NSP Success Hinges On Monetizing The Data Pipe
Providers look to deep packet inspection to deliver the services and user control required in today’s all-IP world.
Andrew (Drew) Sproul is currently director of marketing at Adax Inc. During his 20+ year career in telecoms, he has held management positions in sales and marketing at Adax, Trillium, and ObjectStream. He has a BA in human services from Western Washington University in Bellingham, Wash.
According to a recent report from industry analyst Gartner, 2011 smart-phone sales grew 58% versus 2010. Predictions show similar sales growth for iPads and tablets, revealing a seemingly insatiable demand for data-centric and mobile video applications—a trend that will ultimately stress mobile networks to their limits.
The more powerful the device, the more data is downloaded. For example, while smart phones easily outnumber laptops using dongles, laptops consume significantly more data by volume than mobile devices. This truly exemplifies the explosion of mobile data traffic.
After the initial rise in mobile broadband data, service providers focused on traffic and congestion management. Policy servers were and are being used to apply more rational policies when dealing with network congestion, usually by dividing customers into tiers with different data volume limits and devising policies when limits were breached.
This approach has become widely known as “fair use” management. Subsequently added applications, such as “bill shock,” help ensure that users understand the charges (including and the amounts). Still, it’s simply not enough for today’s user or network requirements.
While bandwidth management and control of the pipe are essential, building a bigger, faster “dumb pipe” alone won’t keep the network service providers (NSPs) in business. The fact is, average revenue per user (ARPU) for data traffic isn’t increasing at the same rate as the demand for service. This disparity won’t be sustainable much longer.
DPI To The Rescue
NSPs must find ways to add services, enhance quality of experience (QoE), and provide flexible, dynamic, up-sell options to monetize the data pipe. Enter deep-packet-inspection (DPI) technology. Value-added-service applications now being developed will use DPI technology to improve the user experience. However, service providers must implement them by placing the user in control. Are NSPs ready for this, and if so, what will it take?
To truly innovate, operators need to think beyond cost-centric measures and adapt current business models to today’s increasingly data-hungry users. They must transform their networks by developing services that reduce incremental network operating costs while increasing IP service revenue. Service operators must also improve the user experience to avoid customer churn. Services should be linked to demand, both in terms of the network and the individual user.
For too long now, customer retention has focused on providing the latest smart-phone, tablet, or price bundle, rather than the device’s available services. A report from the CMO Council entitled “The Challenge of Customer Churn and Market Burn” says that a 2% increase in customer retention has the same effect on profits as cutting costs by 10%.
In short, building out the data pipe is simply not enough. Service providers also have to find ways to monetize the data pipe. To accomplish that, the pipe needs to transform from “dumb” to “intelligent.”
A deterministic packet network is the only way to effectively manage packet-based traffic. The operator must know and control its network traffic by type, user, and device. Enhanced speed and throughput of the network to accommodate the data explosion isn’t enough. New services and user control over services and costs is essential.
As mentioned, knowledge based on DPI brings that control. An intelligent data pipe can manage content, services, billing, access, and location-based services for children and household security. Once the DPI-driven intelligence is implemented, operators can offer customers these new services and control.
In addition, packet inspection is used to analyze network traffic. It identifies the type of application that sent the data, where it came from, and the service for the device. DPI differentiates data (e.g., video, music, VoIP, e-mail, and Web sessions) to prioritize traffic or filter out unwanted data. It also can be used to delay, or “throttle,” some types of content generated by certain applications. This controls the delivery of content, improves network security, and allows for both the network and user-enhanced control.
In the 4G/LTE all-IP world, the core elements include Mobile Management Entity (MME), Serving Gateway (SGW), and Packet Data Network Gateway (PGW). The Policy Control and Resource Function (PCRF) is used to set quality of service, service-level agreements, and usage restrictions that are key to new service and billing paradigms.
Comprehensive and dynamic policy definitions provide better management and monetization of the packet data pipe. These emerging fee-for-service models rely on information provided by these network elements, as well as enhanced home subscriber services (HSS) learning user IDs and preferences.
DPI is essential to smooth billing practices, improve network security, and offer the option to actively control packet-data pipe sessions through traffic filtering and redirection. It ensures subscribers will get the correct package of services they purchased from their service provider and receive support for bill shock and advice of charge applications, giving them peace of mind.
First-generation policy servers met the early challenges of the mobile data traffic explosion. They protected the network from periodic overuse and ensured equal access to all users. Next-generation policy servers and the upcoming data-offload cousins will need far greater intelligence to deliver services and control to customers.
Service providers must offer these capabilities to be successful in the future. DPI engines assisted by fast and efficient IP flow management will meet this need. For both customers and providers alike, controllable and managed services form the ideal QoE as well as a profitable business model.
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© 2013 Penton Media Inc.
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