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All posts by Sunil Subrahmanyam

Top 5 reasons why telecom operators should explore innovative partner contracts

The telecommunications industry has been evolving over the years in this digital economy through technological innovations. The shift between the generation of networks is progressing swiftly, and that sees an impact in business use cases and the BSS/OSS systems that are part of this ecosystem. While there is a huge buzz about 5G today, the 4G rollout is still in progress in certain regions. 5G has opened a host of new business opportunities with augmented reality, self-driven cars, transforming healthcare and more. With this unprecedented pace and agility in the business, partnerships play a very significant role for Communication Service Providers (CSPs), and they need to be well equipped to manage complex wholesale contracts to succeed.

Here are the 5 drivers for CSPs to sign contracts with innovative economic pricing models:

  • 1. Changing Ecosystem of the Telecommunications Industry

The telecommunications industry is experiencing a radical shift in the current scenario with multiple partners in the digital ecosystem. A CSP is no longer isolated in the market, but an integral part of a vital ecosystem. They are collaborating with different vendors and partners to provide differential products, innovative content for new age digital services like on-demand audio and video streaming. All of this puts the CSPs at the crux of all the action. With robust infrastructure and ability to process data in huge volumes, this is a unique position that can be leveraged in this changing scenario.

  • 2. New League of Customers and Partners

The changing dynamics in the industry has given rise to a new league of customers who are aggressive and precision-driven. There needs to be transparency in every aspect of the business. Contract timelines are getting shorter and demanding, while CSPs’ business models have not adapted to meet these demands.

Partnerships are very varied, as the demand for better and more innovative content keeps growing, and this could range from a channel, a gaming company to an individual content creator. Strategic partnerships are key, and transparency is essential here as well. With non-traditional partners for these newer types on content, the business model needs to be adaptive and responsive.

  • 3. Embracing Digitalization

Gone are those days when CSPs focus on merely exchanging rate cards among partners to bill the usage of services. Pricing has become increasingly competitive. Margins are shrinking faster than new business CAGR can grow. Realizing returns is taking a longer time than usual. So, how is the market reacting? Well, the reaction has been to explore unconventional contracts that are driven by data volumes. The complexity of rating has increased in digital contracts with tier/ slab ratings, exclusions/discounts, and commitments.

  • 4. Content is the King

Bill Gates wasn’t wrong in the late 90s when he wrote a paper predicting how real money will be made by sharing content online. Last decade has seen massive foray by CSPs into the content space under the pretext of diversification. Few years back, NBC Universal (acquired by Comcast) and Time Warner Cable (acquired by AT&T) were seen more as a change for the video market than for telecommunication. But with new digital technology to distribute content, and not just traditional media channels, CSPs have gained prominence there. CSPs are partnering with the OTT players to provide exclusive content and niche audience services in the form of premium bundles. Operator-led OTT subscriptions have become the new business model driving the revenues through targeted customer segments.

  • 5. Rise of Edge Computing

With billions of IoT devices expected to be in use globally in the coming years, Edge computing will play a critical role in taking the advantage of high-speed data connectivity. Partnerships will become vital with increased collaboration of vendors in the areas of edge devices like sensors, storage, compute & power, etc. CSPs will become the backbone of this network by providing the required connectivity to all partners involved in the ecosystem.

The last 5 years have been crucial for CSPs in transforming into digital service providers, and this has opened a whole lot of new business opportunities and challenges. Digital transformation had been the buzz word in the industry for almost a decade. In hindsight, it is just an enabler and real transition happens only when organizations embrace & evolve with it.

If you are interested in knowing more about managing complex wholesale contracts

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Debolina Ray

Debolina is a seasoned professional who specializes in Telecom Partner Settlement, Route Optimization, Interconnect Billing and Order Management/Provisioning. She has over 10 years of experience in the Telecom industry and has a vast exposure to customers from all regions. Debolina currently works as a Technical Product Manager where she manages the product management for the Cost Analytics Portfolio of Subex. She is an active contributor on various forums like Actuate, QlikTech, and is also a voracious reader and an active blogger.

Managing Complex Partner Agreements in the Digital Era

Digitalization has opened a plethora of opportunities for Communication Service Providers (CSP) across the globe to transform their traditional service offerings, moving from telephony into content-driven businesses and reaching the status of Digital Service Providers (DSP). There is a paradigm shift in the telecommunications ecosystem with the entry of technological disruptors (like OTT players) resulting in a portfolio of services with competitive pricing models. The depletion of voice revenues and the rise of data services has changed the dynamics of business partnerships.

The traditional telecom service provider is no longer isolated in the market and has multiple collaborations for audio, video, content, analytics, cloud, etc. Furthermore, due to shrinking margins, operators are looking forward to having contracts/agreements with their vendors and partners, which will create a win-win situation for the parties involved. According to a recent survey by TM Forum, DSPs have a revenue opportunity of around $142 billion from digital services. Whether it is AT&T acquiring Time Warner for $85.4 billion or Reliance Jio integrating with Saavn to create JioSaavn app, telcos are looking to roll out exclusive content to their end customers. Considering that there is much to gain, a DSP without a strong content offering in today’s scenario is almost unimaginable.

A DSP often has hundreds of content provider contracts (mostly with aggregators) to manage, and there is a huge diversity of partners ranging from a garage developer to the likes of Google.

Building success factors:

The phenomenal surge in data consumption by subscribers and free content is driving the majority of telcos’ core businesses today. In addition to this, few telcos are partnering with OTT players to provide exclusive content and niche services in the form of premium bundles. Operator-led OTT subscriptions have become the new business model driving revenues and customer segments.
Building Success Factors
Source: IHS Markit

Driving new business models – The increasing level of complexity

Initially, rate cards were exchanged between partners for billing the usage of services. Later they entered into bilateral agreements to settle the revenues between them. Now, telcos are moving to digital contracts by partnering with content providers and other OTT players. These digital contracts involve tier/slab ratings, along with exclusions/discounts. Commitments and rating based on specific parameters have increased the level of complexity with respect to rating and charging their partners.

Let us go through 3 types of agreements that are executed between partners these days:

There are several agreement scenarios (deals) between the operator and content partner based on different business models. Furthermore, revenue sharing models have been evolving from fixed % based to a tier/slab-based approach across product scenarios.

1. An agreement based on new subscriptions

No of New Subscriptions    Revenue Share

0 – 500                                           P %

501 – 2000                                     Q %

2001 and above                              Q % and additional T % for no of subs >2000

As per the partner agreement, if new subscriptions are negative for a particular month, no pay-out will be made to the partner for that month.

2. An agreement based on promotions

Revenue sharing between the parties will be on a monthly basis. The promotion period can be for a few months or it can be ongoing. If the user subscribes to the content for

Months                  Revenue Share

1 month                         P %

2 months                       Q %

3 months and above      R %

3. An agreement based on market penetration

In this scenario, the operator is liable to share the revenue based on the penetration of subscribers in an area. The complexity involved here is that the penetration level of each market is different from the other. In addition to this, there are certain areas where the radius is defined with respect to a landmark. Subscribers within the radius will be charged a premium and accordingly the revenue share.

In today’s competitive market scenario, partnerships have become the need of the hour for telecom operators and they are moving ahead by signing innovative and complex contracts. The above mentioned examples of digital contracts/agreements are a few models that we have recently dealt with. In the future, we will see many such models with increased complexity and innovative digital contract definitions.

If you are interested in knowing more about managing complex wholesale contracts

DOWNLOAD THE WEBINAR RECORDING NOW!

Have you negotiated or signed any complex contract recently? Let us know in the comments section below. Looking for partner who can help you handle complex contact? Talk to us.

Off-beam transformation – What are the side effects & challenges?

Has your organization’s promotional advertisement campaign ever gone off-beam (incorrect or mistaken)? Not only it’s a loss of an investment, but also drastically affects the credibility of the business. Imagine the scale of impact, if a telco’s business transformation, from legacy to new systems, goes off-beam? That would be the worst nightmare for a telecom operator.

Need for transformation

Telcos across the globe are evolving from delivering traditional services to new age services. New age services, like content, digital services, require collaboration with multiple partners serving the ecosystem. One critical aspect of the evolution is the transformation of different OSS and BSS systems to cater to technological disruptions, fixed-mobile convergence, increasing competition and changing mindset of the digital consumers.

Challenges of transformation

Transformation involves migrating complex and voluminous data from legacy systems to the new systems. Proper design, analysis, planning, testing and eventually execution is required to achieve the desired results. Yet, many transformation programs run into multiple issues of quality, budget, and timelines.

One critical area that has a direct impact on the customer experience is charging and invoicing. Off beam transformation, resulting in overcharging or undercharging subscribers, lead to revenue leakages and customer dissatisfaction.

There are many aspects that have a direct bearing on the transformation process. However, they needn’t threaten the transformation journey. Assuring the transformation journey will be the key differentiator in the end user experience.

Transformation journey in a leading South East Asian telco

A leading telco in South East Asia migrated their billing system from legacy to new and observed a dip in the postpaid revenue. While we investigated the reason for the same, below observations were captured:

  • Improper configuration of products in the process of transformation to a new system

It had been observed that there is a configuration gap in the new system where offerings given to customers and charging of those offerings is not the same. i.e. the retail tariffs as per the marketing catalog are not matching with the charging rates configured in the billing system. Some of the top revenue-generating postpaid plans were analyzed and an estimated under booking of revenue of USD~ 35K was detected since migration for those plans due to issues in configuration and rating.

  • Incorrect application of a discount for some plans was observed

While performing the discount and rating validation, increased discount for the month after migration was noticed and it was because of the behavioral change of the rental/commitment charging. A discount of few million USD was given on one offer id. In addition to this, few Customers were found where positive discounts were given, i.e. discount addition was done in the invoice in place of reduction. Voice and SMS are completely zero-rated and not charged for one of the plans which had accounted for a huge revenue leakage from that plan.

  • Incorrect invoices were generated and sent to the subscribers

Overcharging on invoices was observed which can lead to compliance issue with the regulatory body. While performing the product validation, few cases had been observed where customers were being charged for their old subscribed plan even after they deactivated from that plan. This causes dissatisfaction to subscribers and may lead to customer churn.

Multiple reasons can be attributed for the transformation going off beam in the above scenario:

  • Complexity of data and issues with data interpretation
  • Lack of project management expertise
  • Absence of exhaustive test-plan
  • Lack of a comprehensive governance framework to manage intergroup deliveries

Had these issues been taken care by the telco while performing the migration of their billing system, the above resulted revenue leakage would have been reduced.

Conclusion

“Rome wasn’t built in a day but burned in one”

Transformation is a complex process requiring proper execution, especially billing systems that are at the core of any telco business.

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