WHITE PAPER 4G – Unleashing Communication Service Innovation
Abstract The communications industry, one of the fastest growing sectors in last 3 decades, is facing serious threat as it struggles to compete with emerging over-the-top (OTT) players in communication services market. Current technology constraints are imposing challenges on the evolution of new communication services i.e. beyond their flagship products of voice and data communications. This paper delves on following questions which most of us have as communication service providers, investors and industry partners. 1. Will CSPs have a viable business case for investing in 4G technology? 2. How will 4G increase CSP’s shareholder value? 3. How will other industries leverage 4G for improving customer service?
Introduction Today, the communications industry visibly appears to be under tremendous pressure. The revenue from traditional
Overall, investors are losing their
It has the capability to expand the size of
confidence in the future of the
the telecom market by including intelligent
communications industry.
machines and smart devices as its
communication services is continuously
The arrival of 4th generation wireless
declining in highly saturated markets.
technology appears as a silver lining in
Margins seem to be drastically shrinking
the current depressed telecom industry.
with the presence of too many
4G promises to radically revolutionize
communication service providers (CSPs) in
the world of communication technology,
open competitive markets.
business model and consumer behavior.
consumers. It enables CSPs to extend their services to other industries and, thereby, unleash innovation in communication services. The new applications and the convenience they contribute to in daily life promise multi-fold increase of its adaption.
Mobile Technology Evolution and its impact
4G
The evolution of mobile technology has followed Moore’s law in achieving data speed and spectrum optimization. This
Machine to Machine
Telematics
+
+
People to Machine (Apps)
3G
evolution has brought revolutionary changes in interaction methods,
Industry speci c Solutions Providers
+ Content + Mobile Apps providers
Entertainment
+
+
+
O ine People-to-People
Messaging & Internet
+
+
communication products portfolio and definition of a subscriber. Figure -1
2G
describes how the mobile communication industry has been continuously revolutionizing communications services over the last three decades.
Internet + Application Service Provider
+
1G
Online People-to-People
Voice
People
Technology Evolution
Interaction Evolution
Service Evolution
Consumer Evolution
In the beginning, 1G enabled on-the-move people-to-people voice interactions where consumers of these services were people.
Figure - 1
Then 2G added offline communication in form of voice mail, SMS, MMS, eMail and other internet based applications where ISP (Internet Service Provider) and ASP (Application Service Provider) also joined the telecommunication consumer status.
Figure-2 explains –
What does 4G mean to CSP, Customer and Communication Products?
Later 3G started offering people-to-
In the communication service ecosystem,
machine (Apps) communication in form
the demand and supply paradigm is
of eBooks, music, video services where
a mechanism for service providers to
content providers and Mobile Apps
connect the dots of customer demands
providers also became consumers.
holistically.
• • •
How
4G enables CSPs renovate its product-price model? How 4G satisfies different customer segment preferences? How
4G CSPs business model?
redefines the
And, now with 4G, it is entering into Right to Pay for used Features
Right to Buy Preferred Features
machine-to-machine communication domain where the consumer horizon has expanded to all intelligent or smart devices (machines) used across industries and services. This will redefine the communication service market size.
Customer
Practically, 4G service market size will be limitless, and market saturation metrics like tele-density won’t be based on country
Pay
Buy
Focus on Right Customer Segment
New Value Added Features
population any more.
4G CSP
Increase Profitability
Product
Market
Figure - 2
Flexible ProductPricing Models
to
The Product
1. Right to buy preferred features
1. Focus on right customer segment
The next generation 4G communication
A flexible 4G product-pricing model, as
4G will allow CSPs to create additional
products will capitalise the customer’s
explained above, will give customers the
customer stickiness by customising the
latent need and will also generate
right to buy their preferred 4G product
right services and right price plans to
additional demand by demonstrating
features. This will allow customers to buy
target the customer segment that aligns to
the utility and value out of new services.
what they need, instead of forcing them to
their business strategy. It will, in-turn, allow
4G technology is viewed as a significant
buy bundled product features where most
CSPs to increase their market share in their
breakthrough in redefining the
of them never get used.
specific focus areas.
communication product portfolio.
2. Right to pay for used features
2. Increase profitability
1. New Value Added Feature
The product feature flexibility will provide
In contrast to 3G platforms, 4G technology
The 4G ‘All IP’ infrastructure makes its
customers with the right to pay for used
supports reduction in CAPEX and OPEX
integration affordable with industry
services. This will encourage pricing
spending through spectrum optimization
partner’s technology platforms and
models like PAYG - Pay-As-You-Go, QoS, CoS
(e.g. use of O-FDM and SON - Self-
systems. This will lay the foundation for
etc. Thus, 4G enabled products will enforce
Organising Network capabilities). The cost
innovation of industry specific new value
true value for money concept.
optimization will provide CSP’s profitable growth
added services or applications. 2. Flexible Product Pricing Models
The CSP
The 4G guaranteed QoS for different CoS
CSPs are betting on 4G services to address
give opportunity to have flexible products
their current challenges on continuously
and pricing models for as many customer
decreasing market share, revenue and
segments as the CSPs may like to target.
profitability. It is being viewed as a platform to design limitless new services
The Customer
Customers never pay for infrastructure underpinning services; instead they pay for delivered product features. Each individual has a very specific need and therefore today’s communication customer wishes to have a flexible product-price model. In contrast to 3G, 4G is well equipped to support key customer asks i.e. right to buy preferred features and right to pay for used features alone.
in collaboration with other industries to address these constraints.
Note: O-FDM allows spectrum overlapping between carriers to keep the spectrum requirement minimum and SON provides self-configuration, self-optimization and self-healing capabilities.
Customers Industry Applications & Services over 4G Services
4G unlocks innovation in communication service and application design
Advertising
Data Communication Services
The 4G will bring key shift in CSP business model by extending its service horizon to its industry partners. It will add new revenue streams for CSPs by introducing industry
Transport
Value Added Services
Location Based Services
Healthcare
specific applications over 4G services. Figure-3 explains the Telematics Services
new capabilities that 4G CSPs will offer to their industry
Insurance
partners.
+
4G Services Provider
Industry Partners – Systems & Platforms
Figure - 3
4G Service Provider
New Capabilities
Technical Features As described in Table-1, the 4G platform will lay next generation communication
1.
infrastructure which will offer the following
Air interface (O-FDM/ SC-FDM)1
Improvements
Data speed up-to 100 Mbps to 1 Gbps
Minimize spectrum need
technical and service differentiations over earlier generation technologies.
2.
Guaranteed QoS for different CoS2
Effect
Reliable Service Levels
Real-time applications & bandwidth hungry applications
Standard, secure and scalable integration
Cross industry platform integration
Superior data communication Services
Industry Partners They will leverage above specified 4G service capabilities to design new
3.
applications for their customers. The
All IP infrastructure
various industry scenarios are explained
Shift intelligence from service layer to network IP layer
Service performance
Remove IPV4 address constraint
Connect as many devices as you wish
Built-in location tracking
Pin-point location up-to few feet
Affordable telematics service
below to understand how industry partners can leverage 4G services for its consumers. 4.
Precise location based service
IPV63
1. Advertising
Table - 1
Leveraging 4G services
platforms where prospects can view advertisements as per their time
•
preference and interact with it for more clarification.
Most advertisement production houses want to shift from static and time boxed
•
based platforms, such as print media and TV, to more dynamic and engaged digital
Personalize based customer profiles
advertising on
Relevant advertisements
based
customer’s recent transactions •
Engaged and
communication services collect customer purchasing interests and
to
preferences
Customer asks •
Data
interactive
advertisements on digital platforms
on
•
Data
•
Location
communication services push advertisements on digital platform based services update locations on customer profiles databases
to
to
Application of 4G services – An example
•
Location
based service to vehicle position , and data communication service to broadcast waiting time
A person attempts to book travel tickets
track•
Data
•
Data
information
through ticket booking websites or
is recorded against its profile even if the
Application of 4G services – An example
transaction is abandoned. This information
The vehicle tracking system provides real
is subscribed on a real-time basis by hotels
time updates of the public transport bus
or travel advertisement applications to
positions on a map. The system provides
provide the best deals or offers as per
users with an option for automated alerts
individual needs.
with information on the location of buses/ trains scheduled to arrive at their nearest boarding points.
2. Transport
service
to
communication service access individual risk profiles from medical
to
record database
searches for accommodation availability on hotel booking websites. The user interest
communication build medical record database
Application of 4G services – An example A centralised insurance risk profile database can help design an insurance premium model where a person in good health will pay lesser premium than others. Similarly, individuals using transport vehicles for one hour per day will pay lesser premium than those using the vehicle for
3. Insurance
ten hours per day.
4. Healthcare
With 4G, the rate of data exchange speed between machines will increase multi-fold. This will enable remote processing of data with instruction broadcast for machines
4G will help in measuring, monitoring, collecting and distributing risk profile data
(e.g. vehicle).
to insurance companies. This will make flexible premium options a reality and will
Customer asks •
•
address key customer concerns such as
Increase public safety realtime vehicle monitoring
through
Minimize congestion realtime traffic diversion
incidents by
why everyone has to pay same insurance premium when some are more prone to risk than others?
ageing population across the globe, 4G enabled applications are expected to play a critical role in checking the ever increasing healthcare cost. It will enable distant, cost effective, timely and superior healthcare solutions to a much larger population,
Customer asks •
Considering the estimated increase in
waiting time for public transport through real-time tracking
which includes villages located in remote
Reduce
•
Provide
flexible
premium options
areas.
based on individual risk assessment •
Leveraging 4G services •
•
Location
based service monitor vehicle position in real time
to •
Increase insurance claim ratio by validating declared and actual risks Online
access profile
to records
Telematics service to process information remotely and analyze
Leveraging 4G services
route congestion
•
Location
based service collect vehicle route, usage data, etc.
Customer asks •
Reduce
•
Quick
risk
medical consultation cost through distant medical consultation
incidents to
•
Improve
response for medical health
emergency
management
integrated medical record database
through
Leveraging 4G services •
Data
•
Location
communication to connect distant patients
service
based service to locate people that require immediate medical support
•
Data
communication online access to medical records
service
for
Application of 4G services – An example AT&T is working on mHealth (mobile Health) solutions such as mPERS (mobile Personal Emergency Response System) which will connect people in distress anywhere, at any time to medical monitoring centers.
Conclusion While 4G can be considered as telecommunication network upgrade which provides more effective operation model and optimises the cost, but, it is not just about technical upgrade. It is a necessary investment that will enable the creation of new value added services between CSPs and other industry partners, which will redefine CSP’s business model.
Today, communication devices and new
About the author
While considering the 4G business case,
applications are bringing convenience
in addition to CAPEX on technology
in the day-to-day life of customers. This
platforms and OPEX savings, CSPs should
type of usage is ever increasing and new
also factor in the additional investment for
customer needs are continuously being
is a Principal Consultant with over
setting up application service platforms
uncovered through the innovation of new
15 years of experience in the Energy,
and incremental revenue from value added
applications. The combination of a new
Utilities, Communications and Services
services and applications.
CSP business model and the 4G platform
business unit. He has been involved
is necessary to turn everything on an app
in multiple OSS/ BSS transformation
concept into reality.
engagements, predominantly in
With 4G capabilities, CSPs should engage in an industry partnership model as opposed to an infrastructure provider. It will not only
In summary, 4G assures CSPs about
open the new revenue streams for CSPs
business sustainability, promises investors
but also redefine CSPs business models to
for profitability and gives hope to
regain shareholder trust by demonstrating
customers for new applications.
future business growth and sustainability.
Sanjay Kumar Verma,
CRM, Service Assurance, Billing, ERP and Business Intelligence solutions. Sanjay advises and helps major Communication Service Providers in complex technology consulting on IT Roadmap, Enterprise Architecture and Product Evaluation.
Glossary OTT – Over-The-Top-Players, such as Google, Skype, Facebook, are offering free sophisticated web-based features that are competing with CSP’s revenue-generating services like fixed and mobile services. O-FDM: Orthogonal Frequency Division Multiplexing technique SC-FDM: Single Carrier Frequency Division Multiplexing technique QoS – Quality of Service i.e. Packet loss, Latency, Jitter and Availability CoS – Class of Service i.e. Conversational, Streaming, Interactive and Background IPV6 – Internet Protocol Version 6 IPV4 – Internet Protocol Version 4
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