Success of 5G depends upon operators’ monetization and pricing strategies

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Shay Assaraf, CMO of Optiva takes a look at how operators can make the most of the 5G opportunity.

As headlines and advertisements increasingly tout the promise of 5G, it’s important that operators not fall for their own hype. While 5G certainly holds promise for creating new business models and service segments, realizing that promise depends, in large part, on the development and implementation of sound monetization and pricing strategies.

5G completely alters the way in which communication happens by improving throughput and reliability, lowering latency and increasing network robustness. Likewise, 5G alters what is communicated, enabling machine and device communications that underpin connected autonomous cars, smart cities and other next-gen applications. Furthermore, the dynamic and elastic nature of 5G requires operators to fully embrace and utilize the public cloud to support demand for those applications and decrease time to market for launching new, related services. As such, operators cannot and should not apply 4G thinking and 4G IT infrastructure to monetize 5G.

Instead, operators should visualize the types of 5G environments they want to support and then build a business case around it. Operators need to determine the applications they want to support and design ways in which they can deeply immerse customers into experiences and content. They should consider how customers will interact with each other, as well as with machines and devices, over the 5G network.

Throughout this process, consideration should be given to opportunities for monetization. Likewise, pricing strategies should be developed to address the unique nature of 5G offerings. Following are three key areas that operators should consider when developing such plans.

1. Monetize the network

5G enables operators to fully leverage their network and infrastructure capabilities to create new monetization opportunities, including:

  • Developing and selling premium service offerings that are charged and upsold based on quality of service (QoS).
  • Monetizing the mobile network to sell fixed wireless services.
  • Enabling developers to monetize applications that connect to devices, generating revenue from developers, as well as device end users.
  • Creating ecosystems with a variety of partnership opportunities and revenue-sharing models by leveraging infrastructure.

2. Monetize the slice

According to research from Gartner, the greatest revenue potential for 5G will be developed through network slicing, which supports multiple use cases, business models and services. Network slicing enables operators to create multiple virtual networks using a shared physical infrastructure. They can then tailor slices of the network to highly specific use cases and unique business requirements based on capacity, latency, quality of service (QoS), security and other variables.

Network slicing enables operators to deploy only those functions needed to support each customer and/or market segment, allowing them to differentiate through service customization. Slicing also enables “network as a service” offerings that enable operators to manage the slices independently and apply rules as needed. As such, operators can develop offerings for third-party tenants, wherein they maintain control over service deployment and operation and adjusting access according to each agreement.

For operators to truly monetize, the slice will require significant changes in business and operation support systems (B/OSS). Orchestration and Intelligent network functionality - managed in real time - will be key in the OSS layer to enable automated network operations. Meanwhile, the BSS layer requires more flexibility to rate and then charge in real time for a new wave of services for any account, customer, subscriber or user.

3. Monetize the enterprise market

While 5G enables operators to expand service offerings to consumers, the bigger opportunity is what 5G enables for enterprises, including applications for B2B, B2B2X and IoT market segments. For the B2B market, 5G enables mobility solutions and cloud services to SMEs and large corporations. In B2B2X markets, the concept of “customer” expands even more. For instance, an operator might provide high definition video services to a stadium operator that then sells the service to its premium customers, who are able to capture lost moments and referee decisions using virtual and augmented reality.

Likewise, operators glean great potential from monetizing enterprise applications for IoT. In fact, Gartner predicts that the enterprise market, as opposed to the consumer market, will account for more than 90 percent of the overall IoT services spend.

Determining the pricing model

As operators determine how they want to monetize 5G, consideration also should be given to pricing models for new products and services. Pricing models should include options for one-time charges, subscriptions, usage-based charges, “pay as you go” applications, freemium models and charges for application programming interfaces (APIs).

For operators to maximize ROI on their 5G investments, they need to clearly understand the costs and what they stand to gain from 5G transactions. It’s key to implement end-to-end real-time billing and charging to glean the most revenue for every interaction on the 5G network.

Without question, 5G networks enable vibrant use cases that are creating excitement and expectation for operator networks. However, a well-developed monetization and pricing strategy will enable operators to exceed the expectations of 5G, differentiate their service offerings and ensure future revenue.

 

Shay AssarafShay Assaraf is CMO of Optiva. He has a wealth of B2B and B2C experience in marketing and strategy with more than 15 years in the telecom industry. At Amdocs and before that with Pontis (acquired by Amdocs), Assaraf held various positions, and in his last role, he led the marketing consulting and analytics teams addressing customers’ challenges using analytical data, machine learning and artificial intelligence tools and expertise.

Bill presentation is an untapped opportunity for telcos – survey

A survey of telecoms professional commissioned by BriteBill has found they reckon they could be making much better use of bills to improve the customer relationship.

Now we know what you’re thinking: a company that specialises in optimising phone bills has commissioned a study that concluded we need to optimise phone bills. That’s what we thought too so we spoke to Becky Byrne of BriteBill and Teresa Cottam of Omnisperience, who conducted the survey.

They directed their questions at senior execs working for the largest operators but in non-technical roles including those responsible for digital, customer care, marketing and finance. The questions focused on their views on the bills their company produced so, while this was a highly targeted study, we’re satisfied that the resulting data stands up by itself.

Cottham said her company wanted to get a snapshot of operator attitudes to how phone bills are presented and concluded that it remains an afterthought for most operators. This shouldn’t be confused with billing itself and all the other stuff handled by BSS, the actual physical or digital bill itself hasn’t really evolved much over the years. You can see a summary of the findings below.

One of the biggest missed opportunities regarding bill presentation, according to Byrne, lies in using it to interact with the customer. Apparently 40% of people read their bills but only 4% read marketing material, so in other words you’ve got ten times more chance of getting through to them through the bill. And it should just be used to flog them stuff either, regular communication about the benefits of their contract can do a lot to reduce churn, a big chunk of which can be directly attributed to billing issues.

“It’s good to see that service providers understand the importance of customer experience to their digital transformation and innovation programs,” said Byrne. “However, in the rush to transform their businesses, many have completely overlooked the bill’s role as the most common and critical customer touchpoint. Improving and innovating their customers’ billing experience is one of the most tangible ways service providers can communicate the benefits of digital transformation and innovation. This in-turn transforms bills from dull financial statements into strategic customer engagement tools.”

“Service providers face conflicting investment demands, from upgrading their networks to creating new revenue streams and enhancing the customer experience, which can take years to show value,” said Cottham. “However, they’re beginning to realize that by focusing resources on customer experience blackspots such as on boarding processes and billing, they can make a more immediate impact for often modest levels of investment.”

At a time when operators are more worried about new competitors such as OTTs than each other, CEM seems like an obvious area of differentiation. Not only can the bill be a more useful, functional thing itself, in the digital era the operator app through which people increasingly access it is a clear opportunity to engage with them in loads of other ways.

Britebill infographic

A design-led approach to billing creates new opportunities for service providers

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Brendan O’Rouke, Head of Design at BriteBill, explores what CSPs can do to make the billing process more positive for their customers.

With the pace of customer experience now being set outside the communications and media industry, the ability to deliver outstanding experiences is now a moving target. Becoming a top performer, such as Amazon requires service providers to consistently deliver exceptional experiences across all customer satisfaction measures, according to the Institute of Customer Service.

“The top 10 organizations [in terms of customer satisfaction] perform better than other organizations across the full range of customer experience metrics. There is continuing evidence that consistently outperforming the sector average for customer satisfaction is linked to better financial performance.” The Institute of Customer Service, UK Customer Satisfaction Index, July 2018   

The fiercely competitive nature of service providers in mature markets, combined with customers’ increasing propensity to complain or churn, throws down the gauntlet. Service providers need to act fast to address notorious and persistent customer experience blackspots such as billing, in order to deliver the consistency of experience that unlocks loyalty, recommendation, trust, reputation, and ultimately, better financial performance.

 Competition fueling the need for better experiences

The hypercompetitive environment in mature markets, means that service providers are shifting their focus from customer acquisition to customer retention. This requires them to work harder than ever to meet their customers’ expectations and consistently deliver the experience expected.

With four mobile network operators (MNOs) and more than one hundred active mobile virtual network operators (MVNOs) in the UK, which collectively support over 13.5 million customers (or one in seven mobile connections), competition has never been fiercer.

MVNOs differentiate themselves and consistently outperform MNOs, not on network quality or coverage but on products, tariffs, offers and the customer experience they provide. For example, Which? Magazine’s annual consumer satisfaction report revealed that customers are increasingly snubbing the big four MNOs in favor of MVNOs such as Utility Warehouse – partly because they’re pocket-friendly, but also due to higher rates of customer satisfaction delivered.

Billing remains a customer experience blackspot

Let’s face it, no-one likes receiving a bill; they can stimulate such negative customer reactions that we’ve even coined terms for these, such as ‘bill-dread’ (fear of high bills that cause customers to alter consumption patterns) and bill shock (the emotional impact of receiving a higher than expected bill). They remain one of the most digitally untransformed areas of experience, and are so boring that many customers have given up reading them.

To deliver greater consistency of experience, service providers are now focused on improving the design of their bills, which according to The Institute of Customer Service is one of the top three areas that service provider customers want improved.

Design-led approach to improving customer communications

Customers perceive bills to be boring, confusing and stressful. Aside from additions and extensions, the service provider bill has changed little since the 1990s. This means the format of many bills are packed with too much information, making it hard for customers to locate and process the information they require. Since these bills are generic, much of the information squeezed into them may not even be relevant to an individual customer. For example, warnings about late payment and the stern tone of a cold demand for payment may seem rude or even insulting to a prompt payer, and does nothing to enhance the relationship.

Bill design shouldn’t be an accidental evolution, but should be carefully planned to achieve the goals of the service provider. Since its job is to subtlety enable information to be more effectively communicated, service providers need to employ a range of design techniques, including:

Aesthetic enhancements

  • Using size, color and weight to create a hierarchy of information that places emphasis on key elements within the bill.
  • Aligning elements on an axis to create a visual connection between them. This prompts eye movement, as well as adding order and stability to bill design.
  • Arranging elements within a given space to ensure there is a comfortable balance. With an equal distribution of weight, the bill design will feel more harmonious and approachable to customers.
  • Repeating visual elements throughout the design such as fonts, weights, lines, colors, icons and images. This creates unity and consistency throughout the bill and customers will automatically come to recognize and expect these patterns.

Transforming customer data
Although aesthetics are great steps towards improving a bill design, there are further techniques to improve the customer bill experience. If you look closely at a customer’s billing information, you can learn a lot about their activity and behaviors. So why not turn this into an engaging interaction? For example:

  • Customers can access an incredibly long list of calls they made over a period of time. Extract and present insightful information, such as:
    • Who was called most frequently
    • Most expensive calls
    • Longest calls
    • Most active call day of the week
    • Three premium numbers dialed, costing USD7.50 for example
  • Let’s say a customer is regularly exceeding their data usage allowance. Why not display a trend graph that spans the past three months, highlighting at what point in each month they exceeded their plan, and what the extra cost is per month? To further inform the customer, this can be used as an opportunity to present add-on options or alternative plans that better suit their behavior.

Functional customer messaging

This is vital to achieving a conclusive billing experience. By introducing contextually relevant messages at key points, you will transform the bill from a generic and impersonal piece of communication to a more personalized experience for each and every customer. This can be as simple as a standard greeting for a long-term customer: ‘Hello Jane, this is your March bill, and everything looks in order. Thank you for being one of our most loyal customers.’ The tone in this case is positive and slightly informal.

Another example would be a more sensitive message, such as a request for an overdue payment. The tone here needs to come across as knowledgeable, formal and to the point. ‘Your account is past due, please pay USD112.00 immediately.’

Throughout the bill, it is imperative to be as pre-emptive as possible. For example, to reduce customer bill shock, why not display key information in a prominent place? This will enable customers to identify excess charges that would normally drive questions to customer care. The first thing the customer should see is a concise explanation of why their bill is higher than expected, such as:

  • ‘You added a service last month, resulting in a partial charge of USD15.00 this month. Please see page 4 for details.’
  • ‘You were charged a late fee of USD13.95. To avoid this charge in the future, please sign up for direct debit at provider.com/direct-debit.’
  • ‘You have high usage charges of USD22.12 this month.’

A design-led approach to billing means always thinking about how your design affects the customer and putting them first. This will result in clearer and more usable bills, and ultimately fewer calls to care. When designed to meet individual needs, the bill is not only a welcome tool for regular communication, it also provides the customer with a window into their relationship with the service provider.

Transforming bills from an experience blackspot into an asset

For many service providers, bills are already an experience blackspot. With the ever-increasing volume and variety of services, experimenting with charging models, and delivering more one-off and personalized offers, the potential for customer confusion is bound to increase. This is where design-led thinking plays an essential role in creating ways to deliver greater depth of information effectively and attractively.

 

Five Tips For Better Bills
  1. Know your customer
    Excellent design begins with understanding your customer. Service providers should know and understand the history they have with each customer, including how long they have been a customer and the services they have purchased over their lifecycle. They should also know and track the usage patterns of each customer. This will enable the service provider to deliver personalized billing content to each and every customer.
  1. Focus on clarity
    If a customer can’t understand a piece of communication or can’t perform a basic action without frustration, then there are failings in the bill design. The design should be simple and clear throughout. It should save the customer time and provide all the answers they need. This is achieved by disclosing more information when needed and not overwhelming the customer with useless content. Some customers will spend 10 seconds reviewing their bill, others will spend up to four to five minutes. The bill design should cater to all.
  1. Remove technical verbiage
    Systems-driven language is typically difficult for customers to decipher and is often perceived as dishonest. If a customer purchases a device from a service provider or signs up for a new service, there is an element of excitement. This feeling is soon replaced by confusion and discontent when they receive a bill with a different product description to what was expected, and in some cases a complex pricing structure that makes no sense. Aligning old legacy terminology and pricing with what’s sold will help deliver on brand promise and keep the customer experience positive.
  1. Don’t allow technology to restrict design
    Design should not be added retrospectively to try and fix outdated billing processes or be force-fitted into existing technology. Instead, the presentation should be at the core of the billing platform. Design should drive questions such as, ‘what other systems or feeds should be integrated?’, or ‘how can we identify or tag this data to display it as we want?’ If the customer experience is the reason behind a bill transformation project, then all areas of the business need to agree on this common goal.
  1. Don’t forget the business needs
    With the bill being the most regular form of customer communication, why not use it to help support the business needs? The bill can easily deliver content from departments such as sales, marketing or legal. It can also be designed to help reduce print costs. More importantly, it can re-enforce the value of what each customer is getting for their monthly charges. In addition to ensuring customers are connected around the clock, service providers are constantly offering promotions and rewards. So why not educate customers on these benefits and affirm why they should remain your customer?

 

Korean operators set to switch to usage-based billing – report

In a sign of the disruption set to be unleashed by the 5G era is has been reported that Korea’s main operators are all expected to switch to usage-based tariffs next year.

This is the view of Hana Financial Investment and was reported by the Yonhap news agency. The rationale stated in the report is that usage-based billing will offer higher ARPU and thus cover the cost of investing in 5G, but that seems like a pretty tenuous theory. Yes, some people will pay a premium to be able to constantly stream HD video over 5G but a lot more may end up paying very little because they’re on wifi most of the time.

“There is a high possibility that mobile carriers may change their current high definition content into UHD or virtual reality, which will inevitably lead to an increase in traffic and jack up their sales sharply,” Kim Hong-sik, an analyst at Hana Financial Investment, was quoted as saying in the report.

Usage-based billing is expected to become more commonplace, but the assumption that it will be a cash cow seems hasty. Assuming telcos every get their digital transformation act together, they should be able to get into deals with OTT players like Netflix and app developers to introduce dynamic billing models that allow premiums to be paid for certain scenarios.

Lest we forget, usage-based (or metered) billing was common back in the 3G era, but if failed because it dissuaded people from using data at all. Then they jumped to unlimited and everyone got carried away in the opposite direction, before the industry settled on the monthly allowance model that prevails today.

Unless metered billing is introduced in a much more sophisticated way this time there’s no reason to assume it will fare any better. Another billing revolution expected to accompany 5G is a return to unlimited, which would presumably appeal to heavy users, so it will be interesting to see how they manage this. The fact that all three of them seem to be planning to make the move unison is also noteworthy.

Openet reckons Globe Telecom deal win vindicates its ‘agile’ philosophy

Irish BSS vendor Openet has persuaded Philippines operator Globe Telecom to use its Digital Business Platform for its data services.

With much of the pre-5G talk focusing boosting the capacity and agility of the network, often overlooked is the question of what’s in it for operators and their customers. There are approximately zero mobile subscribers currently complaining that networks aren’t agile enough and Openet CEO Niall Norton has, for a while, been telling anyone who’ll listen that BSS vendors are doing a rubbish job of doing what they’re supposed to do.

“I have said very recently, and very publicly that the relationship many vendors have with operators is broken and needs fixing,” Norton told Telecoms.com. “Long term service contracts, packed full of unnecessary costs and expensive licenses, are tying operators to technology and systems that are no longer fit for purpose.”

As you would expect, Norton reckons Openet is different and the hero product put forward to demonstrate its novel approach to BSS is the Digital Business Platform. One of the ways in which it aims to buck the ‘vendor lock-in’ trend is to offer a more flexible, modular, bespoke approach, which presumably involves forgoing some up-front revenue in favour of a better long-term customer experience.

“New technology is redefining this relationship and putting the operator firmly back in control,” said Norton. “We have a range of new solutions, including the digital service platform that we are deploying for Globe that prove the case for an alternative approach. Our deal with Globe shows Openet walking the walk, not just talking the talk. We’re confident that this is just the beginning as the global operator community realise the significant benefits that a different approach to service delivery and monetisation can bring.

“Users in the Philippines have consistently exhibited intense social media usage and engagement,” said Globe CTIO Gil B. Genio. “In addition, Globe has seen dramatic smartphone adoption, take up of data plans, and exponential growth in mobile data, to the point that we now carry two thirds of consumer mobile internet.

“With this new platform, we can be more creative in developing and monetizing new services and offers, even as we make personalization a key differentiator of our services. Our partnership with Openet will give us the speed and agility that we need to grow our business to compete and win in the new digital market.”

There’s that term ‘agility’ again, but this time applied to the operator/subscriber relationship, rather than the network itself. Openet’s strategy seems sensible enough – after all the SaaS model has been accepted wisdom for years now – but it still begs the question of what operators are going to do with all this lovely agility. Perhaps we should check back in with Globe in a year or so to see what, if any, business benefits it has experienced.

Most people baffled by their phone bills – survey

Some research commissioned by billing vendor Brite:Bill has found that the majority of people find their phone bills hard to understand.

The precise figure is 68% and furthermore 75% are not even interested in the information provided even if they can get their heads around it. The apparent purpose of commissioning the research was to demonstrate that the phone bill and more generally billing communications are a major pain point for subscribers. It should be noted that Brite:Bill, which is owned by Amdocs, specialises in providing billing communications platforms.

“How much a customer likes a product often matters less than how they feel about their experience,” said Alan Coleman, Head of Brite:Bill. “Billing is the least transformed part of the digital experience today, but as a key touch point it must evolve, too. Service providers are under increasing pressure to transform billing from a negative, stressful experience into a useful and interesting one that can bring them a competitive advantage.

“This starts with presenting the information so that it is more relevant, visual, and easy to understand. At the same time, providers have to be more proactive in dealing with billshock and bill frustration – for example, by advising their customers on ways to save money that are relevant to that particular customer’s usage pattern.”

The research, which was conducted by Censuswide Research, surveyed 3,236 consumers across the USA, Canada, Ireland, France, Germany, Italy, Brazil and the UK It focused a fair bit on generational differences, with older people finding their bills more confusing. Apparently younger people are happier to communicate with chatbots and more likely to expect their billing communications to feature proactive efforts on the part of their provider to save them money.

Other interesting data points include the discovery that 29% of respondents have contacted their CSPs because of billing issues and that 44% of churners had experienced a billing problem.