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.
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:
- What are the most important market priorities?
- Which success strategies of other operators can you adopt at your own telecom organization?
- Which vendors have industry market share and are leading in specific niches?
- Which revenue management, mediation and analytics players have the right background and market experience to partner with?.
- What emerging trends and industry requirements can your company capitalize on?
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