Whitepaper:Maximizing Network Value with Next Generation Policy

Controlling and monetizing networks with intelligent, dynamic policies

WH

ITE

PA

PE

R

WH

ITE

PA

PE

R

Table of Contents

I. Introduction............................................................................................................... 3

II. The Landscape for Network Service Providers........................................................ 4

III. Evolution Towards Next Generation Policy............................................................... 5

IV. Dynamic, Intelligent Control with Next Generation Policy........................................ 7

V. Monetization of Network Control with OCS.............................................................. 8

VI. Next Generation Policy Scenarios............................................................................ 9

VII. Conclusion................................................................................................................ 13

VIII. Openet’s Next Generation Policy Product............................................................... 14

Openet provides Transactional Intelligence for service providers to extract maximum value from their network activities. Openet FusionWorks delivers the capability to gain 360° visibility into network usage, dynamically control network resources and monetize network activities. With the Openet platform, operators can leverage new opportunities, deliver innovative services and enhance subscriber experience to gain competitive advantage. The world’s leading service providers are using Openet FusionWorks to maximize revenue opportunities with Transactional Intelligence, including AT&T, BT, Telstra and Verizon Wireless. For more information, visit www.openet.com.

2

Introduction

Network service providers are caught between the proverbial rock and the hard place.

Demand for internet protocol (IP) access and bandwidth continues to grow at a tremendous pace driven by network technologies that require faster speeds and subscriber demand for bandwidth-intensive services, such as streaming videos, internet protocol television (IPTV), and peer-to-peer (P2P) applications. Operators are left with little choice but to deploy faster networks with more capacity. However, the flat-rate, “all-you-can-eat” service plans used by most operators make it difficult to increase revenues in order to cover the additional capital and operational expenditures required to manage heavier network traffic. Within this environment, operators are finding it difficult to capitalize on the explosion in demand for their core assets. That is the “rock”.

The “hard place” is the financially driven imperative to avoid being relegated within the value chain as a low-value provider of commoditized access services. The number of over-the-top (OTT) providers of IP-based applications, services, and content is growing as companies, such as content providers, internet companies, and device providers, attempt to monetize on the delivery of rich and valuable internet content to consumers and businesses. In the meantime, telecommunications providers and cable multiple system operators (MSOs) are in danger of being disintermediated as mere transporters of internet traffic and being bypassed from participating in emerging revenue models.

Next generation policy management enables network service providers to overcome these challenges. With intelligent, dynamic control over subscriber entitlement to network resources and real-time charging capabilities at the network-edge, operators have an opportunity to play a central role in the evolving ecosystem of IP content, applications, services, devices, and networks. Service providers are uniquely positioned to use next generation policy to deliver highly individualized, interactive, and integrated experience to consumers and businesses and to monetize the value delivered to subscribers with a variety of new revenue models. Next generation policy enables service providers to become competitive and strategic players in the value chain.

WH

ITE

PA

PE

R

3

WH

ITE

PA

PE

R

Operators are faced with a market landscape that is becoming increasingly complex. Data access service is becoming commoditized. Many service providers are faced with slowing or declining subscriber growth as markets become saturated. Market saturation, increased competition and overall decline in price per unit of bandwidth are leading to downward pressures on pricing and margins.

Within this environment, operators are facing an explosion in demand for bandwidth. The increasing availability of and demand for IP content and applications across multiple devices not only offers new market opportunities but also increases demands on network resources. Operators are discovering that the default options of best effort routing of network traffic, simple over-provisioning, and building extra capacity are not cost-effectively managing network capacity. The flat-rate, “all-you-can-eat” service plans offered by many service providers make it difficult to cover their growing capital and operational expenditures by increasing revenues.

The Landscape for Network Service Providers

Customers are becoming sophisticated and demanding more from their service providers—seamless experience across content, platforms, and devices; better Quality-of-Service (QoS); greater control over their services and spend; on-demand access to applications and services. As data needs of subscribers become increasingly diverse, businesses and consumers are expecting highly personalized services that are tailored to meet their individual needs.

At the same time, network service providers are in danger of being marginalized by over-the-top providers. Rather than bandwidth delivery, subscribers are recognizing that the content accessed, applications delivered, and services enabled provide the true value from accessing the internet. As a result, a variety of OTT providers are developing business models to monetize the delivery of rich and valuable content while bypassing the service providers. Telcos and MSOs face a real threat of being relegated as internet traffic transporters and missing out on emerging, higher-value revenue opportunities (Figure 1).

With next generation policy management, network operators can bring intelligence to their networks and move up the value chain without being shut out from evolving business models and revenue opportunities.

Figure 1: Operators are in danger of being disintermediated.

4

WH

ITE

PA

PE

R

Evolution Towards Next Generation Policy

Policy management originates from systems and processes associated with managing network traffic to ensure appropriate levels of QoS are applied (e.g., VoIP receives priority over email traffic). First generation policy management is limited to the realm of network traffic management. Using a stove-piped approach, static policies that manage QoS, network traffic, and security policies are implemented locally on separate network elements focused on a particular access method. Since polices are not able to incorporate subscriber or session information when making policy decisions, first generation policy utilizes a “one-size-fits-all” approach to managing network traffic.

Figure 2: Next Generation Policy is subscriber-aware, converged, and integrated with online charging.

Next generation policy, on the other hand, enables operators to intelligently control subscriber entitlement to network resources with real-time, dynamic policies (Figure 2). In contrast to its predecessor, next generation policy controls are based on session- and subscriber-aware policy rules (e.g., subscriber entitlements, network resources available, application entitlements, device type, location information, security triggers, application function triggers, SLA between partners, charging rules). These policies are centrally managed in a convergent manner across multiple access networks. As networks become more complex, a centralized policy management framework can reduce the administrative overhead of managing hundreds of policies and improve control over the integrity of the policy catalogue.

With next generation policy, policy management extends into the IT layer, acting as a bridge between network-focused operations support systems (OSS) and IT-focused billing support systems (BSS). By combining subscriber information located at the BSS layer with network resource information located at the OSS layer, next generation policy management enables operators to deliver highly personalized and targeted services by implementing policy controls based on attributes of individual subscribers.

Another way of comparing first generation and next generation policy is to look at the Third Generation Partnership Project (3GPP) standards. 3GPP Release 5 defined the Policy Decision Function (PDF) as a peripheral function in which simple, static policy controls were implemented without centralization or unification. In 3GPP Release 7, the PDF is replaced with the Policy and Charging Rules Function (PCRF) that enables sophisticated, complex policies in a dynamic environment and combines policy and charging (PCC) rules within the same environment (Figure 3). As policies become increasingly complex, next generation policy has the scalability to support a greater number of transactions due to the increase in the number policy rules, triggers and mid-session controls. Historically, a PDF only needed to support hundreds of transactions per second (TPS), compared to the thousands of TPS that must be supported by PCRF today.

5

Figure 3: 3GPP Release 7 policy and charging (PCC) architecture.

In the latest release, 3GPP Release 8, a number of new capabilities has been added (Figure 4). Policy peering enables policy rules to follow subscribers whenever they roam or are utilizing visited networks. There is also increased support for non-3GPP interfaces, such as 3GPP2, DSL, and cable. Both of these capabilities are enabled with two newly created interfaces, the S9 and Gxx interfaces. Other new interfaces have been introduced to enhance the PCRF’s awareness of network capacity and congestion in order to deliver higher performance for premium applications and improve subscriber experience.

Figure 4: 3GPP Release 8 architecture overview.

WH

ITE

PA

PE

R

6

WH

ITE

PA

PE

R

Subscriber- and session-aware: By integrating subscriber information from IT systems with network resource information, next generation policies are based on subscriber attributes (e.g., account type, service plan, usage history) and session information (e.g., application type, traffic source, device type, network congestion).

Dynamic: In contrast to legacy policy management which implements policies in a static manner (i.e., only during the beginning or end of a session), next generation policy controls are implemented dynamically and mid-session based on real-time triggers, such as:

• Requests from network elements (e.g., Application Function (AF) requests resources for video streaming or other premium services)

• Requests from backend OSS/BSS components (e.g., Change or Authorization (CoA) requests, Subscriber Profile Repository (SPR) updates regarding changes in subscriber parameters)

• Subscriber-, session-, and application-based rules (e.g., location, subscriber usage history, date and time, source of traffic, type of traffic)

Convergent: In order to meet the demand for an integrated, seamless experience across multiple devices and platforms, next generation policies are applied across multiple access networks, including wireless, broadband and cable networks as well as supporting legacy and next generation networks (e.g., DSL, WiMAX, LTE, DOCSIS 3.0)

Scalable: As network policies become increasingly complex and sophisticated, next generation policy offers the scalability, performance, and flexibility required to support current and future needs of operators with:

• Performance required to process thousands of transactions per second (TPS) as the number of policy rules, triggers, and mid-session controls increases

• Flexibility to integrate BSS and OSS elements, such as online charging components and subscriber information, to support new business models

• Scalability to manage, control, and maintain hundreds and potentially thousands of policies

Next generation policy management enables operators to not just dynamically control subscriber entitlement and network resource allocation, but to also dynamically monetize these capabilities by integrating with an online charging system (OCS) to provide real-time charging capabilities.

Dynamic, Intelligent Control with Next Generation Policy

Next generation policy is a dynamic function in which real-time decisions are made by taking requests from the network via policy enforcement points (e.g., deep packet inspection devices) and governs:

1. What, when, where, and how subscribers can access content and applications

2. How network resources are allocated (e.g., bandwidth, traffic priorities, volume, etc) Next generation policy gives operators intelligent, real-time control over subscriber access to network resources by providing the following key capabilities:

7

WH

ITE

PA

PE

R

Monetization of Network Control with OCS

Next Generation Policy Management has two critical components: controlling subscriber entitlement to network resources and monetizing that entitlement. With an online charging system (OCS), a tight integration between controlling access to network resources and managing quota at the network-edge allows operators to dynamically charge and rate services in real time. The OCS enables operators to support a variety of business models—whether they exist today or will emerge in the future—as well as providing direct benefits to customers.

The OCS gives network operators the flexibility to offer a variety of pricing and payment methods to better meet customer needs while increasing ARPU, such as:

• Real-time upgrades enabling subscribers to upgrade their service plans in real-time • Service passes enabling on demand purchase of a service, content, or application for a

limited time period (e.g., purchasing a temporary bandwidth boost for a movie download)• Third-party subsidies enabling third-party content providers to enhance user experience

for a specific service (e.g., sharing revenues with a movie rental company for providing higher bandwidth whenever a subscriber views movies online)

• Price tiers enabling different rates for services based on volume, quantity, and/or time (e.g., first 6 hours cost $10.99, each hour thereafter costs $0.99 per hour)

• Hybrid pre-/post-paid plans enabling users to assign different payment plans based on service or user (e.g., mobile data access is pre-paid while voice service is post-paid)

• Flexible bundles enabling operators to offer innovative service bundles (e.g., subscriber-customized bundle)

The OCS enables service providers to offer services and programs that enhance customer loyalty and increase stickiness. Thresholds and balances can be created and managed to enable both customers and operators to check usage limits and account balances in real time. Advice-of-Charges can be sent to alert users of charges prior to service usage in order to avoid “bill shock”. Loyalty programs can be offered in which customers are rewarded for their loyalty and usage of services. By integrating with self-care portals, enhanced self care capabilities can be offered to improve customer care.

With integrated next generation policy and OCS capabilities, operators can maximize the value of their network assets. In fact, operators can leverage its intelligent, real-time control over subscriber entitlement to network resources and online charging capabilities to partner with over-the-top (OTT) providers to deliver integrated, interactive, and highly individualized services to consumers and businesses.

8

WH

ITE

PA

PE

R

Next Generation Policy Scenarios

In order to gain competitive advantage and avoid disintermediation, service providers have a number of capabilities at their disposal with next generation policy. This section provides examples and illustrations of how operators can use these capabilities to address both prevailing needs that are facing them today and what can be done for meeting future challenges.

9

Fair Usage

As a small number of heavy users are creating congested networks and impacting service experience of other subscribers, operators are looking at enforcing fair usage policies. With next generation policy, wireline, wireless, and cable operators are able to not just enforce fair usage policies but can also up-sell services to customers who require more usage.

With next generation policy, data usage is measured for each subscriber and whenever the monthly usage allowance is reached, service providers have the flexibility to implement a number of options. Some examples include:

• Sending a warning notification (e.g., SMS or email) indicating excessive usage• Usage continues but at slower speed or prioritization for the remainder of the billing

period or just during times of congestion• Disallowing bandwidth intensive services or applications during peak traffic hours• Redirecting web traffic to a landing page indicating usage limit has been exceeded and

providing options to sign up for temporary or permanent upgrade in service plan (e.g., “top-up” option)

With next generation policy’s ability to implement subscriber- and session-aware policies, more sophisticated policies can be created based on a variety of parameters, such as subscriber profile, usage history, application accessed, and time. Some examples include:

• Usage limit is only imposed on customers who have reached the threshold twice over a six-month period

• Subscribers who have been a customer for more than 5 years are exempt from the usage limit except if they go over the limit three times over a six-month period

• Traffic to and from “preferred” partner applications are not counted towards the usage limit

With Online Charging System (OCS) capabilities, operators can implement charging and up-selling activities as part of the enforcement actions that are taken whenever a subscriber reaches his usage allowance. Examples include:

• Up-sell to higher class of service (e.g., from bronze to gold plan)• Send an Advice-of-Charge with charges for extra usage• Sell additional “buckets” of usage volume whenever monthly allowance reaches 95%

WH

ITE

PA

PE

R

Tiered Service ControlsIncreasingly, service providers are discovering that usage varies widely among subscribers, ranging from power users who excessively utilize network traffic to casual users that spend minimal time on the internet. Different groups of customers also expect varying levels of quality–such as enterprise customers who pay for and expect highest QoS to casual residential customers who prefer lower cost plans in exchange for lower QoS.

In order to meet the individual needs of subscribers while maximizing revenue opportunities, service providers can package account plans with different classes of service using next generation policy. Service classes can be based on a number of different areas, such as:

• Usage limits (e.g., 5GB, 10GB, 25GB)• Speed (e.g., 512Kbps, 1Mbps, Over 5Mbps)• Time (e.g., day, month, week)• Priority (e.g., consumer, business, government)• Application type (e.g., streaming video , HTTP, VoIP, P2P)• Device type (e.g., mobile phone with WAP, smart phone, broadband card/modem)• Combination of any of these dimensions

Next generation policy enables operators to define business rules that dynamically allocate subscribers among service tiers, moving users automatically from one tier to another based on real-time events and conditions. This dynamic quality gives operators unprecedented capability to control network resources with rules that bind service tiers to real-time parameters, such as time of day, network capacity, and subscriber attributes.

With OCS, operators can further personalize service plans with flexible pricing and bundling, such as:

• Service bundles that subscribers can customize in real-time• Customized pricing options in which subscribers can select different purchasing options

(e.g., post- vs pre-paid, purchase for just 1 month or for entire contract term) • Pricing additional services or promotions based on a subscriber’s class of service (e.g.,

premium plan customers pay less for additional services)• Price services based on utilization, content, and/or service type

10

WH

ITE

PA

PE

R

11

DynamicTrafficPrioritizationService providers can establish a “self-healing” network during times of congestion by using next generation policy to detect the state of congestion and prioritize network traffic based on a variety of business and technical parameters such as:

• Subscriber profile (e.g., usage history; customer type–consumer, business, or government; preferences; SLAs)

• Account plan (e.g., tiered service plan, contract terms conditions, premium service options)• Traffic to and from “preferred” partner sites in support of revenue-sharing partnerships

with third-party content providers and distributors• Availability of network capacity• Application type (e.g., music downloads, streaming video , HTTP, VoIP, P2P)• Location (e.g., off-net/on-net sites, roaming versus non-roaming customers)

Integration with OCS capabilities enables operators to monetizetheircontrolovertrafficprioritization while enhancing subscriber experience. This capability not only supports scenarios such as Tiered Service Controls and Partner Controls, but also enables subscribers to control their own access to network resources. For example, operators could increase ARPU by enabling subscribers to sign up and pay for “on demand” temporary bandwidth boosts or QoS prioritization in real-time.

Partner Service ControlsRather than the delivery of bandwidth, subscribers see the true value of their internet access based on the content accessed, services enabled, and applications delivered. Therefore, in order to maximize future revenue opportunities, service providers need to transition away from bandwidth-centric service plans. With next generation policy, operators can establish revenue-generating partnerships with OTT providers to offer a seamless, integrated experience to customers. Examples of partnerships include:

• Premium TV content providers can provide prioritized QoS to their customers who access the online version of their content by paying a fee to operators

• Providers of devices (e.g., e-book readers, portable gaming systems, MP3 players), can partner with network service providers to enable online access to certain content in order to provide an integrated, seamless experience to users (e.g., read books, play games, listen to music)

• Movie rental companies can offer customers who view movies online higher bandwidth by sharing a portion of the rental fee with operators

• Advertisers can ensure their online video ads are viewed with the highest QoS by paying service providers a fee whenever a user clicks on the ad

WH

ITE

PA

PE

R

Account ControlsCustomers are looking for more personalized services in which they can customize their services to meet their specific needs. With next generation policy, service providers can enable subscribers to have direct control over their account usage.

For residential customers, operators can offer parental controls service to parent subscribers. With this service, examples of how parents can manage their children’s usage of data and mobile services include:

• Restricting access to content based on URL, content rating/categorization, black & white lists• Browsing and SMS are only allowed before and after school hours• Limiting number of SMS and time spent on gaming sites during school days• Accessing detailed reports on children’s service usage For commercial subscribers, service providers can offer business services controls. Corporate administrators can use this service to govern employee use of data and mobile services, manage spending amounts and enforce corporate acceptable usage policies. Examples of controls include:

• Usage limits based on time, day of week, quantity• Restricted or limited personal or non-business usage• Restricted or blocked services, URLs, contact lists• All personal usage blocked whenever roaming• Restricted usage of specific services, content, or applications

The integration of next generation policy and OCS enables operators to offer a more robust service to customers in which real-time, dynamic monetary controls are combined with usage controls. Some examples include:

• Establishing and enforcing spending limits• Creating thresholds for personal usage; employee charged whenever threshold passed• Restricting roaming access whenever a certain threshold is reached• Establishing spending limits and thresholds; once the limit is reached, authorization from

administrator or parent is required before service is resumed

12

WH

ITE

PA

PE

R

Conclusion

The network is rapidly becoming a commoditized asset even as demand for IP services is growing at an explosive rate. To capitalize on this market growth and to avoid being displaced by content providers, distributors and other players, service providers must control and monetize their networks more effectively. Next generation policy management gives operators intelligent, dynamic control over their networks, enabling them to respond to these market conditions by:

• Controlling network resources based on subscriber attributes and session information• Dynamically implementing mid-session policies based on real-time triggers• Applying policies in a convergent manner across multiple access networks• Receiving the scalability, performance, and flexibility required as policies become

increasingly complex and sophisticated

By integrating next generation policy with an Online Charging System, service providers can dynamically control subscriber entitlement to network resources while monetizing that entitlement to support initiatives for:

• Creating new revenue models based on next generation services and solutions• Increasing ARPU with personalized up-sell and cross-selling promotions• Creating customer stickiness and reducing churn by offering personalized services• Enhancing customer loyalty with enhanced self-care capabilities and creative loyalty

programs

In order to extract value from every transaction that occurs on their networks, optimize the customer experience and become strategic participants in the value chain, service providers can turn to next generation policy to leverage their networks into smart, profitable business models.

13

WH

ITE

PA

PE

R

Openet’s Next Generation Policy Product

Openet is a leading provider of next generation policy with its FusionWorks™ Policy Manager. The Policy Manager is tightly integrated with online charging system (OCS) capabilities of three FusionWorks products: Convergent Charging, Network Edge Rating, and Balance Manager. By enforcing business intelligence and real-time charging at the network-edge, Openet provides a next neneration policy solution that enables operators to deliver integrated, interactive, and highly individualized service experience to customers.

Openet’s products are built on the FusionWorks Framework and leverage:

• Openet’s expertise in policy management, charging, rating, mediation, and balance management

• FusionWorks Business Rules Engine for real-time, flexible business rules

• Visibility into individual network transactions and events across all access networks

• High performance, low latency engine capable of handling thousands of transactions per second (TPS)

• Compliance with industry standards including 3GPP, 3GPP2, TISPAN, CableLabs, WiMAX, and others

Policy Manager• In-session, real-time policy

decisions• Pre-defined and event-triggered

policies• Interfaces to leading policy and

charging enforcement functions (PCEF)

• Centralized or distributed policy deployment hierarchies

• Policy Decision Workflow Matrix• External Web Services Interfaces • Notification support• Reduced latency (Policy

Preloading, Policy Caching)• Scheduler

Real-time Charging, Rating and Balance Management (OCS)

• Real-time charging (session management, event and session charging)

• Rating (bundles management, rate calculation, batch and real-time support)

• Balance management (hybrid accounts, account management, promotions management)

• Designed to handle high volumes• Reduced system latency by

reducing transaction load from IN• External Application Interfaces to

integrate with external systems

Product Overview

Contact

www.openet.com

info@openet.com

Dublin, IRELAND

6 Beckett WayPark West Business ParkDublin 12, Ireland Tel: +353 1 620 4600Fax: +353 1 620 4990

Reston, Virginia, USA

11465 Sunset Hills RoadSuite 310Reston, VA 20190 Tel: +1 703 480 1820Fax: +1 703 435 0730

© Copyright 2009 Openet Telecom

14

WP-NGP-POLICY-0609