Its a new world:

Three Tectonic Shifts are

reshaping our industry and
driving convergence

Its a new world: Three Tectonic Shifts are reshaping our industry and driving convergence | 2

As the market moves to an always connected existence,

service providers need to change and transform to meet
the demands of a connected-world where communications,
entertainment and the internet will act as the primary tools
in our daily lives to deliver the applications and information
that we need.

The communications industry is changing and at a rapid
pace. And, the pressure is on for service providers to keep
pace and meet the tough demands of an always connected
lifestyle where communications, entertainment and leisure
converge and are accessible across any device.

In the past, changes in the telecommunications market
occurred less frequently and were mostly non-transformational, leaving service providers on solid ground. Today,
however, the industry is experiencing substantial and
dramatic tectonic shifts, which are seemingly as powerful
as the natural ones that can literally trigger earthquakes and
volcanic eruptions.
The three notable shifts that are coming towards service
providers from several directions and require them to
adjust are:

The massive demand for data does not correlate to the

revenue it generates for service providers. Todays
service providers dont have the ability to monetize data
consumption optimally and efficiently. They must find new
and creative ways to monetize data services

Over the top (OTT) service and content providers, such
as Facebook and Google, continue to successfully
penetrate the market and are challenging the traditional
consumer-service provider relationship. These players will
grow in number and diversify, presenting new challenges
to the relationship between service providers and their
consumers. Service providers are threatened with the
prospect of merely becoming an access provider and
losing the content market share
Real time is now the only time. Real time has become the
expected standard for all types of customers, services
and payment methods. Once associated only with prepaid,
real time has evolved to become the foundation for all
customer interactions

These momentous shifts create new challenges, but also

provide service providers with interesting opportunities
(just as natural tectonic shifts broke up continents, but also
formed new ones). In order to successfully take advantage
of these opportunities, service providers will need more than
just new services and devices to compete in this quicklyevolving terra firma. They must introduce innovative business
and monetization models, and new customer offerings.

The ground is already shifting. Service providers should begin
preparing immediately by developing flexible, integrated and
converged platform capabilities to maintain their competitive
edge. Convergence is no longer a buzzword. It has become
the bedrock in this new telecommunications era. An optimal
solution can be formed only by converging multiple elements
into one platform. This whitepaper will detail the three key
tectonic shifts influencing the market today and explain why
service providers must embrace agility and convergence to
be ready for the new era.

Its a new world: Three Tectonic Shifts are reshaping our industry and driving convergence | 3

The first shift: Data demand exploded the old

monetization models
The insatiable demand for data services, coupled with flat
rate data pricing models, paved the way for the monetization
challenges service providers are currently facing. In order to
ensure their network capacity, service providers are investing in
network expansion, or deploying new network technologies,
such as Long Term Evolution (LTE). These efforts have
mostly resulted in serious hits to service providers bottom
lines and impeded their future ability to profit from data. In
order to move away from flat rates and offer more advanced
data pricing models, new monetization models that will
require integration between policy management and
charging capabilities are needed.
The policy management evolution, which started with
network optimization capabilities, such as quota tracking,
congestion management and traffic optimization, is
used for optimizing the routing of traffic. This evolution is
transforming into a subscriber-oriented approach involving
both network and subscriber-based information. This
convergence of policy management and charging has
enabled the emergence of tiered pricing, data bundles and
data transparency offers.
Todays tiered pricing offers are all based on two main
parameters: quality of service (speed and latency, etc.)
and quota/usage (time, credit and volume). If we integrate
policy control elements to the charging system, we can add
multi-dimensional parameters that enable the creation of
new types of offers. These multi-dimensional parameters
could include:

Device type which type of device is consuming the

data? (iPhone, iPad, laptopor eReader)

Service location where is the subscriber currently

located? (Home\office zone or roaming)

Network status what is the level of network congestion at

that location?
Traffic/service type what is the nature of the data session in
progress? (Video, VoIP, tethering, P2P or Facebook)
Hierarchies and priorities set according to the customers
information what is the customers designation? (Business,
VIP, family or government)

The various combinations create multiple possibilities

for new pricing schemes and business models.
All possibilities depend solely on the tight integration
between the charging engine that will rate these schemes
and the policy management element that will execute
them on the network level. Achieving these goals requires
a converged charging system that will optimize service
providers abilities to monetize their assets.
A quality service monetization and control solution
provides charging functionality, coupled with network
control features, and a holistic customer view across
any network or device type, user segments (enterprise,
SMB and consumer) and payment methods (whether
postpaid or prepaid). These components will provide
a comprehensive view of the overall account status,
packages and hierarchical customer structure, so that
service providers can flexibly and efficiently manage
the new monetization capabilities.

Its a new world: Three Tectonic Shifts are reshaping our industry and driving convergence | 4

The second shift: New entrants are cutting core

revenue streams
Over the top players are flooding into the market and
providing various types of content, services that are cutting
into service providers core revenue streams. Netflix, for
example, says its customers can, Instantly watch as many
TV episodes and movies as (they) want for only $7.99 a
month. Consumers can of course purchase Netflixs
streaming, on-demand movies directly from Netflix.
Contracting with OTT players like Netflix for data bandwidth
bulk will cause service providers to lose their direct relationship with consumers and weaken their marketing efforts.
OTT players are increasingly dis-intermediating
service providers (Sources: Yankee Group, Strategy Analytics and Gartner)

HIGH
GROWTH

MOBILE
PAYMENTS
CLOUD &
ENTERPRISE
IT SERVICES

MOBILE
ADVERTISING

Coopers and IDC U.S.) have found that even shallow quadplay penetration can contribute significant revenue and
reduce churn dramatically. These days this approach wont be
enough, however, especially considering that quad-play
is almost always used to compete against other service
providers. Service providers will survive this shift only by
providing enhanced content products and offerings that will
grow revenue, while continuing to offer their traditional services.

Service providers must offer creative business models and
differentiate themselves from OTT players by combining
bundled offers of quad-play services together with
interesting content services, all coupled with attractive
pricing schemes in order to add more value to the package.
For example:

A global operator in Europe is offering end users a 3G data

stick coupled with a cloud storage service. Users can share
the content of the storage folder with their contact list and
are able to watch streaming videos and listen to music

Another innovative operator offers customers a Skype

mobile phone with only VoIP calls. This service potentially
reduces voice revenues, but at the same time increases
data usage, creating marketing buzz and reducing churn

MOBILE APPS
& GAMES

MOBILE DATA

MOBILE
CONTENT

VIDEO

MESSAGING
BROADBAND

LOW
GROWTH

MOBILE
VOICE

CSP
DOMINANT

VOICE
(FIXED &
CABLE)

OTT
DOMINANT
SP Revenue Pools in 2010 ($ billions)

The above diagram illustrates how service providers

dominant offerings are suffering from low revenue growth
while OTTs dominant services, on the other hand, are
enjoying increased revenue growth. The significant highgrowth market is no longer a dependable part of service
providers repertoire and they are leaving money on the
table because of the OTT players exciting new products.

How can service providers effectively compete given
this reality?
Offering quad-play services and bundling them was a good
start toward leveraging service providers offerings and
several analyses (including analyses from Pricewaterhouse

In order to create attractive bundles, service providers must

break-out of the traditional silo systems to establish an
anywhere, anytime experience. They can offer that type
of experience by utilizing a synergic platform that stores all
service offers in the same repository, with a common view of
rating schemes. The platform should be agnostic to network
technology and provide an experience that is beyond bill
consolidation, offering flexibility for cross-product rating
and cross-network services. We are talking about one
converged system with a single product catalog and no
duplication across lines of business across all networks,
products and customers.
Service providers who possess these convergence capabilities will enjoy an important competitive advantage. By
providing the networking and access capabilities in all quadplay modes, together with value-added services related to
each mode, one compelling, highly appealing package can
be bundled to satisfy consumers desires.

Its a new world: Three Tectonic Shifts are reshaping our industry and driving convergence | 5

The third shift: Real Time is the only time

Prepaid is the most popular payment method worldwide.
Today, three out of four mobile subscribers are prepaid
and that statistic is still rising, even in countries that have
traditionally been mostly postpaid.

There are a few flavors of the hybrid model:

The full hybrid subscriber pays a fixed price every

month and receives a monthly allowance, which includes
voice data and SMS (for example). Once this allowance
is consumed, the subscriber tops-up for the remainder
of the month as a regular prepaid subscriber. The
customer slowly but surely begins to pay a monthly
fee, which produces a predictable revenue stream for
the service provider

The hybrid mix subscriber chooses different payment

methods for different services. This means that she can
choose to have her voice plan on postpaid and her data
plan on prepaid, and she is still managed as one subscriber in the charging system

The hybrid family consists of a postpaid model for

parents while the children are prepaid. The parents plan
could allow a certain amount of prepaid top-ups for the
children and benefits accrued on the postpaid
plans could be distributed as prepaid benefits for the
children (content and better rates, etc.)

All consumers strive for visibility and control. They want to

bring the immediate satisfaction they experience on the
Web to their mobile devices. The here-and-now approach
is desired across all user types:

Prepaid subscribers want to have a postpaid-like

experience in terms of advance devices and services,
attractive and creative pricing packages and flexible
recharge options

Postpaid subscribers want greater visibility and control.

Often they do not intuitively know how much data they
are consuming and how much it will cost them.
This confusion creates dissatisfaction and potentially
bill shock, which prevents them from consuming new
services

Service providers can solve these problems by introducing

a hybrid model.
Postpaid subscribers looking for better cost control for
certain services (data and content, for example) dont
need to switch to a prepaid plan. With the availability of
the hybrid model, they can choose to mix-and-match
payment methods for their subscribed services to best
suit their needs. They can still have their voice plans on
postpaid and sign-up for prepaid data packages as addons to their accounts. Its the best of both worlds.

For prepaid subscribers, the hybrid model enables service
providers to accustom subscribers to monthly allowances
and a diversified set of services, helping to increase their
stickiness. In this model, prepaid users will receive a predetermined allowance every month that will be added to
their prepaid balance. Once this allowance is consumed
during the month, the subscriber will top-up and recharge as
a regular prepaid subscriber for the remainder of the month.

A converged system will handle all subscriber types or

payment methods in one operation and will enable the
right mix of pre/post pricing schemes and hybrid business
models. Such a system will provide immediate insight into
data consumption and will enable real-time notifications,
cross-selling and spending limits.
The single, converged system will provide real-time services
for postpaid subscribers, advanced services for prepaid
subscribers and the hybrid experience that is a combination
of both. All events (online/real time or offline) will be charged
and managed through a single, central charging and rating
function, with: one product catalog, a spending limit,
budget control and a customer management structure that
supports hybrid models.

Its a new world: Three Tectonic Shifts are reshaping our industry and driving convergence | 6

The era of omni-convergence

The three tectonic shifts described above are ushering service
providers into a new era the era of omni-convergence.
People will give different answers when asked what
convergence means in todays telecommunications market.
The shifts reveal that convergence has multiple dimensions:

The data explosion requires new ways of monetizing

services. Service providers must integrate all charging
and policy functions

The entrance of new OTT players offering more than

just access requires service providers to break traditional
silos to establish a ubiquitous experience via the
converged platform

The movement towards real time requires service

providers to enable a real-time customer experience
across networks, services and payment methods

Service providers that are serious about their future in this

complex, reshaped industry, need a single charging and
billing system thats capable of keeping up with real-time
demands. In addition, service providers need to be sure
that their charging and billing capabilities can support all the
dimensions described above.
Amdocs proven track record, along with our solutions for
multi-dimensional convergence, can lead service providers
to success.
The Amdocs Convergent Billing solution is a real-time billing
and charging system that enables service providers to
generate revenue by facilitating purchase, consumption and
payment for prepaid and postpaid customers across multiplay operations.
Based on Amdocs ground-breaking turbo charging
technology, with unmatched, benchmarked performance
levels, the Amdocs Convergent Billing solution:

Allows service providers to build-up a single, affordable charging and billing system that suits their specific
needs

Utilizes a single real-time charging architecture that

allows service providers to support prepaid/postpaid
and wireline/wireless convergence with a single set of
integrated products

Ensures charging and billing operational efficiencies and

reduction of the total cost of ownership

Increases revenue through innovative offerings and

pricing differentiation

Delivers a real-time charging performance and scalability

in a single carrier-grade solution

For all lines of business, across all customers, payment

channels and services, Amdocs Convergent Billing is a
complete, end-to-end, convergent solution that will help
service providers weather the tremors of todays market.
The single, converged system will provide real-time services
for postpaid subscribers, advanced services for prepaid
subscribers and the hybrid experience that is a combination
of both. All events (online/real time or offline) will be charged
and managed through a single, central charging and rating
function, with: one product catalog, a spending limit,
budget control and a customer management structure that
supports hybrid models.

Conclusion
Market trends and requirements are changing rapidly. New
business models and monetization schemes need to be
introduced to address growing monetization challenges in
almost every aspect of the service providers realm, whether
they are data monetization, OTT competition, or prepaid
and postpaid pricing schemes.
Choosing a convergent charging system will enable service
providers to enjoy both flexibility and quicker time to market.
More importantly, it will enable them to address current and
future market trends not just from a technology aspect, but
also from a business and customer experience approach.
Service providers will be able to leverage a convergent
charging systems capabilities to innovate and differentiate
in an increasingly competitive market.

About Amdocs
Amdocs has a 30-year track record of ensuring service providers success by embracing their biggest challenges. Uniquely, the company
combines business and operational support systems, service delivery platforms and proven services with deep industry expertise. In
todays connected world, Amdocs helps service providers simplify the customer experience, harness the data explosion and stay ahead,
while improving operational efficiency. A global company with revenue of $3.2 billion in fiscal 2011, Amdocs has over 19,000 employees
and serves customers in more than 60 countries worldwide. Amdocs: Embrace Challenge, Experience Success. For more information, visit
Amdocs at www.amdocs.com.
Amdocs has offices, development and support centers worldwide, including sites in:
THE AMERICAS:

ASIA PACIFIC:

EUROPE, MIDDLE EAST & AFRICA:

BRAZIL

AUSTRALIA

Austria

ISRAEL

SPAIN

CANADA

CHINA

CYPRUS

kazakhstan

SWEDEN

COSTA RICA

INDIA

CZECH REPUBLIC

THE NETHERLANDS

UNITED KINGDOM

MEXICO

JAPAN

FRANCE

POLAND

United Arab Emirates - Dubai

UNITED STATES

Philippines

GERMANY

RUSSIA

Singapore

IRELAND

SOUTH AFRICA

Taiwan
THAILAND
VIETNAM
For the most up-to-date contact information for all Amdocs offices worldwide, please visit our website at www.amdocs.com/corporate.asp

Copyright 2012 Amdocs. All Rights Reserved. Reproduction or distribution other than for intended purposes is prohibited, without the prior written consent of Amdocs. The trademarks and service marks of Amdocs, including the Amdocs mark and logo,
Intentional Customer Experience, CES, Clarify, Ensemble, Enabler, Return on Relationship, Intelecable, Collabrent, XACCT, DST Innovis, Stibo Graphic Software, Qpass, Cramer, SigValue, JacobsRimell, ChangingWorlds, jNetX, OpenMarket Inc., MX Telecom Inc., MX
Telecom Ltd, Streamezzo, and Bridgewater Systems are the exclusive property of Amdocs, and may not be used without permission. All other marks are the property of their respective owners. Created 1/2012