When it comes to managing an evolving value chain for network providers, balancing service innovation and investment in a dynamic market environment is a pretty tricky act to pull off.

According to a recent study presented by Alcatel-Lucent (News - Alert), “network providers play a more central role in the value chain by working closely with third party service and content creators, helping them to create higher value propositions that yield better direct and indirect revenues from end users and from advertisers.”

 

To do this, “network providers unlock a range of valuable assets and enablers, from subscriber demographics to billing systems, and from QoS support to location information,” says Graham Finnie, author of “Working With Third Party Services: An Action Plan For Network Providers.”

 

This is instead of network providers simply “connecting customers to third party services but offering little new additional value,” Finnie says, citing providers who have successfully established third party programs in areas such as premium SMS and IPTV (News - Alert), “showing that it’s possible for network providers to establish the basis for strong relationships with a very large number of third parties.”

 

To start thinking along these lines, Finnie says, providers need to “identify which types of resources are most valuable, identify which types of partners are most valuable and identify which types of business models will be most appropriate.”

 

His survey of network providers “found that providers rated four kinds of enablers as particularly attractive – billing and charging for services and service attributes, per-application or per-subscriber quality of service guarantees, security tools and services and subscriber authentication (who you are) or authorization (what you are entitled to).”

 

For identifying partners, Finnie recommends identifying partners that are “most likely to be responsive to working with them. This is a critical question since the very term 'third parties,' like the similarly vague term 'mobile data services,' hides great complexity and can sometimes be misleading.”

 

And for identifying business models, the study finds that while “uncertainty about the business or commercial model is one of the biggest barriers to realizing the third party opportunity,” there are in fact several possible models – “one reason, perhaps, for the uncertainty. “

 

The study tested four potential revenue models with network operators and service providers, finding that “per-transaction/session/event fees, sharing of revenue from advertising and related sources, flat license fee charged to third parties and sharing of revenue from end user” were effective, with sharing revenue from end users was seen as “the most important model, with respondents evenly split after that among the other three models.”