PCRF Market Research

© 2012 Karthik Ethirajan, all rights reserved
PCRF Market Research
Karthik Ethirajan
November 2012

I. Market Size
II. Market Trends
III. Competitive Landscape
1. Macro Trends
2. Convergent Billing
3. Flexible Pricing
4. User Experience
5. New Data and VAS
6. New Partner Business Models
7. Network Transformation
8. Marketing Campaigns
9. Regulatory Environment
Agenda

SOS market size is $4 billion and projected to grow at
24% CAGR to $7.7 billion by 2015

Convergent Charging Market
 $1.7B in 2012
 $3.9B by 2016
 CAGR 27%
 Software 60%, Services 40%
 Primarily driven by Wireless
operators
 NA 7%
 EMEA 40%
 APAC 50%
 CALA 3%
Worldwide TAM
Regional TAM

Policy Market
 $0.8B in 2012
 $1.9B by 2016
 CAGR 27%
 Wireless 87%, Fixed Line 13%
 NA 21%
 EMEA 32%
 APAC 38%
 CALA 9%
Worldwide TAM
Regional TAM

Market trends in the US and globally, are creating the
conditions for greater adoption of alternative mobile
communications services
• Mobile Adoption: There are over 6B mobile subscriptions globally vs. 1B 10 years ago.
Landlines peaked at 1.3B in 2006 and are in decline.
• Smartphone Headroom: Of the 6B mobiles, only 1B are smartphones. The US is ahead of
the world with 50% of the devices being smartphones.
• Urbanization: Concentration of the global population to urban areas will continue to stress
the cellular infrastructure and drive the deployment of Wi-Fi
• Share of Wallet: US households on average have reduced their spending on such things as
dining out (-$48), entertainment (-$126) and apparel (-$141) to be able to afford their rising
expenditures on wireless service.
• Recouping LTE $’s: Carriers are moving their subs to usage based data plans to recoup the
cost of LTE and to drive revenue growth.
• Connected Devices: By 2020 the total connected mobile devices is expected to double to
12B driven by non-phone devices. 29% of US adults already have a tablet or eReader.
• Satisfaction with Carriers: Customer satisfaction with US wireless carriers declines again
this year to just 70%. High satisfaction levels for smartphone devices (iPhone) are artificially
inflating consumers real feelings about carriers.
MacroTrends
1

Consolidation of billing and charging systems across
services, networks and/or subscribers
Market Trend Real World Example Implications
Reduce number of
billing systems
Verizon Business embarked on a
billing transformation project to
reduce 30 billing systems after MCI
acquisition to 4
 Operators embark
on long-term billing
transformation
projects in part to
reduce OpEx
 Operators are
looking to gain
flexibility around
service features,
service bundles
and pricing
Post/prepaid services Vodacom Tanzania
Fixed/Wireless
networks
Orange Cote d’ivoire and ALU
CTBC in Brazil enabled a fair usage
quota across its networks
3G/4G networks Bell Canada and Openet
Consolidate all Asian
subsidiaries
Telenor and Huawei
Consumer/Enterprise
customers
Brazilian mobile operator and Orga
Cable/Wi-Fi Cablevision lets its broadband subs
to access its public hotspots for free
ConvergentBilling
2

Flexible pricing models based on real-time usage,
location, content, etc.
Dynamic pricing based
on real-time usage
Telecom Italia allows its IPTV subs to
access prepaid VoD content
 Dynamic pricing is
key to selling from
OTT and other
content providers
 DPI capability is
needed to decipher
traffic type
 Mashups of
location, context,
billing and other
capabilities are
needed to roll out
new service
offerings
Zero-rated content
packages
Orange offers unlimited access to
Facebook in Eastern Europe
Orange Tunisia allows free access to
Wikipedia in specific languages
Location-based pricing Pakistan operator Zong’s cost of
voice and data session varies with
subscriber’s location
Armenian operator VivaCell-MTS
charge variable rates based on the
subscriber’s location
Time-based pricing Some operators charge a premium
for bandwidth “boost” during peak
usage hours for certain services
FlexiblePricing
3

Single user profile One of the biggest selling points of
Triple Play is user convenience
arising from a single profile
 Subscriber
management is a
key service
differentiator
 Identity remains
the same as subs
move across
devices and
networks
 Improves customer
stickiness and
reduces churn
 Employees using
company phones
could retain the
operator’s services
for personal
Corporate controlled
services
Usage controlled postpaid plan from
AMC, an Albanian operator
Shared family plans
with member controls
Impose caps to not to exceed credit
balance or set usage limits to
individuals
Hybrid prepaid/postpaid
plans
An Indonesian operator allows a
company to pay for mobile device
usage during certain hours, with all
other usage applied to a prepaid plan
paid for by the employee
Parental controls Fixed line service TalkTalk in UK uses
a combination of policy and DPI to do
URL filtering for parental controls
UserExperience
4
Enhancing user experience by simplifying identity and
empowering enterprise and consumers to self-manage
their usage levels

Launch of new data and other services to better
monetize upgraded network infrastructure
Service tiers NA operators changed unlimited data plans to
tiered data plans
 Operators are
looking to better tie
bandwidth
consumption to the
price being
charged
 Operators look to
increase ARPU by
upselling value-
added services
Shared data plans Verizon introduced family plans where a
“bucket” of data can be shared among family
members or across devices
Day passes Rogers offers day pass options to its voice
customers that allow them to combine web
browsing and access to social network sites
with email and mobile messaging for a daily
rate
VAS UNE in Colombia offer VAS over LTE
Saudi Telecom block calls during prayer time
using location, time of day, and time of year to
determine those hours
NewDataandVAS
5

Operators encounter innovative business models when
interfacing with new partners such as OTT, Cloud, M2M, etc.
Content packages
from OTT providers
Bundling a specific application or service
such as gaming or HD video with a
guaranteed QoS or bandwidth as a way to
better monetize OTT services
 OTT applications
may need real-time
management and
QoS to ensure its
SLA with 3rd party
content providers
 Many new
business models
require an
integrated
policy/charging
suite
 Ability to do real-
time management
of high volume
transactions from
M2M
Cloud services Many cloud models such as Naas, exposing
APIs to developers, and others are
emerging. AT&T exposed its Watson
speech recognition APIs to developers.
Revenue assurance Operators must pay their partners for 3rd
party content regardless of whether they are
able to recover revenue from their
subscribers
Mobile money or
“Stored Value” credit
Oi Brazil allows subs to pay for small
purchase, such as taxi rides, from funds in
their prepaid balance
NTT DoCoMo’s osaifu keitai is a mobile
wallet service
M2M providers Best Buy offers MVNO service for
connected devices and home appliances
NewPartnerBusinessModels
6

Operators are looking to transform legacy systems and
better utilize network resources to meet growing
subscribers and data demand
Traffic-based rating Orange Botswana charges higher
rates during peak hours
 Real-time
management of
bandwidth is
fundamental to
many new services
 Launch of cloud-
based and other
IP-based services
necessitate
network and
OSS/BSS
upgrades
Congestion
management
An operator could opt to prioritize the
service of its more lucrative
customers who have exhibited a high
propensity to churn in order to
optimize its retention rates
New services (e.g.,
PacketCable 2.0)
enabled by IMS and
FTTH upgrades
Network upgrades by Fixed and
Wireline operators are often
accompanied by convergent charging
transformations to support new and
innovative services from fixed/mobile
convergence
Transformation of IN-
based systems
Legacy IN-based prepaid systems
are getting consolidated with
software-based postpaid systems
NetworkTransformation
7

Customer acquisition & retention initiatives require
mashups of capabilities such as location, real-time
contextual data, etc.
Real-time campaign
management
DST Brunei is delivering targeted
contextual campaigns to subscribers
and automatically deliver rewards
 New innovative
marketing
campaigns rely on
a combination of
location, real-time
contextual data,
subs profile, and
others
Customer acquisition &
Loyalty programs
Ukrainian operator Astelit’s customer
acquisition program under its life:)
brand gives top-up credits to
subscribers who bring new customers
Astelit’s loyalty programs under Lady
life:) brand lets subscribers receive
points redeemable at retail partners
for bringing on new customers
Churn reduction In the Philippines, Globe Telecom
addressed high churn rates by
providing subscribers with unlimited
free voice calling between Globe
handsets and any landline within a
specific geographic area
MarketingCampaigns
8

Regulatory climate is either helpful in spurring
innovation or creates an impasse
Regulation Real World Example Implications
“Bill Shock” regulation
in EU
Once a subscriber’s bill reaches a
certain limit operators are required to
implement,
• Real-time subscriber spend
notifications
• Cut-off mechanism
BT alerts a user close to usage threshold
and provide different offers and PAYGO
pricing options
 Operator could turn
regulatory hurdle
into a revenue
opportunity by
extending an offer
real-time to subs
 Operators, for
example, cannot
penalize OTT
services
 Operators may
hold back on
implementing DPI
to prioritize one set
of data packet
differently from
another
Net Neutrality
regulation by FCC
This regulation for “fair usage” is still
evolving for fixed line operators. Current
version requires operators not to
disadvantage certain services based by
probing traffic pattern.
Net Neutrality
regulation in
Netherlands
Bars operators from charging a premium
for consumers’ use of specific services
or applications
RegulatoryEnvironment
9

Competitors include traditional BSS & ISV players with
NEPs and IT vendors taking a stronger hold on the
market
 Able to integrate BSS
capabilities in GGSN,
other network elements
 Active M&A
 Highly scalable support
and services
organizations
 Financial stability
 Existing relationships
with operators
Network Equipment
Providers (NEPs)
IT Vendors
BSS Specialists and
ISVs
 Policy and Charging
decision makers are
increasingly IT folks
 Active M&A
 Expertise in handling
large-scale
transformation projects
 Organic growth
 High growth startups
 Gained traction in
emerging markets
 Highly customized
solutions

Charging and Policy markets are oligopolic
Charging Policy
Convergent Charging market is
oligopolic with 8 NEPs, billing and
ISV vendors holding three-forth
share of the market
PCRF market is oligopolic with
half the market composed of
smaller regional players

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