Meeting Shareholder Demand for 4G Profits

Technological advancement is good, but needs business justification if you need shareholder backing

As 2011 opened, the telecom marketplace was abuzz with hot news on the mobile front. Major carriers had just unveiled new “4G” markets. That mood is carrying on well into 2012 globally. Some might have concluded that the dawn of long-awaited ubiquitous 4G was here at last. The elephant in the room, it turns out, is that mobile operators will continue to rely heavily on their existing 3G networks for the foreseeable future – for smart phones, too.

When will we see broadly deployed mobile networks that meet the ITU’s original 4G standard of 100 Mbps downloads in transit, for example in a car or on a train, and 1 Gbps in a stationary environment like the office? Before that day arrives, mobile operators have many issues to contend with, not least of which is the ongoing high cost of network investment. Still smarting over the additional sunk cost to make 3G networks handle the load of smart phone traffic, operators know they face another big bill for 4G.

According to In Stat research, the outlay for just one component — new backhaul facilities required to handle the coming traffic generated by mobile data – will soar 41 percent to $117 billion by 2014. Rest assured that shareholders, who have yet to see a profit on 3G network investment, will scrutinize every new nickel spent on 4G. They’ll demand a return. The term “network monetization” will carry a lot more weight with those footing the bill than the current emphasis on “network optimization.”

One way to help offset the cost of 4G is to embrace advanced billing solutions with the proven ability to accelerate new revenue streams efficiently. Such solutions can help mobile operators meet their operational and financial goals in four key ways:

  1. Faster time to market. Before 4G, ARPU was constrained because the network couldn’t keep up with consumers’ data consumption. The increased speed and reliability of 4G is set to overcome this hurdle and maximize revenue, but only if CSPs have upgraded their billing infrastructure to support the rapid introduction of new 4G compatible devices, innovative services, and time-relevant promotions. With a smart billing system, operators can respond to customer demand in a matter of hours or days, rather than months, as is the case with many legacy systems.
  2. Ability to handle increased number of transactions.  Informa research has found smart phone activity accounts for nearly 65% of mobile traffic and that the average traffic per smart phone will increase eight times by 2015. As smart phone usage ramps up, operators have cause for concern over legacy rating and billing systems. Older systems can’t scale to handle 4G’s increased transaction volumes, let alone with what comes after: 5G and 6G.
  3. Cost control. A smart billing system with low operational cost is key to controlling 4G spend and, as a result, realizing profit faster. Benchmark billing accuracy, high level of automation, and ability to handle multiple services are some of the key characteristics of such a smart billing system. Moreover, such a system would also have real time credit control capability to reduce debt exposure in a multi partner service environment. Furthermore, operators can also opt for hosted billing through the cloud to free up capital funds and make operational expenses more predictable and controllable.
  4. Delivering a superior customer experience. 4G may be an emerging technology, but it is already a competitive market. 4G-badged services have already begun in several countries including Norway, Germany, Poland, Austria, and the United States, to name a few. In Sweden, for example, three service providers have already commercially launched 4G services giving us a clear indication that 4G will be just as competitive as 2G/3G, if not more so. Amid all this competition, the customer service experience will be a differentiator. Connectivity, data speed, devices, price plans, and consistently accurate billing all contribute to the service experience, but in a 4G world, the bandwidth tracking and cut-off capabilities of the PCRF (Policy Charging and Rules Function) will be critical to customer satisfaction. Providers will be able to offer and monetize tiered internet access, and parents and employers will be able to control what, when and how much their children and employees have access to, alleviating bill shock, network capacity issues, and data and voice service disruptions.

The up-sides to 4G are numerous – faster, more reliable data consumption for consumers, and more opportunity for profitable revenue generation for providers. To realize 4G’s full potential and begin seeing a return on their extensive investments, service providers need back office systems that are just as robust, fast, flexible and smart as the network. For mobile operators, network monetization via Smart BSS is the next generation of the business and key to maintaining shareholder investment.

More Stories By Mohammed Sha

Mohammed Sha is the Director of Product Marketing at AsiaInfo-Linkage, the supplier of the world's most advanced software solutions and IT services to the telecommunications industry.

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