Managing exploding wireless, over-the-top usage drives policy market

March 30, 2011 - Openet

Service providers are driving the policy management market to strong growth, driven by operators upgrading or replacing existing policy infrastructure to better scale with growing transaction and subscriber numbers and enable value-added capabilities that require more than just a network-centric approach to policy.

Those are among the key takeways in Infonetics analyst Shira Levine’s semi-annual report, “Policy Management, Worldwide and Regional Market Share, Size and Forecasts,” released this week. Given the many vendor product and operator deployment announcements in the past year, it’s no surprise that policy management revenue grew 48% in 2010 to $418.7 million worldwide, according to Levine, Infonetics’ directing analyst, next-gen OSS and policy.

Because of that growing demand, there are many players now entering the policy market, with Openet now ranking as the top player in what is becoming a very hotly contested area. “It’s incredibly tight, as the top players are all within one million dollars of each other,” said Levine, citing Bridgewater and Tekelec as other top players.

While Openet has grown rapidly because of its work within European operators, as well as a pipeline established with Cisco, Levine expects other vendors to enter the space more aggressively.

“You have so many different vendors now getting into policy as the need for integration with real-time charging grows. You have Comverse and Amdocs, and IT players like HP coming down the stack because of a recognition that IT and even marketing folks are having a say in purchasing decisions,” explained Levine.

Ultimately, she said, most solutions—whether offered by BSS players, IT players or network equipment manufacturers—will have to offer “marginally standardized” capabilities and functionality.

“For one, you cannot have a delay once a customer hits a usage cap, so real-time decision making, charging and routing will become standards in all viable solutions. And where a PCRF has always been just a PCRF, the network focus will extend toward more value-add capabilities,” said Levine, pointing out that use cases built on top of PCRF (Policy Charging and Rules Function) will be the differentiators.

“There are more and more investments in policy solutions driven by certain use cases built around campaign management, loyalty programs, acquisition-and-retention initiatives, bill shock, or the desire to do more creative charging and bundling of over-the-top services like Netflix or YouTube with certain QoS guarantees,” said Levine. She expects that in the next year, all vendors that claim to have policy solutions will have to have pre-integrated policy and charging and value-add capabilities that help operators generate new revenues.

Another driver behind policy investment will be the interest in the M2M market, where telcos, MVNOs and others are looking to utilize or offer “enabling platforms” to scale M2M deployments and better manage devices and applications. Already, policy players (e.g., Tekelec) are partnering with machine-to-machine specialists like Numerex to integrate policy and M2M functions and capabilities.

“The increase in connections will drive growth in the policy management markets, as operators need to identify and track M2M traffic and apply policy rules based on transaction type, time of day, network congestion, etc.,” Levine said.

For 2010, the majority of policy spending took place in the wireless market. Levine expects that growth to continue, especially with regulatory pressures mounting for data roaming regulations, and the need for real-time notifications to subscribers.


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