{46598d39 b539 48ce 8df9 18f8249a2b3c} wp using dynamic pricing to accelerate lte revenues

8/13/2019 {46598d39 b539 48ce 8df9 18f8249a2b3c} WP Using Dynamic Pricing to Accelerate LTE Revenues

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Copyright Openet Telecom, 2013

White PaperUsing Dynamic Services Pricingto Accelerate LTE Revenues

The Foundation to Develop and Deliver

Value-Based High Speed Data Offers


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White Paper - Using Dynamic Services Pricing to Accelerate LTE Revenues


Index 2

LTE Increasing the Rate of Market Change 3

How Innovative Operators are Driving Growth 4

Delivering Customer Choice The Importance of Value Based Offers with Built-in Controls 5

Examples of Value Based Offers

Increasing Data Adoption 5

Increasing Data Roaming 6

Leading With Content 7

Upselling Enriched Data Services 7

Segmentation Providing a Mobile Phone Service for Children by Addressing Parents Values 8 Shared Data Bundles 10

Understanding Customer Behavior and Network Performance: the Role of Real-Time Intelligence 11

Direct to the Device: Offer / Service Delivery and Customer Communications- Enabling Simplicity out of Complexity 12

Summary 14

Openet PCC Enabling Dynamic Services Pricing 14

About Openet 14

INDEX


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HOW INNOVATIVE OPERATORS ARE DRIVING GROWTH

Innovative operators who are using data to drive revenue and increase protability, understand their

customers behavior using real-time intelligence. They also provide exible offer development and

marketing that enables faster time to market, as well as context sensitive up-sell opportunities thatare relevant to individual customers.

In the past year operators have been launching an increasing number of services, bundles and add-on optional extras as they look to offer value to an increasingly segmented base. Examples of currentinnovative services include:

Many operators are also providing multi-play (xed, mobile and TV) bundles which adds an

additional layer of opportunity to capture a greater share of customers communication andentertainment spend. Also add the increasing demand for Wi-Fi and the new interoperabilitystandards between Wi-Fi and cellular, then it is clear that mobile operators are operating in anenvironment that is moving faster than at any other time in the mobile industrys 30 year history. It isthose who are best equipped to lead in this rapidly evolving market that will be benet most from the

opportunities presented by high speed data.

DELIVERING CUSTOMER CHOICE THE IMPORTANCE OF VALUE BASED OFFERSWITH BUILT-IN CONTROLS

The premise on which value based offers and pricing are built is relevance and choice. Customersapply different values to services, and the value attached is often context and time dependent. Bygiving a wider choice to customers operators can increase data adoption rates, grow revenues andcompensate for falling voice and text income. By understanding customer and segment behavioroperators can dene value based offers.

These offers can have many components. They can include data volume tiers, speed tiers, Wi-Fi hotspot access, speed reductions linked data thresholds, content access controls and spendcontrols. All of these components and entitlements need to be measured, rated and controlledin real-time for all customers. Increasingly many offers have numerous options and value added

services that customers can pick and choose from. A glance at the websites of many operatorsillustrates the increasing number of value based offers and short term promotions in the markettoday. One of the key points with value based offers is exibility; the value of specic services to a

customer can change dependent on time and context this is why many operators are now rollingout time based options as service add ons e.g. 5 day service pass, etc. The following list providessome examples of value based offers operators are providing.

Figure 2 - Sample of current mobile data services


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EXAMPLES OF VALUE BASED OFFERS

INCREASING DATA ADOPTION

Getting customers to use mobile data is often a big step, as operators move beyond the early

data adopters and want to make data the focal point of their offering. Often this involves increasedtransparency and removing uncertainty over costs.

As can be seen in Figure 3 Canadian operator Rogers promotes the use of a data service passfor infrequent data users. The goal is to get these customers using mobile data and remove any

uncertainty and apprehension about costs. Figures published in Billing World in July 2012 wouldindicate that data service passes are working well. In the 60 days post launch Rogers converted15% of data pass users to a recurring post-paid data plan and cut billing credits by 98%. In additionRogers was able to reduce the number of calls into customer care by 120,000 per year. Thissignicant cost saving and revenue increase is mainly down to providing a more transparent and

easier way for customers to understand how much data they are using, which removes uncertainty.

Several operators are offering free access to popular and recognizable data services in order to getcustomers using data. As can be seen from Figure 4 South African operator 8ta offers free access toGoogle services.

Other operators are offering OTT services with low usage price tag. For example, Malaysian operator,Digi, offers 5 day unlimited access to messaging service WhatsApp for RM5 (US$1.64) for their pre-paid customers.

Figure 3 Rogers Data Service Passes

Figure 4 8ta Free Google Service Offer


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INCREASING DATA ROAMING

According to Juniper Research up to 75% of roamers disable data roaming, and this is resultingin a potential revenue loss. In their report, Mobile Roaming Opportunities and Forecasts 2012-2017, Juniper calculate that the global revenue opportunity from silent data roamers was $3.8Bn in2012, rising to $8Bn in 2017. In many cases customers do not switch on data roaming due to the

uncertainty of data roaming costs.Kuwait based operator Wataniya is capitalizing on the data roaming opportunity by selling dataroaming service passes. These have a clear cost structure, and the customer knows that oncethe data has run out, they can decide to buy a new service pass or not. This direct offer andcommunication to the customer has removed the potential for confusion and apprehension andopened up a valuable revenue stream. Figure 5 below illustrates how Wataniya promote peace ofmind when positioning data roaming service passes and the associated tariff table shows how timeand volume based data roaming service passes are priced.

Figure 5 Wataniya Data Roaming Service Pass Promotion


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LEADING WITH CONTENT

Operators know that data in itself is only an enabler. People buy data in various ways they listen tomusic, watch videos, communicate with friends and so on. Content led offers are a good exampleof value based offers. Music streaming offers will have more attraction for some people than others.Likewise, different video packages, which can include mobile TV with different channel (sports,

movies) packages are a good example of value based offers. Some people will be willing to paya premium to watch football on their smartphone or tablet, while others may decide that a musicstreaming service represents better value.

Orange Slovakia has recognized the diversity of content and has developed a wide range of contentled packages to encourage customers to get the best out of data. With over 40 different offers,including mobile TV, music and eBook services, Orange Slovakia is delivering a wide range ofcontent services to cater for different customer tastes and values.

When promoting content, especially video based offers, quality of service is important. In their 2013

predictions report, Yankee Group reported that 31% of users of advanced data services would bewilling to pay a premium for higher speeds on demand, and predicted the increased use of turboboost services, where customers would pay for a limited increase in data speed.

Figure 6 Orange Slovakia Content Offers


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UPSELLING ENRICHED DATA SERVICES

Israeli operator Pelephone offers a basic data package, and then offers a wide range of add-ons toenable customers to get more value from their service. These include stepped package plans anddata volume and double speed add-ons. This approach enables Pelephone to increase revenuesfrom direct data consumption. In addition, Pelephone also provides cloud and content based

services (as illustrated in Figure 7). These include music and TV services where the subscribers paya at monthly fee. In addition to this Pelephone also focuses on providing services to a range ofdevices which is resulting in 27% of all data revenues coming from devices other than smartphones.

Pelephones approach of delivering upsell data options is working. They are seeing 25% dataARPU increase (YOY 2010- 2011), churn rate in subscribers to their cloud services at 25% less thanaverage, and 10% of customers subscribing to additional data options. As well as driving 5%-10%of additional EBITDA, these advances are enabling Pelephone to enjoy a higher percentage of datarevenues than their competitors (Source, Pelephone CEO presentation, BBTM Conference, London,November, 2012).

HOME

Figure 7 Pelephone Mobile TV Service


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SEGMENTATION PROVIDING A MOBILE PHONE SERVICE FOR CHILDREN BYADDRESSING PARENTS VALUES

Many operators have been offering parental controls as a value added service for several years-often with basic URL ltering, time of day control and service access and restrictions provided free

of charge. Some operators are also controlling the spend by children and this is popular in markets

where shared family usage is provided.

In Denmark Telenor has gone a step beyond and launched a mobile service for children, with in-builtparental controls as part of the base offer. At 50 DK / month (approx. US$8.75) this is a relatively lowcost service and provides the value to parents that they will have control over their kids mobile usageand provide a safe experience, while not costing a great deal. The parents have the options to buyadditional data, voice and text options. A signicant difference here is that this service is a bill pay

service and as such has a minimum term.

Figure 8 Telenor Denmark Mobile Service for Children


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SHARED DATA BUNDLES

In 2012 shared data bundles made a signicant impact on the mobile scene. The increasing

popularity of tablets is helping drive this. Many mobile subscribers (individuals and families) ownmultiple devices and many people were not willing to take out a second mobile subscription for asecond device.

Data share packages offer an equitable way to do this, and many operators are offering multipledevice data share plans to families as well as individuals. With an increased number of people anddevices accessing a shared data pool it is essential that the collection and rating of the associatedusage is done in real-time to avoid bill shock and ensure strict quota management, and that

fulllment and provisioning is direct and in real-time to ensure customers can access data at once.

As can be seen from Figure 9, AT&T is one of the leading operators to offer data share plans.

In order to develop and market such innovative, value-based offers like those discussed above,operators need to have real-time dynamic pricing capabilities in place that enable:

Market intelligence through collecting and analyzing customer behavior and usage data

Development of exible pricing plans and offers (as illustrated the in the above examples)

Fast time to market

Real-time communication and interaction direct to customer device

Figure 9 AT&T Data Share Offer


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UNDERSTANDING CUSTOMER BEHAVIOR AND NETWORK PERFORMANCE THEROLE OF REAL-TIME INTELLIGENCE

The rst step in the Dynamic Services Pricing process is collecting usage data through on-line

mediation.

Traditionally customer usage information is collected by mediation, passed to charging or bill ingand then sent to a batch based data warehouse for analysis for use in planning and forecasting.This approach works well for strategic intelligence and reporting. However customer intelligence onmobile data usage and behavior needs to be real-time in order to make context sensitive marketingand up-sell offers. In this case mediation can collect the data usage records, perform a real-time lookup of the customer data in the existing data warehouse, and enrich the usage record with relevantcustomer information (e.g. life time value score, churn propensity score, etc). As illustrated in Figure10, this enriched data record can then be passed to a real-time outbound marketing system that cantrigger, if applicable, a context sensitive marketing offer to be sent to the customers device.

A simple example could be an outbound roaming customer who has switched off data roaming. ThePCC system recognizes this, and in real-time, looks up the existing data warehouse and sees thatthis customer has a monthly subscription to a music streaming service. This enriched information issent to an outbound system which triggers an SMS to be sent promoting a customer specic offer

e.g. buy a 1 day 50mb data roaming pass, with free access to music streaming service for 3. Aswell as providing the real-time data to trigger the context sensitive marketing up-sell, usage recordsfrom mediation provides the data needed to report on network performance as well as feed usageintelligence to the data warehouse.

Figure 10 Real-Time Intelligence


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FAST TIME TO MARKET

With more base service offers and an increasing number of add-on data options and value addedservices, the last thing an operator needs is to have a service launch held up because they needthe billing vendor to set up and congure new pricing plans. A recent survey carried out by Openet

and Telecoms.com Intelligence highlighted that 80% of operators (from a survey of over 200) felt that

existing billing systems restricted operators getting new products and services launched (see Figure11).

With voice services many operators typically updated their core tariffs every 12-18 months at a costof several hundred thousand dollars. New promotional tariffs were added approximately every 3months, still at a signicant cost.

Clearly a new approach is needed tariff tables should be rules based, and be easily congurable

and maintained by operators in order to enable real-time charging and billing systems support faster

(as well as cost effective) time to market, and also be quickly changed in response to customer andmarket advances.

DIRECT TO THE DEVICE: OFFER / SERVICE DELIVERY AND CUSTOMERCOMMUNICATIONS - ENABLING SIMPLICITY OUT OF COMPLEXITY

A potential concern for operators is that by promoting a wide range of offers, add-on options andvalue added services they could potentially confuse customers. By offering too many tariff optionsthere could be a danger of confusion, as has happened in other industries. In the UK there wereseveral well publicized cases of gas and electricity suppliers being told by the regulator to provideclarity of pricing. By selling mobile data services using value based pricing and effective offer basedsegmentation operators can avoid potential confusion.

However, not everyone knows what a MB or a GB is, and this can lead to apprehension, and potentialconfusion. As seen from the operator examples in this paper, setting up offers such as servicepasses to stimulate usage can signicantly help in delivering revenue and reducing costs. The

optimal way to communicate these offers is direct to the device, with direct, real-time provisioning toenable customers to purchase and use services immediately. This satises customer expectation of

immediacy which is set by other services that they can access on their smartphones for shopping,banking etc.

Making relevant, context sensitive offers direct to the device provides a level of personalization thatmany marketers can only hope for. It is also the optimal channel for purchasing new services andproviding communications to any issues. This makes buying new services easier for the customerand can also reduce back end customer care costs for the operators.

Figure 11 Survey Results: Are Billing Systems Holding Up Business?


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Advanced PCC provides direct interaction with B/OSS and PCC systems to the customers device,thus enabling real-time 2-way communications and controls. This direct to the device communicationcan also enable buy now options. These can include app specic services (e.g. 30 day Twitter

pass); add ons (e.g. cloud storage, 30 days streaming music service, extra 1GB of usage) etc. The

sample screen shots in Figure 12 illustrate offers being made for post paid subscribers to purchaseadditional top-ups.

As can be seen from Figure 12, this direct interaction to the device extends beyond sending emailsor SMS text messages with an embedded URL to a web self-care site. This is direct and personalizedcommunications and marketing, using intelligence direct from back ofce PCC and B/OSS solutions

to enables real-time, relevant and context sensitive interaction.

Providing this real-time and context sensitive marketing delivers the nal piece in the continuous

marketing loop, whereby operators measure the uptake and impact of new offers and optionsdelivered direct. This enables the continuum of analysis, development, marketing and usage.However, as this document il lustrates, with high speed data this continuum is much more dynamicthan with traditional telecoms services.

Figure 12 - Screenshot Example of Direct to the Device Communications Offering Personalized

Information and Marketing


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SUMMARY

The rate of change of the mobile industry is greater than ever before. This is having an impact onhow operators market and support services, as well as deliver value to their customers. Operatorsmarketing teams are now moving at a faster pace than before, as they roll out more offers andoptions to more and more segments and adopt new business models with new partners.

This new industry evolution needs to be supported by systems that enable change and delivercustomer value.

OPENET PCC ENABLING DYNAMIC SERVICES PRICING

Openets product suite combines policy and charging control with direct to the device interaction toenable innovative real-time charging models, to provide the foundation to increase revenues andprovide a more personalized customer experience.

This provides the foundation on which Dynamic Services Pricing models are built.

ABOUT OPENET

Since the introduction of mobile data services in 1998, Openet has helped service providerscapitalize on opportunities and overcome challenges. With competitive pressure accelerating,todays service providers rely on Openet software to evolve business models around networkingsmartphones, M2M devices, and third party services. Openets portfolio combines policy andcharging control with device and third party interaction to enable innovative charging models, tocontrol operatingcost, and to personalize services. More than 80 of the worlds largest serviceproviders in 28 countries use Openets high performance software.

For more information, please visit www.openet.com.

Figure 13 - Openet Framework

{46598d39 b539 48ce 8df9 18f8249a2b3c} wp using dynamic pricing to accelerate lte revenues

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