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January 19, 2017

BSS Transformation Economics

By Special Guest
Rami Assoum, Head of VAS Engineering Department, Alfa telecom

A few years ago, I was introduced by a friend to a businessman working on a project, in one of the central African countries, that consisted of building a mega-bakery (costing more than $10 million). The idea struck me at first, but he then went on to explain that the bakery market in his home country reached its full potential and there was no way to make more money unless he expands into new markets, to provide the same consumable (and some call it commodity) product. The “boulangerie” derivatives of the main product, “bread,” once considered as the “value added services” of the bread industry are also reaching their dead-end.



No matter how hard CSPs strive to stay “attractive” by tweaking existing products, they have plunged into the “commodity market” long ago. The main cash-cow of CSPs is voice and data, and all they can do is launch, periodically, a “me-too” product that has the same basics of the legacy products: data bundles.

While the key competitive advantage for a CSP (News - Alert) depended on its agility and cost efficiency, e.g. a shorter TTM to meet the emerging demand of existing and new customers, this has changed in the past few years. OTTs have taken the lead, and operators are indeed being transformed into bit-pipes that cannot afford to compete on the price indefinitely.

The reason for such an introduction when talking about “BSS transformation,” which is promised to turn operators into “digital CSPs,” is that BSS vendors are increasingly promoting the concept to CSPs through lengthy and costly transformation programs that converge billing, online rating, order management and product catalogues into one single end-to-end solution.

But CSPs have to be careful. While reducing TTM using a unified product catalogue is a major improvement, CSPs have to weigh their options:

  • TTM only gains its meaning in the context of time, i.e. if we shorten the delivery time of products, we will be able to launch more products in a fixed period of time. If a CSP launched 10 products last year, then went through a program to reduce the TTM by half, it should be able to launch 20 products the coming year. But, if the business anticipates keeping the same pace of product launch next year, then why do we need to reduce the TTM at first place?
  • Such programs will deplete the CSP’s resources for at least two-three years, and will compete for those resources against the ongoing “business as usual.” This will lead to a higher TTM during the execution of the program.
  • Vendors are promising a lower OPEX (News - Alert) on the new solutions, but they have been doing so for decades now, and the results are just disappointing for CSPs.
  • The size of the market in which the CSP is playing governs the economics of “segmentation.” For big-size markets, it would be “economically efficient” to spend effort/cost digging for new “niches” or segments, to offer them tailored products. But this is definitely not the case for small markets.

And to add the cherry on the cake, how will the telecommunication market be looking three years from now? It is apparent that the B2C model is not going to change, and that B2B is going to get all the attention (with B2B2C to a less extent).

The mainstream business for the B2B model will be the IoT. And the latter is being promoted by the same vendors through “cloud based” IoT BSS systems (or connectivity platforms), completely bypassing the BSS of the CSPs, in order to reach economies of scale for both the CSPs and the vendors.

Connectivity platforms have another function as well; they will form a “collaborative environment” in which the CSPs, enterprises, and SIM manufacturers can reach a high degree of integration for a quick reach to market. They provide enterprises (the second B in the B2B model) with interfaces and tools to manage their IoT SIMs, including stock ordering, activation/deactivation, plans change, roaming services, and many other tools that new BSS transformation solutions promise to do.

In a nutshell, the connectivity platforms are going to manage the whole billing/charging chain of the IoT segment, with an invoice delivered at the end of a pre-defined period to be issued to the partner. The handling of payment settlements and partner relationships can be managed by the functionalities of the existing billing systems.

The question that raises itself now: with the IoT being the new market of the bakery (CSP), having its own and separate BSS systems, why do we still need a major transformation in the bread (B2C) BSS?

About the Author

Rami Assoum has been working in the field of mobile telecom for 20 years, (MTN (News - Alert) West Africa, Ericsson design center Ireland, and finally Alfa telecoms in Lebanon since 2005).He worked on different parts of the telecom value chain including: core networks, intelligent networks, Value added services and BSS (Business support systems). His experience covers the different aspects in providing the final product to the end-users. Assoum is now leading the VAS department at Alfa, responsible for the development, implementation, charging, and policy management of new services and bundles introduced to the market. He is a renowned speaker on his vision and philosophy in the BSS domain in many conferences around the world (New York, Dubai, and other summits).




Edited by Alicia Young
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