Improving Network Control Improves the Bottom Line

By Karl Toompuu, Bridgewater Systems Broadband service providers face increasing challenges to boost revenues and improve average revenue per user (ARPU). As new competitors emerge and broadband markets become more saturated, service providers cannot continue to rely on a growing customer base for increased revenue-they must be able to capture more revenue from their installed base. Service providers must gain visibility and control of their networks at the subscriber level to better manage the amount and type of bandwidth (data capacity and throughput) that subscribers can access and offer value-added tiered services. They also need a way to tie subscriber policies and services directly to the control of network traffic. A number of factors are making this drive for increased ARPU more difficult. First, service providers can’t compete on price alone. While increasing bandwidth levels might be a temporary fix to attract subscribers, it comes at a high cost to the service provider and does not help with customer retention because subscribers continue to seek the cheapest bandwidth available. In addition, heavy users are monopolizing network bandwidth. Up to 60 percent of network resources may be monopolized by less than 5 percent of the subscribers using applications such as gaming, streaming audio and video, and downloading large files. This can leave the rest of the subscribers dissatisfied and frustrated by slow service. Most service providers are faced with the need to invest in capital equipment just to maintain their existing quality of service (QoS)-with no expectation of new revenue. Moreover, subscribers now are using their broadband service for more than just browsing Web sites and sending and receiving email: they are downloading audio and video files; sharing files using peer-to-peer (P2P) applications; playing interactive, multi-player games; and using voice over Internet protocol (VoIP) services. As a result, both service providers and subscribers are becoming more interested in the appropriate quality levels for the services they are using. To improve revenue, service providers need to better leverage their networks through creative strategies. They need new options to maintain their QoS and capitalize on high-value services. Service providers must control their QoS and bandwidth levels variably as well as monitor and manage heavy users, allowing them to increase average revenue on a per-user basis. Improved control improves revenues In order to improve control-and thus improve revenues and cost management-service providers may wish to create a variety of tiered and dynamic service offerings that will provide up-sell opportunities within their existing customer bases. Following are several network control strategies that will help service providers improve revenues and cost management. Variable QoS: Create offerings with QoS mapped to the specific service, providing high-quality voice, video and data-as it’s needed. Triple-play packages: Offer a complete package to subscribers including voice, video and Internet, becoming supplier of choice for all communications. Tiered services: Create a variety of tiered services from the low end to the high end, targeted to specific types of subscribers. This could include service packages such as gaming or email only, packages that enhance music or video downloads, or VoIP services. Bandwidth on demand: Provide subscribers with a "turbo button" to boost bandwidth for a defined length of time. This can be used for applications ranging from music or video downloads to participation in a live Web event. Bandwidth on demand keeps the service provider’s monthly fee competitive, while increasing ARPU by charging for extra bandwidth use when the subscriber needs it. Revenue sharing: Offer value-add content through partnerships for audio and video, automatically increasing bandwidth and/or QoS while the subscriber accesses the partner’s service or applications. This enhanced subscriber experience helps service providers create a stronger customer relationship and provides an attractive revenue sharing opportunity. Subscriber self-service: Give subscribers the ability to manage their accounts, temporarily or permanently increase their service levels, and change or upgrade their packages through a self-serve portal. This reduces internal customer service costs while giving subscribers the control they want. Try before you buy: Allow subscribers to access new services on a limited basis, based on parameters such as length of time, amount of data or specific content. This encourages subscribers to try new value-added services without commitment and improves the chances they’ll purchase these new services. Prepaid services: Give subscribers the ability to self-register for a prepaid account based either on time or data volume. Once the prepaid threshold is reached, subscribers can be redirected automatically (hotlined) to a payment portal to top up their account or change their service. Account replenishment reinstates subscribers’ services immediately, while an empty prepaid account automatically redirects subscribers to the payment portal. Benefits A number of benefits stem from improved network control. Service providers will be able to accomplish the following: To achieve these benefits, service providers will require a comprehensive policy management solution that gives them the ability to manage network policies on a per-subscriber, per-session basis. Among the tools required are dynamic bandwidth management; revenue collection and formatting; and authentication, authorization and accounting (AAA) or dynamic host configuration protocol (DHCP) servers. Let’s examine each in more detail. Dynamic bandwidth management Based on specific policies and QoS requirements, a dynamic bandwidth management system should interface directly to multi-vendor network elements to provide control of network resources. Such a system should provide four key functions in the network: Regarding this last point, it is anticipated that all service providers will need to move to metered offerings, especially for their entry-level service tiers. To offer competitively priced packages, service providers must ensure that they are not cannibalizing their higher-level services. For example, an entry-level service priced to attract dialup subscribers to broadband will not be successful if bandwidth utilization is too high. The price can be kept low without impacting higher level services by introducing a metered bandwidth cap. We are currently in an interim period where some service providers are marketing the fact that they have no cap, but this is a temporary settling period. An appropriate dynamic bandwidth management system also should include a policy data store and subscriber portal. The policy data store acts as the database of all user profiles and policies, while the subscriber portal serves as the central self-administration tool that allows subscribers to self-manage their accounts and service packages, and enables network administrators to manage subscriber policies centrally. Revenue collection and formatting Offering new services is helpful only if those services can be billed to subscribers. Service providers require a system that correlates and aggregates event-based accounting data into single-session records that identify subscribers and their usage. This revenue collection and formatting system should filter, format and stream these records to external billing and settlement systems. It also should be used to track dynamic changes to a subscriber’s service-such as service level changes, bandwidth boost or third-party bandwidth boost-and dynamically stream this data to billing systems. The system also should filter records via a wide range of parameters and convert and format to accommodate virtually any external billing and settlement system. In addition, it should provide for specialized processing such as a new correlation algorithm, real-time fraud detection or enriching records through an external database consultation. AAA or DHCP server Broadband networks typically use an AAA server or DHCP server for authentication, authorization and accounting, and for allocating network resources. Traditionally, these systems are relatively static, authorizing subscribers based on username and password. Along with new policy management systems, service providers should consider AAA and DHCP servers that are more dynamic in nature. These applications can consider other factors such as time of day, network access method and resource availability in making admittance decisions. Summary Broadband service providers face increasing challenges and no longer can rely on growing their customer base for increased revenue. They must find creative ways to capture more revenue from their installed base. By employing sophisticated network control strategies, they are likely to improve revenues and cost management. The good news is that some existing policy management solutions offer these capabilities for cable markets. Karl Toompuu is product manager for Bridgewater Systems. Reach him at [email protected].