INTERNATIONAL. Tech-savvy consumers of the Gulf are making corresponding demands on their mobile operators. On the occasion of the UAE telco du confirming NetCracker as its OSS (operational support system) of choice, BI-ME talked to Sanjay Mewada, Vice President Strategy, of the US group about the challenges of next-generation networks.
OSS investment is an increasingly heavy burden on any company balance sheet, but the rewards for getting it right are huge. Innovative product and service offerings and investment in new technology have sparked a revival in OSS development and management. The most successful OSS deployments will belong to those companies that have the best information, the deepest knowledge and the broadest understanding of how to manage change. No network can run without OSS and it has been around since Alexander Graham Bell made his first phone call in 1876.
Change is certainly rushing through the mobile market in many forms as computers take over more and more of the operations required to run a mobile network. The operator business itself is changing so quickly and with demands for new services, telcos are having to compete more and more on new areas, whether it is ringtones, personalisation, friends & family billing, music and video downloads.
Some would say there is a battle on the part of the telcos, to prevent their ‘disintermediation’ by the content providers and media companies, in having a say in how our cell phones are function and how they look.
In one such example, du last month announced it has selected NetCracker’s Service Fulfillment and Service and Resource Inventory Solutions for its new Order Activation and Inventory Manager System. This deal expands NetCracker’s growing worldwide customer base into the Middle East, a region of strategic importance and commitment to NetCracker.
Sanjay Mewada, Vice President Strategy, of NetCracker, says that the network side has always been a powerful success factor - what the customer recognises as the simple dial tone - but more and more new services companies are encroaching on the mobile market.
“If you go back in the past to the origins of our company, the phone service was the dial tone. But today you have to look at music and video clips, IPTV in the home and other new services. All that is possible because of the evolution on the network side, with faster routers, faster switches, bigger cables and affordable broadband prices," he says.
The new Order Activation and Inventory Manager System for du - a key enabler for the firm's business and network transformation - will speed delivery of innovative new services and support its rapid infrastructure build-out. The NetCracker Solutions will fully automate Order Management, Service Order Fulfillment, and Network Capacity Management.
du’s mission is to be the first choice provider in the UAE for integrated communications and entertainment solutions, offering voice, data, video, and content services over fixed and mobile networks to residential and business customers. Their advanced network and IT operations support systems allow them to deliver all services from one platform.
The other big change, according to Mewada, is that today operators require more than just the mobile network. They require IT platforms like email servers, video servers, and content servers, in fact everything that is required in getting a video clip and even broadcast media onto a mobile phone.
“The operator needs a push mechanism,” explains Mewada, “and it becomes an orchestration of activities across the network and the IT side. We can provide this as a kind of glue, making services available across the network and IP domains.”
The new Order Activation and Inventory Manager System will replace several discrete legacy systems and will be an integral part of du’s new IT environment. NetCracker’s Resource Inventory, Discovery & Reconciliation, Service Inventory, Service Provisioning & Activation, Design & Planning, and Customer Impact Analysis modules, running on NetCracker’s J2EE Framework, will provide a consistent, integrated view into du’s service layers and network operations. This, in turn, will provide essential correlation across domains.
“NetCracker’s ability to transform the service layer and model next generation infrastructure will enable du to drive its competitive advantages, to speed delivery of new, innovative services and rapid expansion of its next generation networks,” says Mewada.
The worlds of IT and telecoms are converging. The operator has to give the customer the connectivity he or she requires for that video clip or ring tone, and we are only at the start of this process. The content side will become richer and richer, as more and more of us take up the new generation smart phones. Today with six or seven Mbps on your phone, you are ready to watch a movie or catch up on the favourite TV shows you missed at home, whilst waiting for a friend or a plane, or in any spare moment.
But Mewada says he sees big differences between the two worlds of IT and mobile networks, that will shape more deeply than we can imagine, the way we use our handsets. As a global company present in five continents, with clients such as France Telecom, Sprint, Orange - including the Orange Middle East franchises - Russia’s MTS, Time Warner Telecom among others, it is in a good position to compare developments in the Middle East with the rest of the world.
“I see that handset technology and mobile content might actually be richer in the Gulf, with more advances, compared to the US,” says Mewada. “But on the other hand everyday use of the Internet and rich Internet like Facebook is more popular and embedded in the US.”
He adds that on the mobile side, the vast geography of the US market is a natural limiting factor. It’s true that for all large consumer markets, network coverage can be an issue. “It’s a function of markets, and mobile behaviour is cultural,” he adds. “A typical Middle East or American customer will use the net in different ways.”
Meanwhile the GCC markets are perfectly poised to take advantage of all the developments coming through. Mobile phones here are almost a lifestyle issue and we only have to look at the success of the Motorola gold RAZR V3i phone, or the Prada phone by LG which is already available in 50-plus retailers in the region.
An interesting part of the dynamic driving our future use of handsets is the next-generation Internet and the ability to update blogs and social networking sites from our phones. A major problem for traditional network service providers is the threat from Google, with its Android operating system project for mobile handsets, and other players like Apple’s iPhone, You Tube, MySpace and Facebook.
These new players are in effect taking away the value of the customer relationship from the telecom companies.
If we take the iTunes music download site, in a typical case the 99c price of a song download will see 80c of that amount going to the record companies, 18c going to the record companies, and just 1c going to the mobile operator – the company that is actually giving the interface with the consumer. This battleground will become more and more crucial as our viewing and listening patterns migrate more and more to our handheld device, as our favourite personal organiser. In the future our mobile phones will become our TV remote control and the programming device for all our viewing, listening and indexing needs.
As Mewada points out: “It was okay until very recently when the only services were the phone services. Now more and more companies are mediating, whether it is for maps, local destination information or music. You are now seeing a situation where all these entities and services are connecting to the mobile phone, and the phone company doesn’t seem to be making too much money out of it.”
With online communities like Second Life accessible by mobile, we can see again another shift that is disconnecting the mobile company from the customer. These developments are in effect disintermediating the big media companies like Time Warner or News International and putting online content in the hands of individuals. The mobile user then becomes not only a customer, but a provider of content as well.
Emerging market spaces
Other changes in the way we use our mobiles are on the way. New forecasts from Juniper Research show that around 52 million consumers globally will adopt new mobile technologies such as NFC (Near Field Communication) and other physical mobile payment methods to pay for everyday goods and services by 2011. This will help drive the physical mobile payments market to US$11.5 billion by the same year.
NFC and other physical mobile payments methods will begin to offer consumers a viable alternative both to cash, credit and debit cards supporting their increasingly mobile lifestyles.
The new Juniper Research study found that by 2011, around 12% of the total mobile phones in circulation will offer support for contactless payment, specifically NFC, equating to nearly 470 million NFC-enabled handsets worldwide, thereby providing a significant marketplace for retailers to offer goods via m-payment applications.
Other findings from the report show that mobile payment applications and services are already available in most regions in a variety of formats where they are being adopted in either a trial or commercial mode with favourable user feedback.
Industry players (including retailers, handset vendors and the financial community) in Asia, Middle East and the US are seen as particularly receptive to the idea of using RFID or NFC to facilitate mobile payments for physical goods and services. Members of the mobile payments value chain must develop a mutually satisfactory, robust business model, guaranteeing revenue to all parties.
Another technology coming into this cocktail is the high-capacity SIM card that is increasing unit shipments and revenues, parallel to the greater adoption of innovative technologies such as NFC and mobile TV. Although companies are turning to NFC and mega SIM cards, they are still apprehensive about the high costs involved in the migration, said a recent Frost & Sullivan report.
SIM managers at the operator level need to have a thorough understanding of the usage of the additional memory. Mobile operators are also reluctant to make the transition to mega memory SIM cards, as it would require investments in a completely new base of universal serial bus (USB)-enabled handsets that can support these new SIM cards.
In addition, they also have to make an extra effort to educate end users about the various applications content. However, once the shift is made, silicon and smart card manufacturers should respond to mobile operators’ demands and develop products and applications for these mega SIM cards.
“The operators will have to rely on new subscriptions or upgrades of 2G to 3G handsets, as the cost of replacing a SIM card is usually ten times the cost of the card itself,” says Frost & Sullivan analyst Alejandra Etcharran. “The second option would be to issue lower-cost cards to 2G customers and high-end 3G cards only to new subscribers in order to sell a greater number of cards.”
Since high capacity SIM smart cards have no concrete cost structure, early movers will have an advantage. They can generate healthy revenue growth rates before the market attains ‘mass market’ status and prices stabilise.
A migration to high capacity SIM cards and applications is likely in the next few years, as greater convergence of mobile phone applications is hiking the demand for more secure complex SIMs.
“With the increasing number of multimedia applications, mobile network operators (MNOs) now seek SIM-based multimedia solutions to better serve their customers and for this integration, the SIM requires greater memory,” concludes the Frost & Sullivan report. “Applications such as address book, calendar back-up, messaging, teleconferencing and file transfers, as well as entertainment through gaming and chat services encourage the migration process for a sustained professional and personal convenience.”
This focus on solutions has gained significance with card vendors branching out into other areas of operations such as the Internet. The SIM smart card has integrated greater levels of support and security with cellular networks evolving from voice to data. Market participants can also persuade mobile operators to adopt advanced SIM technology by demonstrating how subscriber loyalty depends on the innovations in the SIM card.
Near Field Communications technology is very important from the viewpoint of FMCG companies and marketers, since it offers the prospect to send messages and rich formation to consumers according to their personal preferences and the actual location where they are standing in a store, an airport, or a mall. One NFC project is working to play product information and prices for blind consumers by audio at the point of sale, for example.
Network operators are aware of these challenges of course, but it is far from clear what is the best way to tackle this emerging space, and they need appropriate software.
OSS providers like NetCracker help the telcos manage this new universe of partners, and they have more chance to start adding value, and to get the customer relationships back. They need to stake the ground for this interconnected Web 2.0 economy.