Reality Check: Next-generation content drives need for sophisticated charging and revenue management

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
The days of “content” as simply a photograph or a ringtone download are long gone. The growth of advanced mobile networks and proliferation of smart phones have changed the game and have led to the emergence of next-generation content. Such content spans the spectrum from streaming live video or audio to business applications and more advanced interactive gaming and location-based services – and the content options will continue to become more sophisticated in years to come.
Juniper Research estimated in a report last year that next-generation content revenues from the mobile industry alone could surpass US$51.5 billion in 2013 – and will sustain an average annual growth rate of more than 15% over the next five years. But what does all of this mean for service providers who must meet customer demands for innovation while operating within the limits of their technology infrastructures and keeping a constant eye on the bottom line?
Not only is the mobile entertainment market growing rapidly, but it is also changing the role traditional communications service providers play. They are no longer the sole providers of all the services; they are now significant players in a broader and more complex delivery and value chain that includes content makers, content owners, publishers, and aggregators, all of whom are vying for a piece of this new revenue opportunity. This means that service providers better be on top of their game to take advantage of new delivery and revenue models.
Further, although content is poised to become a larger component of service provider revenues and will be a catalyst of future growth, the drivers for change go far beyond the handset devices and technologies that will enable the delivery of this next-generation content. The relationship between the customer, the service provider, and the content provider is becoming more complex. It is no longer simple to identify with whom the customer will build a purchasing relationship. And because these transactions give rise to money and revenue sharing beyond the service provider, serious issues arise, including:
–Whether the customer has sufficient funds to make the purchase, and whether those funds are available now
–How the payment for the content or value-added service is made
–How to confirm that the content or service was delivered
–How those in the value chain receive the correct share of their revenue, and how they actually receive their payments
–How to determine the value of content (for example, customers are likely more willing to pay for higher quality content (e.g. full-length movies versus free, low quality YouTube videos) or location-based and time-based content (e.g. the location of a taxi stand or a real-time sports score, versus a taxi company phone number or a sports score after the fact)
These critical issues are forcing service providers to look for innovative ways to present and charge for these offerings. However, the vast majority of legacy content delivery and billing systems simply cannot address the real-time active nature of the business transactions that are now required. With the more complex value chains in place and the exponentially growing types of content and numbers of service partners, CFOs are demanding the ability to obtain a real-time view of revenues and profits from the growing value-added services market.
And the stakes are high: getting this right means that service providers can focus more of their time on creatively building and delivering new and profitable services that are relevant to their customers. The ability to effectively manage revenue across the value chain—from supplier to customer—will give them peace of mind.
With the right technology and processes in place, service providers can meet these challenges. First and foremost, service providers must have a streamlined system that facilitates the “holy grail” of rapid time to market. This is even more important when it comes to mobile content because of its short shelf life. Grabbing market share through the ability to “replace and replenish” quickly is essential to maximizing content revenues. With the right customer and revenue information, service providers can gain an edge on the competition by quickly determining revenues and margins, and acting on customer data and intelligence in real time.
Further, the platform must be truly convergent – providing visibility across all services, payment methods, and customer types. This enables service providers to leverage a one-to-many approach – one set of business processes and technologies for all customers. The ability to view a customer profile in its entirety, across services and payment methods, puts the service provider in a better position to up-sell or cross-sell to that customer. For example, if the service provider knows that a customer subscribes to ESPN via satellite, it could offer a package with real-time sports scores and clips for the mobile device.
In addition, the ability to handle complex account and partner settlements is absolutely essential. To broaden the content available to consumers, the majority of service providers purchase content from a rich array of third-party providers, and they must have a system that offers full account settlement capabilities to minimize revenue leakage, ensure correct settlement between the parties, and minimize the potential for disputes among partners. As content commerce becomes more sophisticated, full customer lifecycle transactions also need to be accommodated, including returned sales, partial delivery, and a whole range of dispute scenarios. In these cases, the settlement procedures must be able to address and hold any specific transaction in “suspense” while it is fully resolved and ensure that all monies remain secure.
Service providers also must have online charging capabilities or, in other words, the ability to authenticate, authorize and account for transactions in real time. This capability is critical for service providers to ensure that they eliminate revenue leakage associated with giving away valuable content to customers who do not pay or are unable to pay. It also enables the CFO to obtain a real-time view of revenues and margins from operations. Further, it opens up the opportunity for new business models such as the ability to offer users extra minutes for listening to a series of advertisements on their phones. The opportunities are endless, but the technology must be in place to facilitate this type of relationship.
With technology and processes in place with the features outlined above, service providers can improve customer satisfaction, as well as increase revenue by reducing leakage, strengthening up-sells and cross-sells, keeping up with customer demand for new services and offers, and delivering value-added services.
Further, with content as an emerging market, business models are still in a state of change. New channels, new content services, and new pricing plans can appear at any time, challenging a service provider to maintain its competitive advantage. With technology systems and processes like those described above, service providers will be well-positioned to anticipate and respond to the opportunities and threats of these challenges, and respond rapidly to changes – in days, not weeks or months.
Adding to that, a recent report by Oracle and the Future Laboratory found that in the future service providers will be expected to deliver much more personalization – including personalized recommendations on content, targeted advertising or “supertising,” and emotional branding that goes beyond demographics and usage patterns and really gets at the heart of a customer’s interests. This will re
quire cultural and process changes cer
tainly, but also must have the technology framework to deliver the data providers need to meet these expectations.
The next generation of communications is clearly upon us, and content has a starring role. As 3G, and increasingly 4G, mobile networks continue to roll out and the saturation of high-speed broadband access increases, service providers will take advantage of these technologies to deliver new and innovative content to consumers. Voice and even data services continue to commoditize, but content – and its ability to deliver ongoing and differentiated value to the consumer – will drive future revenue growth. And, with the right systems in place, service providers and their content provider partners will be ready to capitalize on these revenue opportunities.
Brian Pawlus is Director, Product Marketing, within the Oracle Communications Global Business Unit. With more than 20 years of experience, Brian has extensive expertise within the mobile sector of the telecommunications industry, is a frequent conference speaker, and regularly consults with telecommunications service providers and industry analysts globally. Brian is also Team Leader of the Revenue Management Initiative within the TM Forum. Brian joined Oracle through its acquisition of Portal Software. Prior to his positions within Oracle and Portal, Brian has held positions in sales management, consulting, marketing, and engineering at Accenture and IBM. Brian holds a Master of Science in Electrical Engineering from Syracuse University, and a Bachelor of Science in Electrical Engineering from Wayne State University.