Multi-service Revolution: The New Pricing Imperative

The plethora of new services such as IP, broadband and mobile data have brought about greater complexity with new multi-service offers and ever-increasing competition. Business systems in place today must be highly reactive and inherently flexible with service and marketing innovation as key priorities. In particular, pricing is increasingly important with a requirement for greater flexibility in the face of cross product mixes, multiple payment mechanisms and more granular and targeted customer segmentation.
Front office functions such as price plan creation cannot and must not be held back by the operational constraints and concerns of the IT teams in the back office if service providers want to stay ahead. When it comes to pricing for services this is unfortunately too often the case, with pricing and rating being inherently tied to and held hostage by the billing systems in place. Moving forward, companies like Highdeal and Covad, a provider of broadband voice and data communications are now actively working together through organizational bodies such as the OSS/J (Operational System Support Through Java consortium) to separate the pricing and rating functions from billing, in order to ensure smoother business flows from conception of service pricing to introduction to the market place and finally payment collection.

Systems out of sync

Existing BSS/OSS solutions, which require a heavy investment and months to configure, allow operators little room for manoeuvre. Yet Telcos still consider it taboo to meddle with these labyrinthine systems. The principle drawback to these software solutions is that they interweave elements relating to rating, billing and payment. Yet there are software technologies that allow users to separate these different components into autonomous building blocks, and to do so without interfering with the systems already in place. This new architecture enables companies that understand the value of pricing to leverage this driver for competitive advantage.

This is precisely the aim of the OSS/J Dynamic Pricing initiative. The project, developed within the framework of the OSS/J (Operational System Support Through Java) consortium, is focused on developing a programming interface (API, Application Programming Interface) for dynamic pricing. The API will enable the development and implementation of pricing systems that are totally independent, yet linked to operators’ existing BSS/OSS software.

“The objective is to support marketing-oriented scenarios and, for example, pricing based on locations. Not just pricing for customers but also pricing with suppliers such as wholesalers and content providers,” explains David McNierney, Strategic Marketing Director at Highdeal. “The service or content provider will be able to simulate the impact of a new offer on customers and measure the results, whether the offer is intended to stimulate demand, increase or diversify revenues, create bundles of services, or to test that commercial aspect of new services. And accomplishing all this while taking into account operators’ real production costs, as well as their margins.”

Liberating pricing and placing it at the very heart of the system

The API will expose the marketing and sales parameters and provide the data for downstream purposes, such as service rating and billing.
“The Pricing API will provide a central point for determining offers and prices based on a variety of criteria, including customer profile, location, current special offers, other parties in the transactions, factors specific to the request, and any other set of complex and possibly inter-related elements. The subscriber systems can use the Pricing API to present a list of offers, determine either static or one-time prices, or present prices that change over time and across the customer base. The Pricing API will, by necessity, contain the offer and pricing definitions. These definitions, in aggregate, form the Pricing Catalogue. In the static pricing scenario, once a prospect selects an offer, its price must be bound to the order. This option enables companies to keep future offer and price changes from affecting present customers. The Pricing API covers both service and resource pricing via their association with products (e.g., both data services subscriptions and purchase of an end-user terminal device). The API will allow the expression of the pricing rules or algorithms that will be used to calculate all fees, be they for product or equipment purchase, service installation, recurring subscriptions, service usage fees or cancellation fees.” (quote from the Original Java Specification Request (JSR) http://www.jcp.org/en/jsr/detail?id=251)

This evolution, which Highdeal considers to be inevitable, will be facilitated on the technical level by the gradual opening of information systems, spurred by XML, Web Services and service-oriented architectures (SOA). Communication between platforms becomes an operational reality, whether it involves customer care, billing or general ERP systems (SAP, Oracle), or even application servers (IBM, BEA).
“ Before there were no real alternatives to the monolithic billing systems, which provide limited pricing capabilities. With the next generation of pricing tools, operators will gain in flexibility and response time while substantially reducing their initial cost of investment,” says McNierney.
Instead of the usual 45 days for implementation, new service pricing can be produced and deployed in a matter of days. The global approach is completely different: from simple bandwidth providers, Telcos will up their rank to become broadband service providers, linking voice, video, content and applications. Operators who cling to their traditional role as “bit pipes” will be relegated to the sidelines and face shrinking profit margins. Offering telecom network access is commonplace and no longer enough to retain the customer.
The Pricing API will serve as an interface between back office software solutions and front office processes and systems to support these industry changes and translate them into operational terms. The practical applications for operators include new voice or data service provisioning, for example, or the ability to offer parents control, online and in real time, over their children’s telecommunication consumption: speaking on a mobile phone, watching a video on demand, accessing multimedia portals…
Liberated from the constraints of today’s cumbersome BSS/OSS operating systems, the new flexible, component-based structures will give service providers the freedom they need to innovate.

OSS/J in brief
The OSS through Java Initiative ("OSS" stands for "Operations Support Systems") produces a standard set of Java technology-based APIs based on organizational models established by the Telemanagement Forum consortium. The project, backed by leading companies such as BEA, British Telecom, Covad, Highdeal, Motorola, NEC, Nokia, Nortel, Sun and Vodafone, is designed to support telecommunication operators’ business and technology goals.

For more about OSS/J, please consult the project website at www.ossj.org