The emerging telecoms market: a quantum leap for OSS?

Date: Wed, 09/02/2009 - 18:59 Source: Clarity International press department

Jon Wells, Director of Product Management at Clarity, discusses how pressures in emerging markets are forcing OSS to change, for the benefit of all

The emerging telecoms market: a quantum leap for OSS? Jon Wells, Director of Product Management at Clarity

The emerging telecoms market is no less demanding than those in Western Europe or North America, but it does present substantially different requirements. These markets often present challenges that telcos in developed markets have not had to contend with, but are now or may soon find themselves facing – particularly as they feel the impact of the global economic slowdown. In contrast, operators in emerging markets are proving resilient in the current financial crisis, with OSS Observer having forecast a revenue growth of 11% by 2012.  Thus it is no surprise that Western operators are increasingly looking to expand into these markets. This is seen as both a means to financial protection in the short-term and also to benefit from high growth in the long term.
To survive, operators across Eastern Europe, South Asia, Africa and Latin America have learnt to support lean operations. They must leverage economies of scale, keep up with intense competition, engage with increasingly technology-aware consumers and create innovative services if they are to survive. The lynchpin to all their activities are their Operational Support Systems (OSS). Across these emerging markets, OSS is helping telcos manage technology refresh - initiated to reach new customers with next-generation services, replace creaking infrastructure or “leap-frog” to next-generation networks (NGN).
In the West, the traditional approach to OSS is to employ a “Best of Breed” approach potentially unsuited to emerging markets. In contrast, Unified OSS – an open, NGOSS based, modular, pre-integrated, end-to-end OSS solution – presents operators in emerging markets with sophisticated OSS without the associated long lead times and high costs.
Gartner have predicted that 2009-2010 will be a year of market contraction and pronounced ARPU shrinkage for North America and Western Europe, but that emerging markets, such as APAC, will be less affected.  ABI Research recently reported that Europe saw a 5-8% fall in ARPUs in Q42008.  This combination will make the OSS practices in APAC even more applicable in developed markets. So, what are the lessons emerging markets can offer to the global OSS community?

Streamlining the process
Most operators in emerging markets must contend with comparatively low ARPU. The estimated ARPU in India is around US$8 per month; only slightly lower than Sub-Saharan Africa, Russia and China but around a tenth that of some Western European operators. However, this low ARPU is off-set by a huge potential for customer growth. For operators in emerging markets, the key is in accessing their large, often rural populations that typically have low tele-density, thus supporting business models based on rapid growth and high customer subscription. For example, India covers 3M km2 and 70% of the 1.1 billion population lives in rural areas with tele-density of around 2%. While the opportunity for customer growth is clear, automation and intelligent management of manual activities, leading to operational efficiency, are critically important when maintaining services over such a geographical extent.
Some operators in Asia are achieving ratios of staff to subscribers that are almost half that of counterparts in Western Europe and North America; one Indian operator is achieving a ratio of 1:1750. This is being achieved initially through rapid growth in subscribers but to sustain this and turn it into operational efficiency, operators look to their OSS to automate and manage the end-to-end operational processes.
Operators in Eastern Europe and the Commonwealth of Independent States (CIS) are challenging their legacy platforms as they experience demand for broadband services. OSS Observer forecasts that residential broadband will grow faster than revenue, at a compound annual growth rate of 27%, as the service is still relatively new, and ARPUs are low.  Simply put, the legacy OSS cannot efficiently, rapidly and reliably deliver the order-to-cash process, despite network availability and a consumer base demanding higher value services. Many operators are replacing legacy with new OSS, often delivering many functions simultaneously. One Eastern European operator recently started an OSS project covering inventory, order management, activation, field-force logistics and trouble-tickets. In emerging markets, time is of the essence and the transfer of subscribers from low to high value services cannot wait for traditional OSS lead-times.

Growing pains
In emerging markets, an OSS must take the strain of a rapidly expanding customer base, since this off-sets the low ARPU. Expansion can be extremely rapid - some operators in emerging markets achieve tens of millions of subscribers within a few years and a monthly growth of one million subscribers is fairly common. Informa Telecoms & Media recently  reported that the Middle East has seen a 47% year-over-year subscriber increase in 2008, even as the world economy slows.  Where the subscriber base already exists, as in Eastern Europe, the OSS must support consumer demands to rapidly transition from low to high revenue services.
Operators in emerging markets need OSS that helps them “go-live” with services quickly and manage the transition from low to high revenue services. This rapid increase in subscriber numbers or service revenue is often essential for the business plan. This is doubly important because operators in emerging markets have often invested heavily in infrastructure and strive for high utilisation through customer growth to balance costs. One emerging market operator estimates that the right choice of OSS saved around US$200M in life-time integration costs and delivered sophisticated OSS functionality two years earlier, when compared to “Best of Breed” OSS. Within seven months of starting up, they were their country’s largest mobile operator.
Subscribers in emerging markets are technology literate and competition is relentless, throughout this intense growth period. Competition is a major reason why India  has some of the lowest mobile rates in the world, at two cents per minute.  The need to defend market share and capture new subscribers drives innovation in service offerings. In addition to coping with demands of growth, the OSS for emerging markets must reduce time-to-market for new products. Demands for 12-15 new products and features per year for mobile service providers in emerging markets are not unheard of, and are being supported by Unified OSS today.

Innovate to keep customers
A common misconception is that subscribers in emerging markets are not demanding. In reality, customers in emerging markets have extremely high expectations. The level of competition for subscribers may drive to extinction operators that do not address customer experience, innovate and improve their product portfolio and service level agreements (SLAs).
Just as in developed markets, an OSS must intelligently map network status, planned outages and provisioning key performance indicators (KPIs) to customer facing SLAs, and coordinate and prioritise responses when SLAs are in jeopardy or breech. Whilst automation and efficient manual processes remain the fundamental means of maintaining excellent customer experience, SLA management can gauge and improve that experience, focusing management on the subscriber’s needs.
The same is true when viewed from the customer perspective. Customers expect the call-centre staff to be informed, to map the customer reported fault to a known network fault intelligently, give reassurance that the resolution is progressing and provide a restoration time. Only the OSS is positioned to support this.
In “Best of Breed” OSS, maintaining customer centric perspectives is often the culmination of years of evolution. To meet demands of customers in emerging markets, telecoms providers simply cannot wait. Unified OSS can implement customer centric management without major integration projects.

Next-generation technologies
For many developing countries, next-generation technologies are not a long-term aim, but a starting point, since they can solve many problems facing operators.
Various operators in emerging markets are building broadband optic fibre networks, completely bypassing the copper lines still used in many developed countries. In just a few years, India-based Reliance Communications has become the world’s largest IP-enabled optic fiber cable network with 230,000km now laid. Compared to copper cable, optical fibre provides far more bandwidth, whilst being cost comparable and less subject to theft. Similarly, telcos in Africa are deploying no fewer than eight new fibre optic undersea cable projects during the next two to three years.  Telekom Malaysia’s HSBB project will receive RM2.4B investment from the Malaysian government, as it proactively tackles its relatively low penetration of broadband.   Similar government initiatives are found around the world. For example, entry into the European Union is driving infrastructure re-fresh in Eastern European and CIS countries.
Instead of deploying copper or fibre, many countries are deploying wireless coverage to provide an instant broadband service. Wireless broadband is an excellent means of reaching rural or transient populations and coverage “black spots”. Unlike copper cable, wireless broadband equipment can be secured against theft and removes much of the cost of laying and maintaining hundreds of kilometres of infrastructure.
One shared characteristic of most emerging markets is that they are a hive of innovation and experimentation. In Africa, 3G and CDMA2000 are currently capturing public interest, but this may be challenged by WiMAX and technologies such as Power Line Communications (PLC) continue to exploit niche opportunities.  Operators in Africa are evaluating technology, looking for the best fit for their specific challenges and OSS must support this evolution. With current residential broadband at only 1% there is a huge potential for rapid expansion of service.

The unified picture
Unified OSS focuses on simplification through pre-integration, consolidation of operational data and centralised workflow spanning end-to-end operational processes; from SLA management to field-force logistics. Unified OSS can deploy faster and with lower risk than “Best of Breed” OSS solutions, avoiding integration and data synchronisation costs. It helps operators in emerging markets achieve ROI on their infrastructure investments sooner and, through simplicity and flexibility, allows operators to engage their subscribers with innovative products over evolving networks.
With 2009-2010 set to be particularly challenging years in terms of revenue; parallels between OSS practices in emerging and developed countries are that much more pertinent. The approaches emerging markets have taken to overcome these problems have been hard learned and Western operators ignore them at their peril. Furthermore, as Western telcos attempt to step into these emerging markets, they should be aware that they will be competing with local providers who have grown up in an environment of lower ARPUs and high churn, and who have developed the “lean” models needed to cope with it. Western telcos should not be lulled into the sense that competing with these operators will be easy.
Clarity International is a leading vendor of Unified OSS solutions; managing over 120 million subscribers, many of them from emerging economies.

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