Telcordia: Operator business model is dead

At this week’s Fixed Mobile Convergence conference in Chicago, Telcordia’s Grant Lenahan, executive director of wireless mobility and chief strategist, declared in a session on the operational impact of IP multimedia subsystem that the traditional operator business model is dead. He and Siemens' director of network technology, Filipe Alvarez Del Pino, went on to explain how that was a good thing.

“That doesn’t mean service providers are dead,” Lenahan said.

The two talked about the challenge and opportunity facing network operators in the IMS-inspired world of third-party services.

“IP enables new services, but [the question is] by whom and what is the business model going to be,” Lenahan said.

Because IP allows these services to be delivered over multiple networks and multiple technologies, all types of service providers are now competing to deliver then same service. This makes the ability to differentiate a service somehow key to the business model.

“Otherwise, the only thing to compete on is price,” Lenahan said. Bundling has been successful so far in retaining customers, but its not enough, he said.

This makes more urgent the need to be able to charge for the value added enabling technology such as billing, presence, location and quality of service. Some of the other implications of IP and the IMS architecture are that the number of end services will be orders of magnitude greater than they have been historically; customer profiles, service logic and charging capabilities must span networks and technologies; the cost of service creation and delivery must drop precipitously and operators will need to focus more on service management capabilities, including service assurance, order management and billing.

There is a new paradigm at the service layer of the network as well, which is where the value of the network can be found rather than in the network itself. The new paradigm, according to Lenahan, splits the layer in two: the operator layer and the third party layer. It will be up to service providers to determine what role they want to play in the delivery of services.

“Operators have to find a place where they can be the value add product and not compete with the content providers,” Lenahan said.

This means allowing content providers to be the keepers of the content, but adding value such as quality of service, authentication, billing, mediation and more. “Operators need to get out of the network mindset and into a service management mindset,” Lenahan said.

Alvarez Del Pino agrees. “Communications [network] operators need to re-think their role, including where they fall in the larger value chain,” he said.

To do this, operators must overcome certain challenges, such as organizational inertia, legacy interfaces and infrastructure, and inadequate training and knowledge for the next generation network.

He said that a complete implementation of the IMS and service delivery platform application lifecycle and integration with OSS and BSS are a must.