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IMS Magazine logo
Aug/Sept 2008 | Volume 3/Number 4
Eye on IMS

The Differentiator

By Grant F. Lenahan
Two campers are in the forest, when they hear a bear approaching. One camper gets up to flee, but his companion sits down to lace his boots. The first camper warns his friend: "What are you doing? You can’t outrun a bear!" His friend replies: "I don’t have to. I only have to outrun you."

And there is the value proposition for a truly flexible, fast service delivery platform.

Most of the telecom success stories of recent times have been in the innovative world of mobile. And nearly all of them have been based on service innovation. The few shining lights from the fixed communications world innovated with pricing and plans, such as MCI’s Friends and Family, Sprint’s "Dime Lady", or AT&T Wireless’ Digital One rate plans, that ushered in the era of bucket plans.

Innovation will continue to depend disproportionately on creative pricing, charging and promotional plans. But as we move forward, it must encompass a wider range of services, from information to digital content; the services must work on a wider range of consumer devices (we certainly can’t just call them phones anymore); and those services must be more highly personalized, just as services are becoming on the web.

The key issue is speed and differentiation. Tom Peters, of, "InSearch of Excellence", famously wrote that "the only thing I learned in college economics is that wheat farmers under perfect competition don’t make any money". Valuable lesson. Wheat is a commodity. One bushel is pretty much like another bushel, so growers compete with each other for the lowest price, and that sets the market price. Minutes of Use (MOU) is another good example of a commodity in search of a price floor.

So the key is to either differentiate those MOUs or to find things that are more differentiated. That’s the lesson of the two campers and the bear. One well-respected operator in Brazil has a simple business model. They innovate several times a year, and make a disproportionate amount of their profits from those new services. After 12-18 months, these are "revenue generators", but no longer hugely profitable. Consequently, their business model is based on:

• Being faster than the competitors.

• Innovating at a cost that makes the business case work. A couple years back the mobile industry embraced Service

Delivery Platforms (SDP). These were largely proprietary boxes that enabled the sale of ring tones, wallpaper, and games without having to go through legacy systems. Their great virtue was that they were self contained and they worked. Their great vice was that they were self-contained and therefore silos: the classic twoedged sword.

Those monolithic SDPs’ sell-by date has passed. Now they are legacy silos of their own, although still supporting important, revenue-generating, commodities. As always, today’s consumer will only pay a premium for new service innovations. And they are demanding that content, for example, work across devices (e.g., play your iTunes on your Mac/PC and your iPod... and maybe on your mobile phone). Consumers are looking for fee structures, affinity programs, and other creative plans that reflect their needs. For some this means, "pay as you go"; while for others it means "all I can eat". Increasingly, it will be more complicated than that, and may even involve "paid by someone else" aka advertising.

So SDPs must move from their roots, to a more modular, standards-based and flexible incarnation. We believe that much of the industry is coming to general agreement on this point: that SDPs are not things, but rather architectures. An SDP, for example might include the charging function from company A, the policy function from company B, the transcoding function from company C, session control functions from companies D and E, and the Parlay/web services exposure provided by company F, etc. In this way, richly functional, standards-based building blocks may be assembled to create an SDP. And this SDP is likely to operate across protocols, networks and media, possibly even encompassing "legacy" networks like GSM voice and messaging where most revenues are still generated worldwide.

If we follow that path, the pointless arguments about whether something is IMS or SDP or whether it is a charging system or part of an SDP will go away, and we can focus on the goal of all of these acronyms, from IMS to SDP to OMA: Innovation and Differentiation. And if we do THAT right we can also concentrate on how to distribute our collective industry profits.

So SDPs = Differentation = Profits. And if they don’t, it’s pointless anyway.

Grant F. Lenahan is Vice President and Strategist, IMS Service Delivery Solutions at Telcordia Technologies, Inc. (www.telcordia.com).

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