With penetration rates reaching 100 percent in most countries, increasing competition and a steady decline in voice revenues, telecom service providers in the Middle East are starting to focus on offering value-for-money services.
Telcos, who have been dependent on voice business for long, are now leaving that model behind and moving towards an application business model. The new telecommunications business model encompasses a range of applications, including wireless, multimedia, data and connectivity solutions.
Even during the global economic slowdown, the telecom market in the region has remained resilient, mainly due to the increased demand for telecom products and services. Now, industry pundits predict new technology areas will sustain the growth momentum and create pockets of revenue opportunities.
“LTE, NFC, M2M, cloud and Big Data analytics are technology trends which have the potential to change mobile operators’ current business drastically over the next couple of years,” says Klaus Middeler, Director – Strategy & Business Development, Ericsson.
LTE – Long Term Evolution – provides consumers with data speeds they usually would get from a fixed line operator making their business close to obsolete in areas where copper is still the main means of data transportation. With new media compression technologies enabling efficient video transport over the air we will see home TVs connected to the mobile network bringing mobile operators in the position to earn revenues from media distribution, he adds.
M2M, which will connect billions of devices in the near future, is another lucrative market. “With M2M, sensors, meters, cars and machines will exchange data without the interference of a human being. Many of these connections will use the mobile network as a means of transportation. As a result payments have to be made and money has to be collected. This is a profitable revenue stream mobile operators can participate in,” says Middeler.
The growing demand for managed security services is also an attractive proposition. “The size, frequency and complexity of Distributed Denial of Services (DDoS) attacks is increasing. Unfortunately, when it comes to today’s range of sophisticated DDoS attacks, traditional security products, such as firewalls or intrusion prevention systems, are proving to be inadequate,” says Mahmoud Samy, Regional Director, Arbor Networks.
Enterprises are now more concerned about this than ever before and telecom companies and Internet Service Providers (ISPs) can help them combat these threats, while simultaneously creating lucrative new revenue streams, he adds.
Service providers have some inherent advantages that enable them to capitalise on this demand because they own the ‘pipes’ that transmit data across the Internet. This makes Telcos & ISPs uniquely positioned to deliver a comprehensive solution that can combat DDoS attacks.
As telecom sector competition intensifies, customer experience is taking centre stage, with providers leveraging on new-age tools such as social media and mobile Internet. The stress is increasing on operators to enhance customer experience and incorporate a wide variety of service to attract new customers while retaining existing customers.
“There are many areas where the current way of operations can be performed much more cost-efficiently than today,” Middler says. “Consolidating islands of technology, automating business processes, enabling self-care to consumers and the virtualisation of network functions are prime areas to look at. One of the scarcest resources of our era is ‘time’ it takes minutes to call news history, to churn from one company to another one. The operator, who will best manage customer experience, acts proactively and instantaneously to the needs of its customers to have an important advantage against competition. Needless to say, this will be translated into profitability.”
He adds that investment into real-time decision making, actionable intelligence, and complex event processing technologies will be key for operators to be in charge of their customer experience. In the very near future, Social CRM will come from the hype cycle and become an important pillar of CEM to support profitability.
The revenue leakage problem
Today, service providers deliver voice, video, data, interview, wireless and even cable offerings over a common infrastructure. Technology is now available that enabled many such different services over common networks. However, such convergent offerings can be just another dammed-up revenue stream unless they are properly and reliably billed.
Revenue leakage is often treated as a billing issue. Telecommunications industry analysts estimate that between 2-5 per cent of all billable-minute revenues are lost because of absent or incorrect billings. Telcos typically focus on revenue leakage only when a major fluctuation occurs in financial results or billable metrics. Unfortunately, this approach is misguided, as there are many significant revenue leakage problems that may not turn up in monthly trend-analysis reports.
Revenue loss can occur in any element of the revenue stream, from new product development to systems – switches, order and provisioning, rating, invoicing – to back-end customer support. Given the sheer scale of transactions processed by a typical telco, the total amount of money washing down the drain due to leakage can be substantial.
In this context, it is important for service providers to sustain their investment in fraud management and revenue assurance technologies. Middeler says, “New investments are not the only key to success. Operators need to be willing to question established routines and processes to be more successful in fighting against fraud. Making sure that you get paid for the service you provide is more a question of having the right technology in place. Many outdated systems could be replaced and financed only by the losses the old ones are responsible for in less than a year.”
Revenue assurance programs allow organisations to identify revenue opportunities and threats, and enhance the efficiency of operational and support activities. An effective program will increase billable revenue and cash flows, make operating processes more efficient, cut end-to-end cycle times and minimise the chance of service disruption.
Revenue assurance methodology was originally developed for telecommunications companies, but the underlying risk management principles can be applied to other industries that face similar challenges: rapidly shifting market conditions, processing small transactions on a massive scale, and fragmented hand-me-down systems architecture. For example, utility companies are now facing markedly similar conditions as power markets deregulate, and may benefit from the adoption of revenue assurance techniques.
Financial institutions also face similar issues. Revenue assurance concepts can be generalised to be of use to any savvy organisation that wants to implement improvements in its revenue processes and drive dollars to the bottom line.