European ISPs Suggest New Internet Business Models

Leading European ISPs said, more than once, that they wish to charge OTT content providers for delivering their content to subscribers, which may not match the ideas behind net neutrality (see "European Telcos do not Like Regulation and OTT!" - here; "European Carriers Ask [Again] to Charge Content Providers [Google]" - here and statements from DT, Telecom Italia).

So it is no longer just statements given to the press. ETNO,  an organization that represent 41 ISPs (including Belgacom, KPN, Orange, Telecom Italia, Telenor, swisscom, and Telefonica), submitted a proposal to the ITU "for changes to the ITRs providing for a new sustainable model for the Internet based on commercial agreements between undertakings".

  

"This contribution calls for a new IP interconnection ecosystem that provides end-to-end Quality of Service delivery, in addition to best effort delivery, enabling:

• the provision of value-added network services, to both end-customers and over the top (OTT) players and content providers, and
   
• a reflection of the value of traffic delivery over network infrastructures.

Moreover, the contribution states that in order to ensure an adequate return on investment in high bandwidth infrastructures, operating agencies shall negotiate commercial agreements to achieve a sustainable system of fair compensation for telecommunications services.

By endorsing the concept of “quality based delivery”, it will be possible to establish new interconnection policies based on the “value” of the traffic (not only on the “volume”), enabling new business models and implementing an ecosystem where operators’ revenues will not be disconnected from the investment needs made necessary by the rapid growth of Internet traffic". 

See also BEREC: "traffic management and differentiation practices are capable of being used for questionable purposes" - here.

See "ETNO proposes a number of changes to selected articles of the ITRs, in view of the WCIT (World Conference on International Telecommunications)" - here and the proposal text - here. 

Allot: 25% of MNOs Have a Transparency Issue with "Unlimited" Service Plans

[Posted on 11/11/11 11:11 EST]
 
Recently, UK's BCAP (Broadcast Committee of Advertising Practice) published a set of guidelines to "bring clarity to advertisers and consumers on the use of "unlimited" and "up to" speed claims in telecommunicatons and broadband ads" (here).

According to the findings of Allot Communications' recent research ("based on data collected from over 100 mobile operators worldwide .. during the third quarter of 2011 from publically available sources"), it is time for everybody to adopt such rules, as "38.5% of all operators sampled offer data plans which are branded Unlimited .. Only 13.5% of operators sampled are currently offering ‘True Unlimited’ plans". 

So - one quarter of operators have a transparency issue - a fundamental component of Net Neutrality 

 

Allot Communications' inaugural MobileTrends Charging Report also "shows that 35% of operators are already implementing Value-based Charging strategies such as Bill-shock prevention and Social Networking plans that make applications such as Facebook, MySpace & Twitter zero-rated .. 15% of operators sampled charge for tethering, mainly in North America and EMEA [see examples for Verizon and AT&T]".
 

See "Allot MobileTrends Charging Report Shows 35% of Operators Already Offering Value-Based Charging Plans Such as Toll-Free Facebook" - here (press release) and download the report from here.

TeliaSonera: Mobile Pricing Based on Speed, Usage, Quality and Services

TeliaSonera's value-based pricing was once again (see "TeliaSonera's New Business Model: Value-based Pricing" - here) presented during the multinational operator Investor Day 2011 held yesterday in Stockholm (presentation- here).

Some interesting slides follow, on mobile data growth, unmatched data revenues growth and the billing model to compensate for that, by Håkan Dahlström, (picture),President Business Area Mobility Services.

See also - "TeliaSonera to Charge OTT VoIP Usage" - here.
 

KPN to Charge Extra for VoIP, Messaging and Streaming Video

      

KPN announced that its  "[Q1] Consumer wireless revenues lower than expected following accelerated change in customer behavior .. KPN is making significant wireless portfolio adjustments in the Netherlands to address SMS and voice substitution by moving from voice to data-centric portfolios to optimize the value per customer .. To further lower the cost base in the Netherlands, a new reduction program of 4,000 - 5,000 FTE, around 20 - 25% of the workforce in the Netherlands" - see "2011 EBITDA outlook adjusted downwards, free cash flow confirmed" - here and chart below.

KNP CEO, Eelco Blok (picture), said "To make our Dutch businesses more robust I have decided to accelerate the investments related to the new strategy. I’m confident that we are taking all necessary measures to strengthen and grow our businesses and I will share my detailed KPN Group plans during the 10 May Investor Day"

However, we do not have to wait till then. KPN's spokesperson, Steve Hufton (picture), explained to Arnoud Wokke from the Dutch site tweakers.net what are these "wireless portfolio adjustments" going to be: "Services such as browsing, VoIP, instant messaging and video viewing will get its own price tag, just as is the case with calling and texting .. We will allow everyone to take the services they intend to use and what they want to pay"

See "KPN: 'chatheffing' voor mobiel internet komt deze zomer - update" - here (Dutch; the above quote is a Google translation).

Recent Trends in Policy Control [Part 2] (with examples)

 

This part is dedicated to a recent article by Graham Finnie (picture), Chief Analyst, Heavy Reading, covering "new pricing ideas I've been compiling in connection with Heavy Reading's research on policy management".

See "Mobile Data Packaging: A Policy-Driven Revolution?"  - here.

Graham lists the following cases:

• Movistar Colombia has created five mobile data packages, including one that offers only email, one just for IM, one for social networks – all at low price points.
   
  
• Saudi Telecom Co. (STC) has built a "prayer time" offer, enabling subscribers to block access to the Internet, or to specific IP-based applications (video, chat, voice, gaming, etc.) during prayer times.
   
  
• Poland's Play increased bandwidth, removed volume limits and removed restrictions on P2P traffic between midnight and 9 a.m.
   
  
• Russia's MegaFon [See "MegaFon Deployed Cisco ASR-5000 for Service Personalization" - here] offers unlimited access to some URLs, event-based charging and varying speeds based on protocol and usage profile.
   
  
• In Kuwait, Zain Group (see "Zain Kuwait Prepares for Fair Use Policy" -  here) offers two contrasting prepaid data packages -- one for customers on limited budgets with a low connection speed, and one for those who are mainly looking for occasional high-speed access.
   
  
• In Sweden, 3 Group (See "3 Scandinavia Deploys Procera New 30G DPI Appliance" - here) offers a variety of on-the-fly promotions, including QoS uplift for loyalty and periodic free boosts in data speed.
   
  
• Multiple operators now offer unlimited access to Facebook and other social networking sites within volume-delimited services ; Multiple operators waive data volume metering in off-peak periods, e.g. at night ; Some operators offer "shared wallet" services, in which allocations are shared across different devices or family members, for example ; One operator lets customers choose five Internet sites or URLs and get unlimited access to them.

Telefonica: "Pricing for Optimized Service should be based on QoS"

  

 

In an interview to LightReading, Tanya Field Telefonica UK Mobile Data Group Director, tells Ray Le Maistre how the mobile carrier will monetize the increased use of data - "..it is all about understanding what customers are using data for and being able to optimize the service .. if they are very high video users and they want to have optimized solution so they get very good delivery then we should be looking at pricing for that optimized service so it should be at QoS basis based on the service usage that you effectively undertaking as consumer.."

 

See the video below (or here).

 

See also: 

• Policy Management: What Does Telefonica Need Now?  - here.
• Telefónica Group Selects Acision/Tekelec - here
• Sandvine - Who is the Global DSL/Mobile Customer with 20 Properties? - here.   

 

 

 

 

[Light Reading] Amdocs Vision on Service Provider Billing

 
A good video interview by Phil Harvey, Light Reading, on the future of data services billing, by Amdocs executives - Tal Givoli and Gil Rosen.

See video below and the origial story "Service Providers See Big Billing, Cultural Changes"  - here. More on "Value-based billing", mentioned by Tal, here.

TeliaSonera's New Business Model: Value-based Pricing

 
During its Q2 earning call, TeliaSonera described a new business model for mobile broadband services which they call "Value-based Pricing".

"Of course, we would like doing some sort of value-based pricing where if you buy a movie, video-on-demand, you would actually have traffic for that movie included in the price of the movie. That would be the reasonable part of it. The same with music .. So some sort of value-based pricing, I believe, would be the next step."

See "TeliaSonera Q2 2010 Earnings Call Transcript" by Seeking Alpha - here.

TeliaSonera presented some information on mobile broadband usage (see chart), from which we can understand why this is needed. They already have high consumption (1.5GB/month) and they expect to see 8 times higher traffic on 2014.

TeliaSonera has 17.5M mobile subscribers of which 6.2M are pre-paid. Biggest countries are Sweden (33%) and Finland (18%), other countries are Norway, Denmark, Lithuania, Latvia, Estonia and Spain (here). In addition, they have 24M mobile subscribers in the "EuroAsia" region (almost all pre-paid).

It seems that TeliaSonera goal (see quotes below) is to be a "single point of billing" that will charge for a combination of content, volume and QoS. They address real-time applications, such as video and music, where QoS counts while stating that the content itself will be offered by Over-the-Top (OTT) providers and believe that customers will pay the extra value (see an alternative suggestion from Amazon - here).

Håkan Dahlström, President, Mobility Services, said:

"The technology and the new technology will continue to deliver that cost benefit and the possibility to increase the traffic in the network twice every year. We see no reason that we shouldn’t be able to keep the cost-to-sales relationship and the CapEx-to-sales relationship under the coming year due to this. But the most positive thing with this is that our customers, they have the willingness to pay for this. They are really so positive when it comes to the experience of mobile broadband and mobile data. It’s very much about the speed and the usage, and they see enormous amount of services that they would like to use. Very few of them will be developed by us. It would be a partner that we’ll find it on the Internet. But on the other hand, it is up to us to make sure that the quality and experience is there. Due to that, this mobile data explosion has to be well managed, and I think that we are in a good way to do that."

Lars Nyberg, President and CEO said:

".. If you imagine that you are the customers and your demand for bandwidth is basically unlimited and we have a technology that can double the bandwidth every 18 months, it’s very important for the operators that we have a tool so we can regulate how much traffic you are going to put on an effort, because the moment you put on more traffic, then the network at that point in time can handle. That’s when you get the disaster they had in Manhattan AT&T when you couldn’t make voice calls anymore. And that tool to control how much traffic is going to be allowed on the network in this quarter, for instance, that tool is called price. And it’s very logical, in my opinion, that if you use more capacity, higher speeds, you pay more than somebody who use less. That’s by long-term for this industry, flat fee doesn’t work. It’s also interesting, it’s not fairly actually because if you look at our customer base, it’s something like 5% to 7% of our customers are the real heavy users. They generate a big chunk of the traffic. And if we have flat fee revenues of 95% are actually subsidizing the 5%. So fundamentally, I’m convinced that the industry will have to have a pricing model where you actually pay for how much you use."