Virtual Services: A Bright Future for Telecoms

By Tony Kalcina

The global financial crisis has brought about the end of easy access to capital to fund business expansion. Credit is harder to get, and the cost is higher. And yet, communications service providers (CSPs), like any other business, still need to find ways to increase revenue through product innovation and market expansion.

One way that operators are reducing their capital and operational expenditure (CapEx, OpEx) is by adopting managed services that effectively outsource areas of their business. There is also an increasing trend toward vertical segmentation – the days when the owners of the ducts and cables were the sole providers of the services that could be offered are over.

Instead, the telecoms industry has seen an explosion of new business models, such as Virtual Internet Service Providers (VISPs) and Mobile Virtual Network Operators (MVNOs) who are able to provide services without directly managing infrastructure, by up-selling spare network capacity. This lets the CSP generate additional revenue and target niche markets, without having to invest in additional infrastructure, marketing and customer service.

While these new business models can be lucrative, they are not without risk. The rules and best-practices for them have yet to be written in stone and many hard lessons will have to be learned. The companies that survive and prosper will be those that can rapidly deploy and manage service portfolios, keep up with intense competition and adapt to market changes quickly.

The lynchpin to overcoming all these challenges is a flexible management platform which can streamline the delivery of wholesale services under one automated, self-service system.

Making VISPs a (Virtual) Reality

TelstraClear is one company that is taking advantage of this new market space. They have developed a VISP model that allows retailers in New Zealand to deliver ISP services and their own value-add offerings without managing any network infrastructure at all. Effectively this allows TelstraClear to focus on creating operational efficiencies in the network, while the VISP manages the marketing, bundling and selling of TelstraClear capacity.

Without the shackles of managing infrastructure, virtual operators and ISPs can benefit from creating highly customized product and service portfolios for their target audience and the ability to react to market changes far more rapidly. Meanwhile, TelstraClear is able to sell its network and ISP capabilities to a far larger demographic through many disparate retailers.

While the benefits are clear, the coordinated management of multiple VISPs is no easy task. From the outset, TelstraClear’s management solution had to allow for the rapid registration of new VISPs, so that they could bring products to market within extremely short timescales. Typically these timescales were mere weeks from when they signed up.

TelstraClear is currently managing 12 distinct VISPs on the same platform, with each provider housed in its own secure environment, which ensures that there is no visibility or interaction between these distinct organizations.

To achieve this, TelstraClear consolidated customer self-service, account management and product catalogues into one system. While this system is managed by them, it is also accessible to every individual VISP through a white-label service that is personalized for each of these new channels. This allows each VISP to design its own product offerings, without being weighed down by the inertia of maintaining its own operational systems.

The system supports the end-to-end processes to manage customers; from an initial customer sign-up screen, an integrated catalogue, methods for tracking orders and providing feedback to the end-user. One of the key features of the new system was the ability to define a hierarchy of accounts, products and pricing models that inherit from each other. This perfectly aligns to the hierarchical nature of the supply chain. Once accounts have been modeled in the ecosystem, a comprehensive account model allows sophisticated and differentiable pricing policy to be established and aligned to each layer in the hierarchy.

TelstraClear also opted for the system to be provided as an outsourced capability, allowing it to focus on the technology aspects of the product supply-chain, rather than back-office systems maintenance.

Thanks to this unified management system, TelstraClear is capable of reacting to changes and opportunities far more quickly and efficiently. For example, when TelstraClear creates a new network capability, it can immediately be shown in the VISP’s product hierarchy. VISPs can then configure their own products and bundles using these core network capabilities, adding their own value-add services and pricing.

By working under this model, VISPs have the maximum possible flexibility to quickly build their own product portfolios. Using this type of management system, TelstraClear is able to present screens directly to the VISPs, allowing them to design products, group them into bundles, manage their lifecycles and relevant customer accounts.

After just three months, TelstraClear were selling on-net products through this system. This included deployment of network integration and control and management services. After a further six months, the system was integrated into TelstraClear’s business systems and was able to manage the creation of off-net services in the Telecom New Zealand network through a business-to-business interface.

Product managers can now create products and bundles through an intuitive user-interface in minutes or hours, rather than days or weeks. To increase the speed of provisioning new services, their management platform also encourages the re-use of previously built services, bundles and rating plans. Additionally, parameters or aspects of existing products can be quickly modified and released as a new product version.

TelstraClear is now managing more than 300 distinct service packages – some were created by them, while the rest were designed by their customers. These are based on just 27 technical core products provided by TelstraClear. This variation shows how powerful the ability to re-combine and add value to services can be in the hands of VISPs – allowing them to quickly tailor any offering demanded by their customer base. Essentially, this empowers the VISP, while also removing the administrative burden from TelstraClear.

The Future

While much of the OSS industry remains focused on the increasingly dated model of selling network services to customers, TelstraClear has shown that embracing new business models can bring huge benefits.

TelstraClear is leading the way in managing complex and changing retail service provider portfolios, providing them with an agile model for selling their network services to wider and more diverse markets. New network initiatives around the world, especially in national deployments of new technologies such as FTTX, are also exploiting the Retailer Service Provider models, and could do well to emulate the approach taken by TelstraClear.

At each layer in the supply chain, players can realize the potential benefits of working together across vertical industry layers: freedom from maintaining infrastructure, increasingly tailored customer offerings, rapid provisioning of services and OpEx and CapEx savings from outsourcing. Generating new revenue streams without significant capital outlay can be a reality with the right systems and business models.

Tony Kalcina is executive director of Clarity, responsible for helping formulate the company’s strategic direction and guiding its resources to deliver on that vision.