The fight over content value chains and the emergence of value based pricing
June 18, 2018 - Aleks
At the Next Generation Billing Conference in Rome in 1999 (or was it Madrid in 2000 – it was a long time ago), I was speaking with a group of operators of BSS vendors about how GPRS, WAP and ultimately 3G would change the mobile business model. The new world of content delivered over and via mobiles would see the industry change. Value based pricing models and content value chains would be the new business models that would drive growth for the mobile industry.
It sounded good at the time. Then we realised how rubbish WAP and GPRS actually were. It just goes to show the importance of getting the timing right. But fast forward (almost) twenty years and there’s a bit of déjà vu kicking about. Last week I spent a pleasant few days at TMF’s Digital Transformation World conference in Nice. Amongst all the chat about digital and more about transformation, there was talk about operators and content value chains and operators selling more digital services to their customers. Also, I was speaking to a couple of analysts about 5G and BSS - the conversation moved quickly to value based pricing and charging.
Content value chains have been around for a few years now and service providers are now pushing to get a more dominant (and profitable) position in them by being more relevant to customers. A lot of this push is being driven by the move to digital – which basically means selling a lot more than just telco services to their customers and delivering them via a digital channel (app or website). This means an overhaul of the systems that enable creation, monetisation and delivery of these new services, and support this new way of doing business.
Listening to the speakers and talking to operators, and other vendors, the push now is to deliver a good experience to customers. This doesn’t just involve network experience (that’s almost a given these days that networks should just work), but the focus was on interacting with customers. How they’re onboarded, how personalised marketing offers are delivered and how quickly new offers can be spun up to support this.
Openet has just produced an ebook with videos showing 5 app based customer journeys that can increase customer relevance. One of these shows how a customer can turn unused data into cash and give it charity – and then encourage his contacts do to the same via social media. Have a look at the video here.
This example of interacting with customers is becoming increasingly standard and pretty soon will be the normal way all operators interact with all customers.
At Digital Transformation World last week, I walked round all the vendors’ stands and couldn’t find the word ‘billing’. This leads me onto value based pricing and charging. There is increasingly a view that 5G will see the emergence of value based pricing and charging. The data volumes involved in 5G will be so large that pricing per MB or selling GB based bundles won’t make sense. Customers will buy services and these will be priced based on the value they deliver. A key component of value based pricing is time. The newer the service, the higher price premium it can attract. So operators will need a lot more flexibility in offer catalogs and pricing tables, as there will be many more offer and pricing changes than operators are currently used to. As for the range of services, some will be sold direct from the service providers, some direct from content providers, some will be funded by indirect models. Then there’s the enterprise and B2B2X models – which will add a new level of sophistication and complexity to charging, settlement and assurance models.
We’ve come a long way in the (almost) 20 years since content value chains and value based pricing were the hot topics at telecoms billing conferences. Value chains are well established and positions are being fought over. Value based pricing is, at last, on the immediate horizon thanks to 5G. What’s missing from the old discussions? Billing – but whether we still need billing is another topic, and one that just keeps giving.
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Martin Morgan is the VP of Marketing at Openet.
With 25 years’ experience in mobile communications software, Martin has worked in mobile billing software since the early days of the industry. In that time he’s spoken at over 50 telecoms conferences worldwide and had a similar number of articles published in the telecoms trade press and served on trade association and company boards. At Openet Martin is responsible for marketing thought leadership and market interaction.