What we’ve come to know as the Internet today – a global phenomenon that provides access to more information and tools than could have been imagined 15 years ago – presents a goldmine of opportunity for network operators to differentiate themselves in the market. The challenge, though, is to decide on the right business model when it comes to developing and delivering applications and services to subscribers.
Already, the majority of applications have been built by third parties, not the service providers themselves, and the application development market is one that is only going to continue to grow as network technology continues to evolve and user devices become more sophisticated. This means providers have to decide – and quickly – how they want to work with these third-party applications developers.
This understanding of how to leverage third parties is a key component of Alcatel-Lucent’s (News
) application enablement
vision, which includes network evolution to a high leverage network
, and collaboration with the application developer community – and, ultimately, managing the integration of new applications in the network environment and identifying ways to effectively monetize those relationships.
In order to accomplish the latter goal, operators behave, as they have for the most part until now, as strictly access providers. In other words, they provide the connectivity to third-party applications without leveraging their network resources to add value to the services. It’s a strategy that poses little risk to the provider, but also limits their revenue potential.
On the other hand, providers have an opportunity to bring developers deeper into the network experience, linking applications to a wealth of resources, including subscriber demographics, billing systems, location and presence information, user preferences, and more. This model requires network operators to open their data vaults to their application partners, but significantly increases the revenue potential by creating higher value, more targeted, stickier services.
So, in order to most effectively integrate third-party applications into their overall product offering, network operators must identify which applications will be most valuable to them, which partners will be most valuable in delivering those applications, and which business models will allow them to most effectively create new revenue streams through those relationships.
Regardless of the specific applications that each operators will choose to focus on, there will be a number of key characteristics common to many of them that will make them easily integrated into next generation communications
networks and make them desirable to the end user.
For instance, many will incorporate video technology, which is becoming a central part of services and devices. They will be much more personalized and customizable to create a stickiness not possible with legacy technology. They will leverage the growth of collaborative environments, like social networking, which has quickly grown into worldwide phenomenon. They will incorporate automation techniques, making it simple to install, maintain, and troubleshoot them – no application is 100 percent fault-free, but enabling simple resolution of problems limits user frustration, which could result in dissatisfaction and, ultimately, churn. And they will leverage open standards that will allow them to be delivered to a wide range of devices, critical in today’s always on world.
In order to build an ecosystem of application partners, network operators will have to first agree to open their networks and data stores more than they have in the past – which also means they will have to very carefully select their trusted partners to ensure the security of their resources.
A recent Alcatel-Lucent white paper
has identified ten principles that operators must follow as they look to grow their third-party partnerships. These guidelines are meant to help derive maximum value from their relationships, while ensuring they can still exercise control over their resources.
1. Establish a set of KPIs that set benchmarks for improving performance in this area.
2. Take a pragmatic initial approach to working with third parties, aiming to show through simple early-to-market solutions how the new relationship could work and demonstrating that superior value really can be created.
3. Have a variety of business and commercial solutions available over time to meet the needs of different types of partners.
4. Understand which third parties are most likely to respond positively to an invitation to work with you. This can vary based on network operators’ size, competitive position, geographic position, customer set, strategic objectives, services available, etc.
5. Use software platforms that are suitable or adaptable for use by particular kinds of developers.
6. Sell the ability to connect third parties with end users wherever they are — through both partnerships and technology – including resolving issues on behalf of third parties, such as the customer’s location, type of access network, device, and so on, as well as configuration, installation, and support.
7. Break down internal walls and barriers between the key stakeholders, which will include CIOs, CTOs, OSS/BSS, network operations, CRM, product management and marketing.
8. Deploy policy and QoS tools that are designed to enrich relationships with third parties, rather than simply as tools to control the behavior of applications or the telco’s own services.
9. Focus on dismantling subscriber data silos and getting consensus on rules for using that data. Subscriber profiling in its widest sense could be the most valuable tool that network providers own.
10. Emphasize the ability to identify and authenticate individuals in a secure environment, as well as the ability to bill them.
Erik Linask (News - Alert) is Group Editorial Director of TMC, which brings news and compelling feature articles, podcasts, and videos to 2,000,000 visitors each month. To see more of his articles, please visit his columnist page.
Edited by Erik Linask