so I hope I would manage to glue the audience to their seats.

The theme of my presentation is Evolution of Partner Settlement.   I think that the apparatus, systems, structures and know how which allows carriers to trade voice minutes will soon be in demand to negotiate, set prices and monitor a whole range of services and not just voice.

One particular area I’m interested in is content settlement. How does the carrier (or a cable company) set a fair price with a content creator?  How does the content owner verify the final payment?   If it’s all about supply and demand, how do providers gauge demand and look at product performance? Who could have predicted that a Danish sub-titled crime thriller, The Killer series, would take the world by storm? ( I guess the writer!)

What strikes me is that what Telcos sell changes, but not how successful business runs.  I once worked in a toy shop in a particularly posh part of London. Our buyer made the company a fortune from buying Japanese pencils ( a bit like Hello Kitty) – everyone thought she was nuts. She also ceremoniously dumped the then unfashionable Kermit the frog.  This released floor space, which she crammed with pencils  and she watched point of sales like a hawk. Nowadays we have sophisticated systems such as  ours to do this. But the core things that buyer spoke about, attractive stock, great presentation, customer experience are all key elements of product management and content distribution.  Managing the content catalogue and getting value for the content creative and the CSP are critical.

So I’m hoping to have a great discussion about Partner Settlement with people this week about all the hot topics  IPX, Content, M2M, Mobile Money – don’t ever let anyone tell you billing is boring.

Blog more later. Have a good week.

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