Policy management is critical for operators to move successfully to value-based billing, according to panelists speaking at the Billing & OSS World Conference & Expo this week in Las Vegas.
The migration to value-based billing is top of mind because it moves service providers away from being just a bit pipe, said Ari Banerjee, an analyst for Yankee Group, and the moderator of the roundtable, which featured Michael Manzo, chief marketing officer for Openet, and Will Rotch, CTO for Comverse.
Research from Yankee Group found 57 percent of operators say flat-rate pricing is unsustainable. Part of the problem is bandwidth is constrained and becoming more so by all-you-can-eat subscribers, Rotch said, claiming one carrier experienced a 492 percent year-over-year growth in traffic while at the same time realizing a revenue increase of only 60 percent.
Some of the mechanisms for addressing the imbalance are bandwidth management, spending limits and real-time view of usage, Banerjee said.
As recent headlines suggest, carriers are resistant to implementing such measures as rate limits or bandwidth caps primarily due to consumer backlash. “They are reluctant to jump from the frying pan – lack of profitability – into the fire – consumer backlash,” said Manzo.
That’s not going to stop them long term, he said, claiming they’ve no choice but to do it. Besides, Manzo said, most consumers eventually will realize that these policies don’t impact them negatively and may even lower their pricing. “For every one that’s upset, two are happy,” he said, claiming in some cases as few as 1 percent of users generate 45 percent of a service provider’s traffic.
Execution is key, of course. “There is a right way and a wrong way to do this,” Manzo said. Shutting users off when they reach their limits is one of the wrong ways, he said, explaining its important that when the cap is reached, the users is offered choices about what to do next, e.g. pay per use, run at a lower quality, pay more, etc.
Rotch chimed in with the example of not measuring precisely by relying on non-real-time metrics – something that can tick off subscribers should they discover it.
Indeed, today’s operators that have implemented value-based billing primarily are relying on network-centric measures like real-time rating.
