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Analyst Letter & Highlights

Dear Colleague:

In the last several years, the risks of operating a telecom company have increased substantially.

However the slow down in the world's economy is having less of an impact than the sheer number of competitors -- both internal and external to the industry.  Not only have regulators stoked the fires of rivalry within the telecom/cable industry itself, but increasingly, outsiders from internet (i.e. Google), consumer electronics (Apple), IT companies (Microsoft), and media companies (BBC) want their own slice of the communications revenue pie.

In a climate that competitive, it's hard to accurately predict which telecom services will be the stars and which will be the dogs. As a result, service providers must constantly experiment with innovative new services all the time . Telecoms must not only launch those services quickly, but also bill them creatively, provision them accurately, and market them wisely.

In other words, to stay ahead of the pack, a telecom must have enormous operational dexterity.   And that means revenue maximization, business optimization, and analytics techniques and systems have become more important than ever.

This is what is meant by the term telecom revenue management -- a broad category of assurance and analytic disciplines that monitor business health from an operational point of view.

A New Market Research Report

But what revenue management sectors are the most critical today? And which vendors are providing operators with innovative solutions?

Getting answers to such questions is the purpose of a TRI's latest research report, The Telecom Revenue Management, Mediation, and Analytics Software Market.

In this 390-page report, TRI analyzes this dynamic market and shows how you and your company can find profitable solutions, invest safely, and -- if you're a solution vendor -- avoid excursions into market sectors that are either too competitive or too specialized to attract enough paying customers.

Here are highlights of out market analysis:
 

Revenue Assurance

Revenue assurance has often been considered the business of finding and plugging "revenue leaks".  On the web, you'll find various sources estimating telecoms lose between 4% and 15% of their annual revenue to leakage.

Yet today, "leakage" is no longer a complete measure of revenue assurance practices because carriers savvy in RA techniques have practically no leakage.  Why?  Because those operators have wisely invested in RA systems and processes that correct problems before bills are sent out -- i.e.  before they become leaks.

Revenue assurance is properly considered an audit function -- an operational audit whose goal is optimize business processes that lead to better efficiency, revenue, and profits.  And both plugging and preventing revenue leaks are major result of that audit process.

Now, unlike a financial audit that's done quarterly or once a year, revenue assurance is a continuous -- every day -- audit of business operations.  In fact, the airing out of operational problems is a healthy process that telecoms no longer need to be ashamed about.   RA problems are the natural result of having a creative telecom business -- one that continually tests the limits of what can be profitably deliver.
 
When a telecom first launches creative new services, it's only expected that it will run into billing errors, ordering snafus, customer dissatisfaction, and other problems until the process kinks are all worked out on those new services.

On the contrary, not detecting revenue assurance problems may actually indicate a bigger problem. It could mean, for instance, that the business is being operated too conservatively or that the revenue assurance team isn't equipped with the tools to drill down to discover and correct deeper problems.

In the report we profile the highly mature RA practices at Verizon Communications where "preventative assurance" techniques and RA software are being used to great advantage to monitor services in its next generation FiOS service.

Fraud Management

Fraud management continues to be a vital revenue management function, even as criminals change tactics and target different vulnerabilities. With the rise of low cost VoIP and IP backbones, international voice call fraud is less of a concern than it used to be. After all, if a VoIP call from the U.S. to China is only 3 cents a minute, it's tough for fraudsters to make a decent margin.

The report explains some of the traditional techniques fraudsters use such as PBX hijacking and points to new areas such as wireless dealer management where solutions are just emerging.

Cost Management

Carriers use each other’s pipes and complete each other’s calls.  If you’re selling wholesale, you need to be sure you’re billing for all your usage.  If you’re buying services from another carrier, your job is to verify the interconnect bills you receive. 

This interconnect reconciliation side of revenue management is referred to as "cost management."

Interconnect bills itemize two types of costs: facilities costs and usage costs. Cost management has traditionally been limited to an analysis of facilities costs. Usage charges, meanwhile, used to reconciled at a high-level summary level only because the costs of processing usage were prohibitive.

However, as facilities costs have fallen and interconnect margins have been squeezed, there's less money to recover from an audit of facilities alone so carriers are now starting to examine their usage costs in detail.  The significantly lower cost of computer hardware, such as the latest Linux blade servers, has also contributed to the trend.

The Report examines the usage analysis trend and explains how traffic jurisdiction analysis, SaaS solutions, and electronic invoice conversion are transforming the cost management sector.

Video Content Assurance

Video Content Assurance is a relatively new frontier in revenue management and it applies to both cable operator and IPTV operations.

IPTV service certainly falls in the category of complex networks services. The cost to deploy the service is very high, entailing much physical facility provisioning and setup in neighborhoods and on customer premises.

The networks are typically built on top of legacy DSL networks, where what really drives high cost is the carrier's ability to streamline the order process. To make IPTV profitable, an operator needs to drastically reduce its physical handling and technician time for orders. It's a massive problem at AT&T and its uVerse service, for example.

Manually generated orders drive costs up exponentially. You simply can't activate 40,000 subscribers a week and have 25% of those orders fall-out.

In the Report, we discuss another problem in video content delivery: the need to control pirated set top boxes. The case study involves a cable operator who, despite having a modern OSS, was hamstrung because it lacked the data integrity to precisely target the offenders without unnecessarily shutting down legitimate users.

The Report's Value to Your Organization

The trends we've just discussed are a just a few highlights of the 352 pages of analysis in the full Report.   A particular strongpoint is the Report's analysis of 25 software vendors,  showing how each are delivering value to telecom operators.

Whether you're a carrier executive aiming to improve your revenue management or analytics infrastructure or a vendor delivering solutions, the Report will help you discover:

Besides its sweeping coverage of market trends, the Report provides quantitative data on the individual vendor companies, the size of industry segments, and 5-year forecasts. The quantitative data is presented in a software application that enables you to create your own Excel sheets and charts from a market database.

Please scan the full table of contents provided here. You'll see why this report delivers the tactical and strategic information you need to fully understand where telecom revenue management, mediation, and analytics are headed.
 
To access this market intelligence today, contact us at +1-570-620-2320.

Sincerely,

Dan Baker
Report Author & Research Director, TRI