By Chris Carfagnini, Strategy Director, Alcatel-Lucent North America
Jun 25, 2007 4:14 PM
An evolution is occurring in the palate of the consumers of telecommunications services. Arguably, for the first time since the early days of the Internet, new money is becoming available to the traditional service provider since the demand for new kinds of blended and personalized services that go far beyond simple bundling, is just beginning to take off. This new money, however, must be earned through competition with, or better, in partnership with the innovators that flourished in those early days - the Internet-based Application Service Provider (ASP). These application providers, who ride freely over the top of a traditional service provider’s network today, capitalized on the last shift in palate by providing innovative, rapidly created services through new business models including music and video sharing, peer-to-peer messaging and a whole new advertising model based on digital media delivery. According to research performed by Alcatel-Lucent Bell Labs Business Modeling group, worldwide advertising revenue via digital media delivery methods (Internet, Mobile, etc) was close to $15B in 2006. A business comparison shows a competitive advantage for Internet-based ASPs as they use an operator’s network. The EV/PPE ratio, the ratio of Enterprise Value to Property, Plant and Equipment, shows “over-the-top providers” superior ability to generate shareholder value with less hardware assets, up to 10 times that of traditional providers. Similarly, operating expense-to-revenue ratios show that “over-the-top providers” control costs and generate a greater return. Why? The Internet-based ASPs do not have a large embedded base of network assets and “legacy back-office” operations and business support systems, and therefore don’t have to consider how to evolve their long-time customers, revenue streams and assets in their business plans. The ASP’s service creation and delivery schemes are much more nimble since they are based on the latest IT technologies such as Web Services, Web 2.0 and Java.
As the result, the traditional service providers must find an effective way to compete. Clearly, wholesale “rip and replace” strategies are not a practical option. Some industry participants have proposed that today’s service providers should simply shrink back to core competencies of moving bits, accept the lower margin “pipe provider” model and make up the revenue in volume through organic and acquisition-based footprint growth. However, others believe there is another option and the opportunity to prevent history from repeating. Traditional service providers have a number of unique assets that can be leveraged, including Brand, Trust, the ability to manage the Quality of Service (QoS) and a long established billing relationship with most North American consumers and enterprises. Further, many carriers can offer multiple access technologies that enable services to be delivered to any device anywhere. These factors clearly put them in a powerful position to evolve and differentiate. But what will it take? The answer lies not in the gamble of hitting on a “killer” service or two that will fill the coffers overnight. No, it lies in a carefully planned, smoothly integrated transformation strategy that implements specific service optimized platforms for the development and delivery of core new services - like IPTV for consumer video, the IP Multimedia Subsystem (IMS) for SIP-based converged conversational services such as Video conferencing, and of course VoIP, and with existing SMS/MMS services - within an environment that will allow blending of these services and 3rd party applications quickly and inexpensively.
Some imply that it is possible to achieve a unique Service Delivery Platform (SDP) that supports all types of services. Although an attractive idea, Alcatel-Lucent believes that, because each type of service, such as those based on IMS or IPTV has considerably different requirements, it would be unrealistic to assert that one single delivery paradigm would be able to optimally deliver all different services. Thus, introducing multiple service-optimized SDPs is a natural step in the evolution towards new services. The key is the overall environment in which they inter-work.
These service-optimized platforms will form a key base from which will emerge a gradual evolution to the “killer” Service Delivery Environment (SDE), one that shares common service enablers such as presence and location information, preferences and profile data as well as makes use of a common set of operations tools including user self- provisioning portals, and fulfillment, assurance and billing processes. This strategy must be careful not to disrupt current revenue flows but facilitate the leveraging of assets that results in the introduction of new, unique and highly desirable personalized, blended services. “Blended” refers to the inter-working of technologies, applications and services to enable the service inter-working and personalization, as opposed to “bundled services” which refers to the grouping of separate services into a marketing package or bundle.
The recent surge in social networking, multi-tasking, user-created content and the demand by Generation Y users to have it all available on any device anywhere means service providers need to embark upon a transformation that will result in a “killer” environment instead of continuing to overlay specific silos without an overall evolution plan. An environment where rapid service creation and delivery is the result, where duplication is minimized and the ability to leverage current and new applications developed in-house and by existing 3rd parties is fast and easy.
With the right SDE, service providers have the opportunity to derive new value from their legacy assets and effectively incorporate 3rd party applications and services.
This new SDE needs to be an open Services Oriented Architecture (SOA)-based framework that enables integration of service-optimized SDPs, such as IMS and IPTV to accelerate service innovation by binding their own and partner applications with network resources, using its intelligent delivery, personalization and blending capabilities. It must provide a set of common enablers that break down or avoid service stovepipes created when introducing multiple SDPs by providing service enhancements and operations tools common to and shared across all types of services.
To deliver the promise of carrier-grade quality of experience (QoE), the Service Factory relies on common enablers that support the service delivery end-to-end and allow services to be personalized and blended across the shared resources of the common IP network.
These common enablers are grouped into three main areas: Federated Control, Service Enhancements and Service Operations. They are accessible in real time by all services and provide the bridge between the services, the resources required to deliver those services and the related service operations applications.
Federated Control includes all service and session control applications of the SDPs. Examples of such controllers are the S-CSCF for IMS, a video-on-demand (VOD) server for IPTV, an SMS-C for mobile, as well as a service broker and a policy-driven dynamic resource controller to handle the services mix.
Service Operations encompass all network management, OSS and BSS applications and cooperate with the Service Enhancements to obtain a coherent view of all services from an operational perspective. Service Operations includes such functions as:
Payment and Content Management
Network and Service Resource Management
Service Fulfillment and Assurance
The SDE provides Service Operations components for self-management, including subscription and troubleshooting and end-user self care.
By using an appropriate selection of SDE Service Factory, Federated Control, Service Enhancements and Service Operations common components and a relationship with suppliers who understand both the IT application world and the telecom network world and whose portfolio can deliver a true SDE and not just a few SDPs, service providers can begin a stepwise evolution, tied to the expedited introduction of individual new services to effectively compete with traditional rivals and grow a symbiotic relationship with new entrants.