Jon Wells, OSS Consultant at Clarity, a vendor of Unified OSS solutions that manages over 120 million subscribers, many of them from emerging economies, discusses how pressures in emerging markets are forcing OSS to change, for the benefit of all.
The emerging telecoms market is no less demanding than those in Western Europe or North America, but it does present substantially different requirements. These markets often present challenges that telcos in developed markets have not had to contend with but may soon find themselves facing. They are also extremely lucrative, with OSS (Operational Support Systems) Observer in February forecasting revenue growth in emerging markets at 11% from 2007-2012.
OSS is essential for telcos in emerging markets since it helps them operate efficiently, leverage economies of scale, keep up with intense competition, engage with increasingly technology-aware consumers and create innovative services. It also helps telcos manage technology refresh, being initiated to reach new customers with NG services, replace creaking infrastructure or “leap-frog” to NGNs.
Modern OSS is shaped by developed markets, culminating in a “Best of Breed” approach potentially unsuited to emerging markets. In contrast, Unified OSS – an open, NGOSS-based, modular, pre-integrated, end-to-end OSS solution – presents operators in emerging markets with sophisticated OSS without the associated long lead times and high costs. Market analysts, such as Frost and Sullivan and Yankee Group, are increasingly aware of the opportunity that Unified OSS presents to operators seeking sophisticated OSS.
Falling ARPUs, increased customer focus and technology refresh are impacting globally. With local pressures pushing operators in emerging markets towards a “quantum leap” in OSS, there may be lessons that the emerging markets can offer to the global OSS community.
Streamlining telco process efficiency
Most operators in emerging markets must contend with comparatively low ARPU. The estimated ARPU in India is around US$8 per month; only slightly lower than Indonesia, the Philippines, Malaysia, Thailand and China and around a tenth that of some Western European operators. This low ARPU is off-set by potential for customer growth. For operators in emerging markets the key is in accessing their large, often rural populations that typically have low tele-density, thus supporting business models based on rapid growth and high customer subscription. For example, India covers 3 million km2 and 70% of the 1.1 billion population lives in rural areas with tele-density of around 2%. While the opportunity for customer growth is clear, automation and intelligent management of manual activities, leading to operational efficiency, are critically important when maintaining services over such a geographical extent.
Some operators in Asia are achieving ratios of staff to subscribers that are almost half that of counterparts in Western Europe and North America; one Indian operator is achieving a ratio of 1:1750. This is being achieved initially through rapid growth in subscribers but to sustain this and turn it into operational efficiency operators look to their OSS to automate and manage the end-to-end operational processes.
Operators in Eastern Europe and CIS are challenging their legacy platforms as they experience demand for broadband services. OSS Observer (Emerging Markets Outlook, February 2008) forecasts that residential broadband will grow faster than revenue, at a CAGR of 27%, as the service is still relatively new, and ARPUs are low.
Simply put, the legacy OSS cannot efficiently, rapidly and reliably deliver the order-to-cash process, despite network availability and a consumer base demanding higher value services. Many operators are replacing legacy with new OSS, often delivering many functions simultaneously.
One Eastern European operator recently started an OSS project covering inventory, order management, activation, field-force logistics and trouble-tickets. However, time is of the essence, and the transfer of subscribers from low to high value services cannot wait for traditional OSS lead-times.
Operators in emerging markets are using Unified OSS to achieve end-to-end process efficiency and automation without facing the costs and time-scales of “Best of Breed” OSS.
Growing pains
In emerging markets, an OSS must take the strain of a rapidly expanding customer base, as this off-sets low ARPU. Expansion can be extremely rapid; some operators in emerging markets achieve tens of millions of subscribers within a few years, monthly growth of one million subscribers being fairly common. Where the subscriber base already exists, as in Eastern Europe, the OSS must support consumer demands to rapidly transition from low to high revenue services.
Operators in emerging markets need OSS that helps them “go live” with services quickly and manage the transition from low to high revenue services. This rapid increase in subscriber numbers or service revenue is often essential for the business plan. This is doubly important because operators in emerging markets have often invested heavily in infrastructure and strive for high utilisation through customer growth to balance costs. One emerging market operator estimates that the right choice of OSS saved around US$200 million in life-time integration costs and delivered sophisticated OSS functionality two years earlier, when compared to “Best of Breed” OSS. Within seven months of starting up, they were the country’s largest mobile operator.
Subscribers in emerging markets are technology-literate and competition is relentless, throughout this intense growth period. Once again taking this February's OSS Observer as the source, competition is a major reason why India has some of the lowest mobile rates in the world, at two cents per minute. The need to defend market share and capture new subscribers drives innovation in service offerings. In addition to coping with demands of growth, the OSS for emerging markets must reduce time-to-market for new products. Demands for 12-15 new products and features per year for mobile service providers in emerging markets are not unheard of and are being supported by Unified OSS today.
Innovation and the customer service
A common misconception is that subscribers in emerging markets are not demanding. In reality, customers in emerging markets have extremely high expectations. The level of competition for subscribers may drive those operators that do not address customer experience - or innovate and improve their product portfolio and SLAs - to extinction. Just as in developed markets an OSS must intelligently map network status, planned outages and provisioning KPIs to customers facing SLAs, and coordinate and prioritise responses when SLAs are in jeopardy or breech. While automation and efficient manual processes remain the fundamental means of maintaining excellent customer experience, SLA management can gauge and improve that experience, focusing management on the subscriber’s needs.
The same is true when viewed from the customer perspective. Customers expect the call - centre staff to be informed, to map the customer-reported fault to a known network fault intelligently, to give reassurance that the resolution is progressing and to provide a restoration time. Only the OSS is positioned to support this.
In “Best of Breed” OSS, maintaining customer centric perspectives is often the culmination of years of evolution. To meet demands of customers in emerging markets, telecoms providers simply cannot wait. Unified OSS can implement customer centric management without major integration projects.
OSS, above and beyond
In emerging markets, OSS vendors often need to go above and beyond system deployment. Operators in emerging markets often expect OSS vendors to contribute as much ownership and industry experience as product experience - facilitating faster, lower risk deployment. For example, one mobile provider in the Philippines required their OSS vendor to construct the entire NOC including IT, workstations, video walls, and servers. OSS vendors have to take more responsibility for data migration challenges facing many telcos in emerging markets, assuming an active role in identifying data “black-spots” and providing tools and utilities to help improve data. For example, an OSS vendor equipped network audit teams with remote applications directing data entry for almost 1,000 sites, analysing data for integrity and checking completeness against the reference model.
It is important that OSS providers in emerging markets empower their clients to take control of their OSS and work with them in partnership. Often operator’s cost constraints are such that they can only maintain their OSS in the long-term by doing it themselves, supported by the product vendor as needed. The OSS vendor must put in place knowledge transfer strategies that will gradually introduce the operator’s IT staff to the system.
Achieving complete transfer of responsibility within a few years is realistic and proven; where supported by the product vendor. In emerging markets where economies of scale cannot be found, collaboration between smaller operators is beneficial. For example, South Africa contains separate municipalities, each with telecoms service providers delivering to their local geography. Despite its large population, Africa has one of the lowest service revenues, with US$43 billion in 2006, while the average GDP/capita is a little more than US$2,000 per person. Since this revenue often cannot justify a sophisticated OSS platform, operators may look to a “virtual-OSS” which provides segmented views of consolidated management.
Finally, emerging markets contain many niches and opportunities. One example is PLC (Power Line Communications) that allows utilities companies to sell telecommunication services over their infrastructure. The OSS vendor must deliver business value with the OSS, by providing telecoms “best practice” experience to help the utility company leverage their investment.
Next-generation technologies
For many developing countries, next-generation technologies are not a long-term aim, but a starting point, since they can solve many problems facing operators. Various operators in emerging markets are building broadband optic fibre networks, completely bypassing the copper lines still used in many developed countries. In just a few years, India-based Reliance Communications has become the world’s largest IP-enabled optic fibre-cable network with 230,000 km now laid. Compared to copper cable, optical fibre provides far more bandwidth, while being cost comparable and less subject to theft.
According to a press release from the Malaysian Minister for Energy, Water and Communications, dated May 15, 2008, Telekom Malaysia’s HSBB project will receive US$722 million investment from the Malaysian government, as it proactively tackles its relatively low penetration of broadband. Similar government initiatives are found around the world. For example, entry into the European Union is driving infrastructure re-fresh in Eastern European and CIS countries.
Instead of deploying copper or fibre, many countries are deploying wireless coverage to provide an instant broadband service. Wireless broadband is an excellent means of reaching rural or transient populations and coverage “black spots”. Unlike copper cable, wireless broadband equipment can be secured against theft and removes much of the cost of laying and maintaining hundreds of kilometres of infrastructure.
One shared characteristic of most emerging markets is that they are a hive of innovation and experimentation. In Africa 3G and CDMA2000 are currently capturing public interest, but this may be challenged by WiMAX and technologies such as PLC which continue to exploit niche opportunities. Operators in Africa are evaluating technology, looking for the best fit for their specific challenges and OSS must support this evolution. With current residential broadband at only 1% there is a huge potential for rapid expansion of service.
Operators in emerging markets should be wary of equipment vendors "giving away" their equipment and technology-aligned management solutions. Instead they should consider longer term use of flexible, multi-technology and multi-vendor OSS platforms, providing holistic network management, future-proofing for evolution and customer centric perspectives, as is provided by Unified OSS.
Conclusions
Does “Best of Breed” OSS adequately address the challenges of OSS in emerging markets? The Yankee Group commented this May in “Unified OSS architecture is the critical underpinning for automating the telecom service delivery factory”, a commissioned work conducted by Yankee Group Research on behalf of Clarity International, that: "With carriers focusing more on reducing opex and capex, a unified OSS solution provides a compelling value proposition that ensures long-term viability. Unified OSS removes some of the bottlenecks associated with best-of-breed OSS solutions.
Unified OSS focuses on simplification through pre-integration, consolidation of operational data and centralised workflow spanning end-to-end operational processes; from SLA management to field-force logistics. Frost and Sullivan in “Market Insight featuring OBCE Trends” agree that: "This pre-integrated approach streamlines the rollout of an OSS deployment and yields greater out-of-the-box functionality. It avoids costly one-off, technology dependent solutions."
Unified OSS can deploy faster and with lower risk than “Best of Breed” OSS solutions, avoiding integration and data synchronisation costs. It helps operators in emerging markets achieve RoI on their infrastructure investments sooner and, through simplicity and flexibility, allows operators to engage their subscribers with innovative products over evolving networks. Its single data-model exploits relationships between network, service, customer, SLA and field-engineer in managing the customer experience. Unified OSS is proven to help operators in emerging markets enjoy business benefits of sophisticated OSS solutions.
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