Telecom’s “Field of Dreams” 

Turning dreams into reality is a recurring Hollywood theme. 

And the 1989 film, Field of Dreams, was one of the more memorable of the genre.  You’ll recall Kevin Costner played the movie’s hero, a guy with a consuming passion to build a baseball diamond in his cornfield.  His vision was that one day baseball’s legends would miraculously come back from the dead and play there.

“If we build it, they will come,” was the hero’s guiding light.

In a way, those words – “build it and they will come” -- are a fitting epitaph for telecom’s network expansion of the late ‘90s.

Back then, industry soothsayers were predicting the internet would transform telecom’s humble pipes into streams of bandwidth gold.

Regulators also nourished the dream as the landmark Telecom Act of 1996 set the stage for local loop competition.

AT&T and the MSOs also came to play, investing heavily in high-speed cable modems.  And not to be outdone, the large Regional Bells planned  their own internet home run -- a massive rollout of DSL.   Even mobile operators figured they would soon cash in on the bandwidth parade by streaming 3G content to wireless handsets.

Then suddenly -- almost without warning -- the dream vanished into thin air.

When investors looked around, they saw nothing but competition, an economic recession, and huge operational bottlenecks.  So they pulled the plug on many a startup telecom.

The large carriers, too, were forced to scale back when they discovered their high DSL provisioning costs meant it would sometimes take two years to break even on the service.

And mobile operators discovered that replicating DoCoMo’s wireless web success story was a much tougher task than it appeared.

Calling on Babe Ruth: 
Revenue Assurance 

So here we are on the flipside of the Field of Dreams asking ourselves: what went wrong?

Many telecom executives now believe the only way to stir telecom out of its slump is through a renewed stress on operational excellence.

So telecoms are adjusting their lineups.  It’s time for a rookie or two to sit on the bench and make way for the veteran slugger -- revenue assurance -- someone with a lot of experience playing in the cleanup position.

What is revenue assurance?  It’s actually an umbrella term that covers a host of best practices.  Stripped to its core, it boils down to three things:

• Auditing operations; 

• Creating OSS feedback and detection mechanisms; and,

• Efficiently correcting problems across functions such as ordering, provisioning, collections, customer care, and billing.

The objective is to boost profits by optimizing operations, finding lost money, or retaining profitable customers.

The Changing Mediation Market Place

If revenue assurance is telecom’s back office slugger, then mediation is the pitcher hurling usage data to upstream OSS players like billing, service assurance, market analysis, and traffic management.

Before, mediation’s mission was as simple as getting the ball over the plate: create call detail records (CDRs) from voice switches and distribute them to billing in batch processing mode.  But today, throwing strikes isn’t enough – the sophistication of telecom services and interconnect arrangements is forcing mediation to play with greater intensity and skill.

So mediation vendors have added a number of new pitches to their repertoire – features like real-time subscriber authentication, revenue assurance checking, large-volume processing, plus an assortment of IP usage fastballs and sliders.

At some carriers, mediation acts as an enterprise-wide “usage central” - actively managing usage records as they flow from switches, intelligent network devices, and third party partners.  Smarter mediation is especially key to mobile operators as they access third-party content -- be it sports scores, horoscopes, or bullets in an online game. 

In short, mediation performs the “behind the curtain” grunt work enabling new services such as wireless data content and Voice Over IP.  These next generation services rely on mediation to account for third party content payments and correlate usage data from numerous network devices.
 

The Emerging Revenue Assurance and Mediation
Market Opportunity

With the enormous revenue assurance and mediation challenges telcos face, it should be no surprise that dozens of consulting and software firms have emerged to lend a helping hand.

In fact, it was fourteen of these vendor companies who commissioned TRI to conduct this multi-client research study.

In the course of our six-month study, we interviewed 25 service provider executives representing diverse types of carriers.  Among vendors, we interviewed and profiled 63 revenue assurance and mediation solution suppliers to the market.

And that market  is relatively immature.  As a rule, telecom buyers simply don’t know who’s who. . . or even that a third party solutions market exists.  

But TRI projects excellent vendor opportunities in the next few years.  We forecast the global market for telecommunications revenue assurance and mediation software and services will grow from about $1 billion today to a peak of $1.36 billion in 2005 before tapering off.

  Chapter 1: 

Revenue Assurance & 
Cost Management Overview

Telcos are still struggling to adapt to the post-boom era. 

When the telecom crash occurred, it signaled the end to three years of unbridled growth and network overbuilds.  Along the way, scant attention was paid to operational efficiency.

As a result, telecommunications companies face some significant operational problems, for instance:     

• They have billing systems that can crank out millions of invoices but can’t reconcile what’s billed with what’s provisioned.

• They own provisioning systems that can rapidly deploy services but can’t query the switches to verify inventory accuracy.

• And they have mediation systems that mediate billions of records a day but can't correlate usage events across multiple network elements and content providers.

In this first chapter, Revenue Assurance & Cost Management Overview you’re given a sweeping, down-to-earth view of revenue assurance as it’s actually practiced at telecoms today.

Here’s a taste of the knowledge in store for you:

• The Nuts and Bolts of Assurance — Not Always Pretty: Here’s a roll-up-your-sleeves look into the day-to-day business operations of revenue assurance teams.  It’s a fast-paced story of operations evangelists up against legacy business practices and jealously protective feudal lords.

• Captain of a Telecom’s Soul: If the times call for running a tight telecom ship, you need a strong captain to lead the crew.  And TRI’s research finds telecoms are increasingly relying on their CFO to ensure operations are brought back into shipshape order.  In this section you’ll gain insights on how telecom RA organizations are organized for success:  What’s the average number of dedicated RA staffers per subscriber?  How long have RA organizations existed?  How do cross-functional teams enter the picture?  TRI provides answers to these and other questions in some revealing tables and analysis.

• Survey Data You can Use: We’ll be the first to admit that you can’t obtain statistically valid results when you only survey 25 RA carrier executives.  But that doesn’t mean you can’t draw some informed conclusions.  Here’s an example: matching up our survey results with U.S. government data we calculated that the 171 employees in the RA organizations we reached for this study are responsible for monitoring revenue assurance for almost 7% of U.S. telecommunications lines/cellular subscriber phones.   

  Chapter 2:  

The Telecommunications 
Revenue Assurance Market

In its formative years, revenue assurance was usually nothing more than an ad hoc committee that lived in the billing department. 

Today, revenue assurance organizations have evolved into multi-disciplined departments that work across a carrier to find lost revenue and control costs. 

And carrier revenue assurance departments are increasingly turning to vendors for help in two key areas:

• Automation to help fewer RA employees do more RA work; and,

• Best Practices to beef up the knowledge base and leverage other telcos' and consultant's experiences.

In this chapter, we describe this new market for telecommunications revenue assurance solutions: what’s being offered and how.  We also cover the OSS systems that RA solutions are auditing and restoring to good health. . . 

• Silos, Mergers, and Errors Galore: Carriers are still reeling from long-term concerns like: post-merger failures to consolidate systems; problems synchronizing the siloed OSS systems they’ve purchased; and network inventory error rates in the 20% or higher range in some cases.  This chapter patiently walks you through the labyrinth of key revenue assurance functions from usage management and interconnect . . . to collections and construction management.  In all, this section is a marvelous place to hunt for new RA opportunities to attack. 
  
  

• Large Organizations = Massive Assurance Headaches: Large telecom carriers deal with massive traffic volumes and manage the work of tens of thousands of people.  So the sheer scale and complexity of the work they do can lead to major assurance concerns.  Take the interconnect billing environment at Verizon: the company that has around 80 trading partners and needs to reconcile and pay 800 service provider invoices a month!  

• Bad Boys in Broadband. . . Keeping the Lid on Fraud: Fraud is another area where telcos are diligently working to assure revenue streams.  Most fraud vendors today use fancy “adaptive anomaly detection” methods and neural networks to analyze data in real-time.  TRI explains the significance of these trends in plain English and points to some key vendors making fraud/revenue assurance crossover a reality.

• Making Sense of the Vendor Marketplace: If you think revenue assurance is a tough field to master, try figuring out which vendors can actually solve your RA problem.  Happily TRI’s research has made the job a lot easier.  First, we give you a two-page grid showing the five top RA specialties of 41 vendors.  We then reveal insider knowledge on methodologists vs. gurus. . . favorite consultant contract terms. .  . and how much money RA software firms usually earn in their first contract year.

  Chapter 3: 

Telecommunications
Interconnect & SS7 Systems

The Telecom Act of 1996 was a defining moment in U.S. telecommunications history.  And because it opened up the local exchange network to competitive LECs, it caused the number of interconnect agreements to explode.  Incumbent LECs and CLECs could now carry and terminate each other's calls and pay reciprocal charges to one another.

Trouble was, the rules government regulators set up for computing those reciprocal charges made it easy for some carriers to bend those rules and find creative ways to get traffic classified at an advantageous interconnect rate.

And it’s no surprise what happened to carriers without good interconnect analysis systems: ILECs and CLECs alike lost tens of millions of dollars because they couldn’t “prove” -- through accurately measured traffic usage -- that they had the right to lower their payments to interconnect partners.

In Interconnect & SS7 Systems you’re taken inside this multi-faceted and fascinating world of interconnect reconciliation.  Here are some topics to whet your appetite: 

• Signaling Your Intention to Get the Money You Deserve: The signaling network, Signaling System 7 (SS7), the same network telecoms use to set up and tear down phone calls, turns out to be a great secondary source of interconnect usage data.   The Report profiles the leading SS7 “probe” suppliers and shows how carriers are leveraging these platforms to “triangulate” RA hot spots and defend against fishy interconnect and caller ID scams. 
  
  

• Here’s How to Boost Profits. . .. on the Margin: International voice and pre-paid services can be downright hazardous to the health of your bottom line.  And if the rates a Nigerian operator charges to terminate a call should suddenly skyrocket, carriers need a know about it in a hurry.  Welcome to one of the more interesting aspects of interconnect – margin management.  The Report points you to a handful of vendors who are serving this area with high performance analysis engines that alert when profit margins drop below a threshold.
  
  

• When in Doubt, Punt to a Service Bureau: Interconnect assurance also gets a boost from two new vendors with unique service bureau solutions: One is building a worldwide database of telephone numbers indicating which ones are owned by wireless operators.  Another runs a national database repository that gives carrier billing information for every phone number, regardless of whether it has been ported or resold.  TRI's report saves you the days of time it would take to discover such companies and understand their business models. 

  Chapter 4: 

Telecommunications
Ordering, Provisioning & 
Network Reconciliation Systems

When we speak of automating revenue assurance and other telecom systems, we assume that automation is the only approach.

But forty years ago the Bell companies ran their provisioning operation the old-fashioned way.  Service reps would take down service orders manually, on specialized forms.

And you know something? It worked. Very few errors ever passed through the system because there was so much checking and cross-checking.

Now, of course, the pendulum has swing to the other extreme.  Telecoms have plenty of automation, but they face huge accuracy problems related to their complex network-facing systems.

This Chapter gives a glimpse of the major assurance and cost management problems across ordering, provisioning, and inventory systems.  The section’s specific topics include. . .

• Living with The Sins of The Past: Here’s a taste of the problems that legacy provisioning systems are creating in the big LECs: Individual order systems are geared to specific regions or services. . .customers are scattered over multiple databases. . .batch processing can’t handle the real-time queries that today’s fast-paced interconnects demand. . .and years of cost-cutting have produced layer upon layer of systems that require a Herculean effort to maintain.

• A Tough Job Made Tougher: Order management and workflow systems present unique problems of their own. The multiple processes, departments, and systems they draw on is headache enough — see what happens when you add to this complexity all the telecom mergers and acquisitions that are taking place. The integration quagmire is both an inter- and intra-company problem. And as product catalogs continue to expand, the problem grows more and more complex.    This Chapter brings these problems into the daylight — and shows you exactly how they’re being tackled.

• Network Inventory -- “Know Thyself”: Network “inventory” means different things to different carriers, but having an accurate one is absolutely critical to the health of your OSS ecosystem. Here the Report explains why the latest capacity-based “network resource systems” are upstaging the old and venerable engineering-based inventory systems like TIRKS.

• Discovering Buried Telecom Treasure: Suppose your network could identify for you — in real time — all those assets you think are in production. . .but really aren’t. Syndesis maintains that the carriers using its telecom discovery solution are saving in the range of 10% of their logical network assets.  Gain a deeper understanding of how the Syndesis solution works under the covers and why Bell Canada is so keen on this technology that it uploads network assets every night

  Chapter 5: 

The Telecommunications
Mediation Marketplace

It would be difficult to overstate the role that mediation plays in the world of telecom.

It’s nothing less than the lifeblood of billing – and a slew of other upstream systems like fraud detection, interconnect payables, traffic management, market analysis. . . and of course, revenue assurance.

And like all else in this industry, mediation is evolving at a lightning pace as telecoms of all sizes and stripes strive to maximize its potential.

This chapter explores the evolving mission of mediation and delivers a crisp assessment of the role it plays today — and the role it’s destined to play tomorrow. As in all other sections of TRI’s report, this chapter uses detailed examples of carrier and vendor strategies that bring to life the workings of this vital function.

• Mediation Then. . .and Now: In the past, mediation systems were relegated to the vital -- but nonetheless mundane -- job of converting the usage records of multiple switch types to a common format for upstream billing.  Today’s a different story.  The Report summarizes the many historical uses of mediation as it points to several new drivers that are revolutionizing the marketplace.
  
  

• The Fun’s Only Beginning: As complex as the mediation scene is right now, it promises to grow even more treacherous.  Mediating network elements in the circuit based world is a known — and almost mastered — process.  But look out ahead! Here come next-generation services from IP packet networks, arguably the biggest influence in mediation systems today.  Here, the Report chronicles the immensely ugly process of mediating dozens of IP events from an array of gateways, softswitches, and media servers.  You’ll also learn how carriers are preparing for this brave new world of IP content, Voice over IP. . . and where they’re turning for mediation help.

• Mediation – A Key Enabler of Wireless 3G: The pioneers of next generation wireless voice and data hail from outside North America.  NTT DoCoMo has 33 million subscribers. . .SMS messages exceed one billion per month today in Europe. . . Japan’s KDDI is launching mobile location-based services. . .wireless video streaming trials are underway in China.  Here the Report identifies the huge obstacles that stand in the way of mediating wireless content. . . be it sports scores, horoscopes, or bullets in an online game.  And the Report points to a cluster of companies who are mediating prepaid usage in real time with full credit-line authentication.

• Real Time Trend Analysis: Trend analysis is the bread and butter of sophisticated revenue assurance.  The theory here is to run an arsenal of database queries to monitor traffic flows, conduct market analysis, and pinpoint potential revenue leaks before they get out of hand.  This section of the Report provides an inside look at how challenging it is to build such a system – and a look at one vendor solution that performs advanced “adaptive trending” in real time.
  
  

  Chapter 6:  

Buying & Selling 
Telecom
Mediation Systems

In this chapter we’ll talk about how mediation vendors are responding to their many market challenges. . . and the issues that carriers need to consider as they plan their long-term mediation strategies.

It’s here where you’ll see which mediation vendors hold a market share lead, and which companies have won new contracts in the next generation mediation battleground. 

The chapter also contains a “vendor capabilities table” that categorizes major mediation and revenue assurance vendors into 22 groups, explaining the strengths and future directions of each.  This table provides a mental framework for understanding the companies covered in our Vendor Profiles chapter. 

Here are some other key issues explored in this section of the Report . . .

• A New Role: Usage Management Central: Some vendors are taking their mediation solutions into an entirely new paradigm: as telco-wide usage management solutions – putting mediation at the “heart” of a telco’s circulatory system, actively managing usage records as they flow from switch to bill and to several other OSS systems.  In the Report you’ll learn how certain companies are leveraging workflow and rules-based technology to enhance or augment usage records and even house the data in a data warehouse.

• To Build, Buy, or Outsource — That’s The Question: Another variable — and a crucial one — in the mediation equation is where carriers turn to solve their problems.  Do you build in-house. . . purchase off-the-shelf programs. . .or even tap the expertise of service bureaus?  Here TRI leads you through the pros and cons of each approach. 

• David vs. Goliath – A Clash of Vendor Cultures: Over the years, the archetypical “mediation vendor” and style of mediation solution it sells has remarkably changed.  No longer offered by a small cadre of experienced “big iron” vendors, mediation solutions also come from startups wearing “convergent” capabilities and Java architectures on their sleeves.  Here, TRI helps carriers sort through the maze of conflicting vendor claims and discusses the trend toward greater user configurability. 

 Chapter 7: 

Telecommunications
Business & Service Assurance Systems

Success in the telecom and cable industries today hinges on doing many things right -- promoting the right services, doing effective marketing, maintaining good cost control.

But at a time when margins are slim and customers have plenty of providers to choose from, many telcos are fine-tuning the customer-facing aspects of their business, including customer care, sales, service assurance, and field service.

Business & Service Assurance Systems is the chapter where you learn how this battle for customers’ hearts is being fought. And it takes the wraps off the latest tools the carriers are using to woo businesses and consumers -- and efficiently maintain the services they  subscribe to.

•  A CRM Relationship Is Not A One-Night Stand: If you’re consistently able to give your customers the support they want and deserve. . .pat yourself on the back for a moment. But only for a moment — because now it’s time to get back to work. TRI gives examples of ways carriers can turn brief encounters with customers into lasting, fruitful relationships. You’ll learn how Verizon has applied CRM principles in its Sales-Service Negotiation System serving 6,500 customer service reps.

• Why “Network Care” is Good Customer Care: When a telecom or MSO installs a broadband connection at the customer’s home, customer care isn’t finished. . .  it’s only just begun.  That’s because a telecom provides an on-going service across a sophisticated, expensive-to-maintain broadband network.  So probably 90% of a telecom’s “customer service” costs are related to service assurance – the monitoring and repair of the network itself.  Chapter 7 walks you through the major issues of service assurance, illustrating how poor troubleshooting, diagnosis and integration can lead to unnecessary truck rolls and other expenses. 

• Extra-Strength Relief for The Sales Order Headache: We’d like to introduce you to the wonders of a Sales Guidance System. It’s just what the doctor ordered for sales order maladies, and is particularly effective for pain caused by today’s complex data orders. An SGS is basically an automated checklist that takes your order from specific customer requirement. . .through product-catalog search. . .on to price quotation. . .forward to work order issuance. . .all the way to your emailed order confirmation.

• Field Service Delivery on Steroids: Today’s outside plant has fanned out from 50 central offices in a metropolitan area to 50,000 customer premises where sophisticated modems and facilities now reside.  Performance metrics, technician scheduling, and integrated logistics are all part of the modern “field service delivery” process.  Here you’ll learn the benefits of the latest field service software that automates the assigning of thousands of technicians, trucks, equipment, and other resources.
  

 Chapter 8: 

Marketing & Selling
Telecom OSS Solutions

The telecom industry is a baffling one because of its complexity, its many diverse players, its fast-growing list of products and services, and the incredible pace at which it’s changing.

Marketing & Selling Telecom OSS Solutions is an outsider’s guide to telecom “written” by seasoned insiders — a look into the psyche of the industry sponsored by the keen insights and decades of experience of those who make our industry move. All courtesy of TRI’s ongoing dialogue with telecom insiders in many operational and executive branches.

This is where ambitious software vendors and consulting firms should turn to get a leg up on their competition. Not only for selling a solution but for successfully maintaining mutually prosperous relationships with telcos.

• 6 Steps to A Contract Win: Here’s the lowdown—given to you from those who know telecom buying habits inside and out—on how to...Focus on what makes you different...Sell your telecom knowledge...Push interoperability...Showcase your people...Prepare a stellar presentation...Negotiate a fixed time, price, and function contract. It’s all here.

• Get Inside Telecom Buyer Heads: We’ll explain to you what goes on in the head of a telecom exec, how you can tell if they’re new to the game, and give you a look at the entrepreneurial mindset. You’ll also find out why teamwork at a startup is a reliable indicator of long-term stability. Marketing and Selling Telecom OSS Solutions reveals signs you should look for that will tip you off to the level of teamwork at your prospect’s organization.

• Sales Techniques That Work: Here’s how to tailor your message to operations, product, and development  people; each will respond to a unique pitch and will need different kinds of reassurance. And you need to get IT to buy into your proposal. We’ll show you how. And this is vital: Never lose your credibility—you must always be very specific about what your software can—and can’t do.
  

  Chapter 9: 

Strategies & Recommendations

The first eight chapters of Telecom Revenue Assurance, Mediation & Cost Management Systems offer a wealth of ammunition for carriers and vendors as they buy, build or sell solutions that assure revenue, lower costs, or enable new mediation capabilities.

Chapter 9, Strategies and Recommendations, goes a step further — providing specific market forecasts and guideposts that will make your path to success speedier and easier to navigate.

Drawing on the preceding 498-pages of data and perspective, this chapter analyzes several critical issues, including:

• Carrier Strategies You can Take to the Bank: Inspiration can come from unusual places: human resources. . . Dr. Deming. . . software models. . . or even a simple change in operating policy -- no software investment required! 

• Value Added Revenue Assurance: Is your company still supplying “big ugly consulting reports” that only tell carriers where their problems are?  Here’s a few carrier “points of pain” and advice to get you back on the value-added track.

• Crystal Ball Gazing: Which market sectors show the greatest growth potential?  Europe or North America. . . large LECs or small mobile. . . billing or provisioning.  TRI forecasts the trends with the biggest impact and the market sectors that are likely to lead.

•  A Guerilla Marketing Manifesto: Global expansion ideas. . . opening ears. . . front-line troop training. . . ASP offerings. . . the curse of functionality.  Here’s a TRI buffet of mediation marketing action items and discussion generators.

Vendor Profiles

A flock of revenue assurance and mediation vendors has descended on the telecommunications revenue assurance and mediation scene in recent years.   Some of these companies have decades of experience.  Others are relying on a venture firm's bankroll and a few great ideas.

It's in this 221-page Chapter where TRI explains exactly who these players are -- in great detail.

Here you can track the progress of your partners and competitors with analysis of:

• Historical expertise and background

• Specific areas of strength

• Significant customers and partnerships

• Summary of most important products

• Differentiators that make the company standout

• The company’s revenue assurance or mediation revenues for 2002

By the way, these profiles are not warmed over press releases.  This is fresh content and analysis based on structured interviews held with key marketing and technology executives at the companies themselves.

In fact, roughly half our research time was spent interviewing vendors and writing these profiles.

Like TRI’s Report as a whole, Vendor Profiles is a time-saver: it succinctly delivers the information you’d otherwise have to spend weeks tracking down.  A list of vendors profiled follows:

Table of Contents