Is your legacy charging system ready to monetize 5G?

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Marc Price, CTO at Matrixx, looks at how operators need to adapt to cash in on the 5G era.

5G networks will change the way we live and experience the world, with nearly instantaneous speeds, new services such as Mixed Reality (MR), Augmented Reality (AR) and Virtual Reality (VR), and most importantly an expanding ecosystem of enterprise solutions, involving network services that can be scaled and right-sized for wholesale business-to-business-to-customer or enterprise (B2B2x) solutions.

Despite the hype, however, the first 5G services won’t arrive with much fanfare: changes will be rolled out slowly and some customers might not even notice the initial differences.

It might be tempting to think that 5G changes are incremental, and while major network investments are required, business systems won’t require big changes. Nothing could be further from the truth. In addition to changing our lives and habits, 5G will revolutionize business models for consumer devices, smart cities, factories, agriculture, and venues. Not only will 5G deliver a massive increase in the volume of transactions, it will involve a massive variety of transactions – which raises a fundamental question: how should customers be charged for these services?

Traditional telco billing/charging systems were built for a simpler world, where services are often measured in minutes and megabytes. What happens when new pricing schemes are needed for millions of users making small transactions with thousands of different services? How can service providers spur interactions and automate new functions harnessing rich analytics across a breadth of new network functions? If a charging system isn’t built for a 5G environment, it will fail in all these aspects, which means another year of flat revenue for communication service providers (CSPs) and a few more steps along the march toward being a dumb pipe.

5G Requires Cloud Natives – Not Cloud Tourists.

5G isn’t just another “bigger and faster” network. Yes, 5G networks will offer exceptional speed and scalability, but it’s not just a bigger bit pipe. The next generation network is positioned to empower CSPs as digital service providers, harnessing a flexible, automated, cloud-based architecture to launch new services quickly and employ the same web-scale efficiencies as digital leaders like Amazon, Facebook and Google. This requires a cloud native approach.

Cloud native is a specific set of architectural requirements defined by the Cloud Native Computing Foundation (CNCF) that includes the use of containers, microservices, dynamic orchestration, and the separation of stateful and stateless services, among other things. Updating an existing legacy solution to run in a virtualized environment is not cloud native. It would be more appropriate to call this a cloud tourist, as it can exist in a cloud environment, but isn’t adapted to it. Cloud tourists will still face many of the same performance and scalability limitations in a cloud environment as their non-virtualized counterparts.

Cloud native solutions are optimized for distributed environments, regardless of the platform infrastructure. Well-designed applications running in distributed systems are central to the promise of 5G and will enable an evolving ecosystem of massive new IoT devices, slices for enterprise and new business models.

Software solutions like these run natively in containers (e.g., Docker) with container orchestration (e.g., Kubernetes), are designed as loosely coupled microservices that use shared resources, use lightweight APIs to collaborate with other solutions, and handle elastic and resilient deployments as only a truly distributed and dependable architecture can.

Charging and Billing Must Be Cloud Native, Too.

5G is revolutionizing the kinds of digital transactions that will happen over many new emerging devices. These could be billions of tiny transactions from smart meters installed in our homes or in cities. Or they may be dozens of transactions processed through our smartphones as instant transactions or digital shopping carts. 5G will not only bring an increase in the volume of transactions; it will involve a massive variety of transactions.

Some 5G transactions will be stateless, such as “one and done” transactions like buying a movie. Other transactions will be stateful – for example, paying a per-minute charge for a live video chat with a healthcare professional. Some may require extremely low latency (e.g. virtual reality experiences), while others may need to be scaled up and torn down quickly (e.g. augmented reality services at a live event).

Because of the demands of differentiated services, 5G networks are fundamentally different by design. With 4G, monetizing the network means charging more for data and video services. In 5G, however, CSPs will need to be creative. They’ll need to slice their network to provide very different experiences for their customers: one slice for low-cost, high-latency IoT traffic, another slice for high-cost, low-latency emergency response services. In addition, CSPs will need to be able to create, deploy and tear down services quickly if they expect to create value in an ecosystem involving their agile, over-the-top (OTT), digital-native competitors.

Charging and billing systems must adapt to this new world. As new network slices are created, new billing and charging services will need to be created to support those slices. These charging services should be designed to scale up and down seamlessly, move out of the core network and into the network’s edge for lower latency, apply different policies for security and quality, and a myriad of other considerations. In short, charging and billing needs to behave like a cloud native so it can be easily integrated into and meet the performance requirements of 5G services.

Monetizing 5G Is Different by Design.

The business models for 5G will be radically different than those for 4G services. New services will be more immediate and transparent, providing incremental value via “networks on demand” and through tailored services, with nuance and scale not available in legacy networks. These distinctions will impact both enterprise and consumer pricing as 5G matures. In turn, solutions are needed that are ideally suited to support billions of stateful transactions at the scale and speed that 5G services require.

Design principles for 5G charging systems must evolve likewise, both with respect to application and database design. In order to understand why a new database may be needed for 5G scenarios, one must consider where other databases fail. To begin with, telecommunications networks are very different than most computer networks. For example, most networks can sustain some level of packet loss, re-sending the lost packets at a later point without losing the integrity of the session. Any kind of loss is intolerable in real-time revenue bearing networks, however.

Similarly, most computer networks consist of stateless transactions, in which the state of the session can be lost without impacting the transaction itself. A stateful transaction is a different story. It requires that the state of the session be maintained with resilience, so data is not lost when failures inevitably occur.

To ensure stateful transactions in a 5G world, one needs a database with exceptional elasticity and resilience. The majority of industry databases use eventual consistency or asynchronous replication, neither of which provides the accuracy or performance required. An option involves an all-master data store architecture allowing each transaction to be simultaneously committed to multiple masters. If a transaction does fail, it will still be maintained by other masters and may be accessed seamlessly to provide service continuity. 100% accuracy and near instant performance are both required when charging and billing 5G services in a modern environment.

5G charging systems should also harness the full power of open source tools from the Cloud Native Computing Foundation to achieve much greater scale in distributed systems. However, careful design choices must ensure both the performance and consistency of telco transactions in such an environment. Without this level of performance, the charging system cannot act as a reliable management service in 5G networks, coordinating millions of valuable transactions every minute, delivered instantaneously and seamlessly to customers, and enabling new streams of revenue for the operator.

5G’s Payoff Depends on More Than Just the Network.

5G offers a world of opportunity for CSPs, particularly in the way that network services will be created, deployed and most importantly, monetized. Where the revenue focus in the past has been on direct-to-consumer services and, to some extent, direct-to-enterprise services, a new revenue focus for 5G will ultimately be on B2B2x (consumer or enterprise) services. In this new landscape, CSPs will no longer simply be technology providers, but business partners that help other businesses innovate, create and deploy exciting new services.

A legacy billing and charging system has no place in a 5G network. It can slow down revenue streams, create frustrating customer experiences and ultimately compromise CSPs’ ability to compete with native digital service providers. To win in a 5G world, a cloud native charging system delivering scalability, performance and reliability is what CSPs need to successfully stand up and monetize new 5G services. It is a key investment that will pay off for years to come.

 

As Global Chief Technology Officer, Marc Price accelerates MATRIXX Software’s worldwide growth through key software and solutions delivery initiatives. He works closely with the MATRIXX executive leadership, engineering and product management teams to drive industry-leading technology into the market and spearheads strategic engagement with key customers and partners. With almost thirty years of experience in the telecommunications market, Marc has held pivotal roles during the establishment of the real-time charging model, the changing landscape of digital transformation and the move to hybrid clouds and IoT. Prior to joining MATRIXX, he worked for Openet serving as CTO for the Americas where he led initiatives for software development, systems consulting and business development.

5G pricing: the best is yet to come

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece, Jennifer Kyriakakis, Founder and VP of Marketing at Matrixx, explores best practice in the pricing of telecoms services in the 5G era.

The advent of 5G technology will bring a monumental shift in how traditional telcos operate their business. In the run up to full scale 5G deployments, many forward thinking telcos have launched digital brands. These are essentially 100% digital versions of their businesses packaged as a different brand. Many of them are using their digital brands to experiment with customer experience, service offerings, and business models that will become mainstream with 5G. The theorem: If we don’t have the pricing models and business infrastructure in place to properly extract value from a 5G offering, we’ll end up losing out to the next wave of OTT players. So let’s figure it out now, before the networks are in place.

As operators debate how best to price 5G, some early examples, such as Three in the UK are offering 5G at no additional cost to current 4G plans. The idea seems sound as a starting point, particularly as there is little 5G network availability and devices haven’t yet caught up. But does it make sense in the medium to long term, or do these tactics risk further devaluing the very asset that differentiates them? Are these early pricing models really strategies for 5G, or merely placeholders as telcos continue with transformation efforts that will set them up to compete with OTTs and digital players?

Operators have a powerful opportunity to create a competitive advantage with their 5G offering. Getting the pricing model right is a strong place to start. With the industry already throwing different pricing models at the wall, which one will stick?

The Pay-for-Speed approach

This approach started in some markets with 4G and while it’s simple and straightforward for the consumer, it also sets the precedence that speed is the only value lever telcos have to offer. For example, Vodafone became the first UK network to offer unlimited 5G data plans. Ditching the monthly data allocations, Vodafone offers three speeds; 2Mpbs, 10Mpbs and then the fastest speed possible. People have the choice on how fast they want to download or stream content.

If you are a super user or have a family of six who are always on their phones, it makes sense to pay for those faster speeds. If you are in retirement, don’t necessarily have a job in tech or could care less about YouTube, then having the choice for lower speeds may be a good option.

But is this model sustainable? When in the future, the amount of data – everything from gaming to connected home, health apps, IoT, streaming video and more -could outweigh the speed? Would an operator lose a revenue opportunity on super users who take advantage of accessing large amounts of data at the fastest speeds?

The Rewards approach

Others are taking an ecosystem approach banking on potential new revenue streams by creating value-added services, which often come to life through rewards-based programs. These programs offer incentives such as discounts, coupons and first-access to concerts and movies, to entice users and make the app experience more sticky. By building loyalty around an ecosystem now, as 5G services arrive they have established channel relationships with partners who will be leveraging 5G in the future for AR/VR services and are actively participating in the revenue chain.

Verizon’s Up Program is a great example of this, as they offer discounts and rewards on technology, dining, sports experiences and stage-side concerts. They tout deals monthly and even daily, driving people to check in on the app frequently. Once there, they encourage users to manage their services, often upselling them on new benefits.

By creating these rewards-based programs they are not only appealing to the next generation of users, but they are also creating a more valued relationship between consumers and their brand. This brand strategy is one that few operators have navigated successfully, but it is crying out for change in a new 5G era if operators expect to compete with OTT players.

The Marketplace & Bundled approach

Operators that create marketplaces are offering users opportunities to connect with friends, form inner social groups, gift data to friends, and also manage their plans in real-time. These marketplaces are highly sticky, driving customers to spend lots of time within the marketplace, which breeds more opportunities to sell products and boost revenue.

Another approach are operators who are choosing to bundle the price of data with a specific service. For example, if you want Netflix delivered in high-definition to your smartphone, you’ll pay a flat monthly fee for that service and the data will be included. These bundled-service options work well for a variety of value-adds, including VR gaming, augmented reality services, IoT of the home and more.

This sets the market up nicely for two-sided business models which will emerge with full scale 5G. Getting consumers used to paying carriers for services vs. network access is phase one to future multi-faceted models in which the carriage is monetized through different partners and models.

So have any 5G pricing models arrived yet?

While these offerings are all based on 4G today, they set the foundation for turning customers into high-engagement fans, in turn increasing their revenue streams.

5G introduces hundreds and even thousands of possibilities to utilize the network efficiently and generate additional revenue. Operators that are moving now to innovate and distinguish themselves from their competitors are setting themselves up to reimagine pricing for 5G and drive new revenue vs. defend against price wars and the resulting churn.

 

Pod 15 jul Jennifer croppedMATRIXX Founder and Vice President of Marketing, Jennifer Kyriakakis, brings deep expertise in both telecoms and software with roles ranging from complex systems delivery to technical sales to strategic marketing. Her 20 plus years of experience helping Telcos reinvent themselves has propelled the growth of MATRIXX into markets all over the globe.

5G. It’s Going To Change Everything.

As they steadily move forward with their 5G deployment plans, telcos must also focus their attention on the IT infrastructure they’ll need to extract value from their investments.

Uncover how innovative thinking powered by modern technology is the only way to deliver on the potential of 5G! Download the latest Matrixx Software whitepaper to unlock opportunity and monetise digital commerce.

This white paper covers:

  • Learn how to extract value from your existing IT infrastructure investments
  • Learn how to transition your telco from connectivity enabler to a provider of services
  • Simplify and optimise your IT systems to maximise monetisation opportunities
  • Embrace a product-based approach for digital commerce
  • Discover opportunities in the Internet of Things (IoT)
  • Learn how 5G is supporting enterprises on their digital journey

Openet exec gets red-pilled, joins Matrixx

Marc Price, CTO for the Americas at BSS vendor Openet, has decided to find out how deep the rabbit-hole goes by defecting to competitor Matrixx Software.

He will get to travel a bit more in his new role at Global CTO for Matrixx and he had been at Openet for 15 years, so it was probably time for a change. The move will also allow  Matrixx Founder Dave Labuda to step away from the techie side of things and focus his attention entirely on some serious chief execing.

“Marc is a tremendous addition to Matrixx’s executive leadership team,” said Labuda. “His experience will be invaluable as we continue to scale the company. Marc’s vision and vast experience in the telecommunications market is renowned. He has played a leading role across three key eras in the telco market: the rise of competitive carriers; the establishment of the real time charging model; and the current process of digital transformation and subsequent move to hybrid clouds and IoT.”

“Matrixx is poised to lead the digital commerce revolution being ushered in with the advancement of cloud technology and the advent of 5G,” said Price. “I’m excited to join the team at such an important time to help accelerate Matrixx’s global growth. I am looking forward to working with the Matrixx team to help scale the company, driving Matrixx’s innovation to further accelerate our customers’ digital transformations.”

Openet and Matrixx aren’t just competing BSS vendors, they’re both trying to disrupt the market by presenting a more flexible, cloud-based approach to customer engagement for operators. They’re both fond of buzzwords such as ‘digital transformation’ and like to paint larger BSS competitors as slow and anachronistic. So culturally this should be a straightforward move for Price and, at least until they find his replacement, may mean a fair bit more work for Openet Founder and CTO Joe Hogan.

UK and US consumers want 5G and they’re prepared to pay – survey

US digital BSS vendor Matrixx spoke to a bunch of mobile users on both sides of the pond to find out how much value they place on 5G.

It turns out we’re surprisingly optimistic about what it promises and will pay good money to find out. 33% of respondents reckon it will solve their connectivity issues, with 88% of those willing to pay more for a 5G mobile service and 87% of them saying they will upgrade to it. What that remaining 1% will be paying for remains a mystery. On the flip side 70% of respondents aren’t happy with their 4G, citing coverage and speed as pain points (see charts below).

“The feedback from consumers paints a very clear picture for operators: ‘deliver a 5G experience worth the attention, and we’ll gladly pay for the privilege of using it,’” said Dave Labuda, founder, CEO, and CTO of Matrixx. “In an industry fighting to keep customers amidst consolidation and competition from digital MVNOs and OTT players, 5G presents a real opportunity to deliver a powerful value-add to the consumer.”

We spoke to Matrixx co-founder Jennifer Kyriakakis and she was most surprised by the finding that a third of punters are so upbeat about 5G. She concurred that the underlying commercial message is that there is demand for 5G services if operators git it right. We agreed that the industry needs to fight its urges to over-promise on 5G and Kyriakakis stressed that in the short term operators should simply focus on pleasing their customers. They surveyed over 4,000 mobile phone users in the UK and US.

Matrixx chart 5G

Matrixx chart 4G

Killer Use Cases for 5G Monetization

5G will offer improved speed, increased capacity and greater flexibility. But what are the killer use cases that will attract customers, and justify this significant investment?

Read our eBook to learn how:
• Digital experience will drive service differentiation
• Increased segmentation will enable smart family plans and other new use cases
• Network slicing will unlock new wholesale revenue
• IoT services will evolve and require more than simple connectivity
• To capture the mobile enterprise opportunity
• Why a digital-grade, low-latency commerce platform is needed

Most people would switch to Amazon if it offered mobile – survey

A survey conducted by digital commerce vendor Matrixx Software found people would like to buy mobile services from major internet brands.

The apparent aim of the survey was to highlight the consumer relationship challenge operators face in the digital commerce era. In terms of brand recognition and trust it seems the big OTTs are way ahead and could eat even further into operator core business if they fancied it.

As you can see in the first chart below, something like 85% of the 3,077 UK and US mobile users surveyed said they would buy mobile services from Amazon if they could. Even Netflix, which we currently associate solely with video on demand subscriptions, would sorely tempt the majority of respondents if it got into the CSP game.

Matrixx chart 1

It seems this isn’t just blind brand loyalty, but also a certain level of customer experience associated with the brand, which punters apparently assume would apply to anything else they served up. In the second chart you can see that what they like most about their favourite apps is transparency of pricing and ease of use – not qualities generally associated with traditional CSPs.

Matrixx chart 2

 

“The survey clearly demonstrates that digital-first brands have set a new baseline of expectation by which every other consumer service is judged,” said Jennifer Kyriakakis, founder and VP of marketing at Matrixx. “Telcos have an opportunity to attract an entirely new crop of customers, ones who are motivated by intuitive engagement that results in a highly personalized, transparent and real-time mobile experience.”

Of course vendors don’t just conduct these kinds of surveys for a laugh. Matrixx positions itself as an enabler of just the kind of fast, agile product development it reckons operators need to keep up with the OTT brigade. But a vested interest doesn’t necessarily discount the underlying findings. Using Amazon or Netflix is a pretty smooth simple process and if CSPs are going to grab some of this digital commerce action they need to move with the times.