In focus: smart networks

The growth in data services and the advent of over-the-top (OTT) players present challenges for operators. Ericsson’s Lingaraj Patil, Senior Marketing Manager, explains how a 4G IP network solution, which includes smart-network capabilities, can help operators stay profitable.

The global number of mobile subscriptions has reached about 6 billion – and just over a billion of these subscriptions include access to mobile broadband. Ericsson forecasts indicate there will be about 5 billion mobile-broadband subscriptions by 2016. On top of this, data consumption per user is increasing dramatically – something that presents challenges, as well as opportunities for operators.

The first challenge is finding ways to fuel this growth profitably by increasing the number of mobile-broadband consumers and devices. To achieve this, operators need to come up with innovative and profitable offerings to penetrate markets with lower average revenue per user (ARPU). They also need to boost ARPU in high-end market segments by improving users’ Quality of Experience QoE.

The second challenge is finding strategies to cope with the rapid traffic growth fuelled by the use of OTT services. Video is a key driver of this growth. Operators need to provide the capacity to meet this demand cost-effectively, and find a way to monetize the value these services represent in the ICT ecosystem.

To realize these objectives, operators will have to redefine their business models. Possible strategies could include working with OTT players to provide value-added services to users, and making these offerings cost-effective by engaging advertisers. The intersection of the telecom, OTT and advertising ecosystems offers significant potential for operators to expand their business.

Ericsson’s strategy to help operators meet these challenges and opportunities is centered around a portfolio of products and solutions based on 4G IP network capabilities. With 4G IP, operators can build networks that are smart, simple, scalable, and that offer superior performance. Smart-network capabilities can help operators to refine their service offerings by targeting specific user groups, and redefining their business models to fully monetize the value they generate.

Ericsson’s 4G IP-based smart-networking solution, Service-Aware Charging and Control (SACC) is the cornerstone for refining service offerings and enabling new business models. It brings together Ericsson’s policy control, charging, traffic inspection and enforcement functions.

By offering mobile broadband, operators can penetrate new market segments and engage users in areas beyond traditional voice and SMS services. Unfortunately, in many markets, mobile broadband is restricted to the top-end consumer segment. Ericsson’s smart-networking capabilities can help operators reach other consumer segments by providing low-ARPU services that are relevant, affordable and simple to use.

To that end, Ericsson has developed the Smart Prepaid Broadband solution, which enables operators to create mobile-broadband offerings that increase subscriber penetration. This solution is built on the foundation of SACC. Variations of SACC have already been implemented successfully, so customers can be confident that these solutions can start generating value for them immediately.

Providing a “social networking only” package is an example of how operators can come up with innovative low ARPU offerings. With this package, consumers will be able to access social-networking-specific apps and websites and nothing else for a low hourly, daily or monthly fee. Ericsson has helped implement this in some South Asian countries with very high subscriber-uptake levels.

When service offerings are refined, operators also gain the capability to selectively enhance QoE for users willing to pay for higher quality. For example, operators can offer improved QoE for subscribers who want to use mobile broadband to watch videos.

In the ICT ecosystem, the role of operators is changing, and they need to redefine their business models accordingly. Ericsson’s 4G IP-based smart networks can help them do so by enabling them to build networks that are more user-aware and content-aware – and to utilize this awareness to deploy their network assets effectively to enhance the user experience.

SACC enables true end-to-end QoS support, which helps operators to scale their network capacity cost-effectively and offer superior performance where it matters. The solution’s integrated charging and control function allows operators to refine their service offerings to meet the needs of subscribers in diverse market segments, and lets users pay for mobile-broadband services as they go. SACC also gives operators the opportunity to use a multidimensional business model in which they can work with OTT players to enhance QoS – and get paid for doing so.

It is possible, for example, to provide an unlimited music-streaming service in collaboration with OTT music-streaming companies without that bandwidth usage counting towards the subscribers’ monthly data cap. This leads to increased ARPU and reduced churn.

A year ago, Ericsson introduced its family of Smart Services Routers (SSRs), built on a foundation of 4G IP capabilities. Their key benefit is the scale they offer in terms of control-plane signaling, users and bandwidth. These routers were created with mobile and fixed convergence in mind. On a single platform, they can support multiple applications, services and functions, such as Border Gateway Function, Broadband Network Gateway, Content Delivery Network ,(CDN) Carrier-Grade Network Address Translation, Evolved Packet Gateway , Multi-Service Edge Router and traffic inspection. They also support Internet Protocol version 6. Because these routers scale very well in several dimensions, they allow operators to simplify network design and operation.

Operators are beginning to open up to doing business with OTT players and starting to realize that they can partner with some of them to achieve win-win solutions. This is a positive development that will lead to more innovative mobile-broadband offerings and will help operators monetize more of the value they are providing to the ICT ecosystem.

Looking ahead, Ericsson sees smart networks as a platform on which many innovative user services will be enabled and new business models defined.