MANAGED TESTING - Testing times
While service providers are still tempted to use price as a competitive weapon, Tony Amato argues that they should be investing capital in enhanced revenue generating VAS applications - and ensuring that they are tested across every element of the network
I want to be able to download my music and also be online with my friends anywhere-anytime, among other things, and I need all of this very economically", asserts the technology savvy end-customer. The underlying message translates simply to a convenience-at-your-fingertips idiom with a pocket-friendly ulterior motive. If you are a service provider or a network operator, you might already be overwhelmed with such a paradoxical sentiment. On one hand lies the enormity of improving average revenue per user (arpu) and profitability each successive ‘accounting period'. On the other is the seemingly perilous choice of selection and rollout of new Value Added Services (VAS) that appeal to the imagination of the masses. Now consider the following stark realities
- Fixed-line revenues are dwindling owing to an increased fixed-to-mobile substitution
- In geographies that are witnessing positive subscriber growth, arpu figures are either flat or seem headed downwards, although profitability figures have shown improvement in some cases
- In highly saturated markets arpu growth has shown a direct impact on profitability
- New and innovative VAS such as multimedia messaging, presence, gaming, mobile commerce (m-Commerce), mobile office and location-based services are starting to contribute significantly to the data component of total arpu (i.e. voice + data)
- The data component of total arpu is growing, but not fast enough to offset the decline in the voice component of total arpu
Market studies have established VAS to be the prime driver for arpu growth. From an average current revenue share of 8-12 per cent worldwide, VAS implementations are poised to account for at least 15-20 per cent of the top lines of service providers in the next couple of years. However, VAS implementations have to be operationally supported by the deployed network and systems. For them to be operationally efficient, service providers and operators are realising the importance of effective utilisation of their network infrastructure. The need of the hour is for new service rollouts to provide ample revenue improving opportunities, while also dealing with a shortened time-to-market cycle. For them to succeed, all innovative marketing techniques for the new services have to be pillared on a solid foundation of a harmonised network configuration.
Service providers (both fixed and wireless) deciding to offer bundled/converged (used inter-changeably with VAS) services often find it difficult to deal with intricacies at key stages of the product lifecycle. At the very outset, the high-level business consulting process needs to be focused on assessing the existing operations and management systems to discover potential gaps and recommend solutions (in the order of priority). This forms an inherent part of a future-state transition plan that has strategic as well as tactical ramifications. The overriding motive is to use Business Process Modelling (BPM) to evolve to an operationally efficient state that delivers optimal resource utilisation, improves productivity and reduces the possibility of a substantial overhaul. This improved operations efficiency will streamline processes that work to further enable future VAS. To help enable a flexible service delivery environment, this stage should also consider prevailing market trends and preferences. The planning process has a bearing on the eventual returns on investment (ROI) and arpu. Service providers have increasingly started to rely on the services of their partners and specialist vendors to chalk-out strategic roadmaps for optimising their networks and service rollouts.
VAS implementation and integration are also fraught with numerous challenges. While content acquisition, its management, and spectrum regulations (for video/data applications) pose a common threat to all providers, the actual implementation and integration effort provides the differentiation from competition. This stage attempts to convert the optimised functional models (suggested during the consulting phase) into action. This may require replacement/retirement of legacy components and introduction of new COTS systems that seamlessly plug into the network. Once the final selection of components is made, their seamless integration into the network follows. Effective customer relationship management and network management are the desired outcomes of this phase. The success of this phase determines the ease of deployment of current and new services, as well as their financial viability, through reduced opex as the result of integrated, end-to-end systems in support of services.
SLA-based managed testing is another interesting trend in the communications space. By removing testing silos and adopting a single testing strategy, service providers and network operators tend to dramatically reduce the operational costs associated with managing a multi-vendor environment across all their networks, devices and applications. As operators focus on the launch of VAS, they are also striving to reduce the manpower and maintenance overheads of their product line. The managed testing partner brings an in-depth knowledge of technology development and testing to support end-customer SLAs and Key Performance Indicators (KPIs).
Extreme competitive pressures are forcing operators to reduce R&D costs, while simultaneously ensuring that VAS are tested across every element of the network.
The touch points at various interfaces of the network core, various OSS/BSS elements as well as the main application and network components also need managed testing. This ensures a thorough verification of all features, functionalities, performance and quality metrics prior and after service launch. It also improves predictability and visibility of costs the operator may need to spend on testing, year on year. Prominent types of managed testing services include test engineering and consulting, end-to-end integration testing, test automation, user acceptance, and multi-vendor interoperability testing services.
The managed testing vendors also have the capability to conduct end-to-end testing scenarios in a controlled network environment. They assume responsibility for the entire service lifecycle. This may include a lab setup to emulate the entire network deployment architecture to conduct various testing scenarios in heterogeneous access networks, with multi-protocol implementations of converged services. Such labs also allow communications service providers to address and monitor critical issues such as performance, latency, voice quality, retransmission, security QoS and policy, enabling a smooth launch of services, maybe even ahead of competition.
VAS is leading the way in driving arpu growth and improving profitability. But, this path must be trodden carefully, backed up by the capability of a ‘fine-tuned' network and the associated management systems. Operators cannot afford inefficiency and poor management of their own systems and hope to be competitive at the same time.
Service providers often use price as a competitive weapon when the services market faces extreme competitive pressures. They find it simply easier to offer better pricing for a longer-term contract commitment with early termination fees to suppress churn, than to invest capital in enhanced revenue generating VAS applications. This temptation has to be curbed in favour of optimising their networks to achieve long-term sustainable arpu growth. Strategic partnerships with specialist telecom vendors are enabling them to achieve operational efficiencies to make their networks ready for new service rollouts. This also helps them rationalise their operational expenses.
Rather than worry about the maintenance and deployments of their networks, innovative operators are focusing their energies on managing and growing their businesses through VAS. After all, the end-customer will continue to request more innovative services regardless of any operational challenges a service provider might be facing.
Tony Amato, AVP Network Services Solutions, Aricent, can be contacted via tel: +1 516 795 0082, e-mail: anthony.amato@aricent.com
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