A complex task ahead With data services usurping voice as the profit engines in the developed markets and operators losing absolute control over end users, a buyer’s market has emerged in the telco space, where user perception and experience are the predominant yardsticks of operator quality. However, user opinions and demands are quite diverse and individualized, so operators now seek innovation and/or transformation just to stay afloat.

Traffic operation requires transformation in three areas, a process where the precious resource in the operator’s hand changes from voice to mobile bandwidth. One area involves the operational transformation from voice to data, while another encompasses a shift in the optimization process from network-KPI orientation to a customer experience focus. And finally, operators should open up their value chain by attracting service providers (SPs) and content providers (CPs), with all working together to provide end users with a diverse body of applications and content.

However, these aforementioned transformations are not all there is. Successful traffic operation also entails an architectural change in the operator’s business management system that makes it much more responsive and accommodating to users’ demands. It also requires the refined management of mobile network traffic, to a user-level granularity, so that bandwidth resources can be controlled and commercialized. However, it should be noted that realization of the core concept of traffic operations means far more than just a few technical adjustments or even overall upgrade/evolution, it means the prompt fulfillment of end user wishes, while monetizing the bandwidth/traffic involved, and the key to this is traffic that effectively and precisely tallies with end user needs. In other words, what is needed is assurance of an end user experience that excels, through traffic operation.

What this all means

Many subscribers are cautious about consuming traffic, so an accurate and transparent charging modality is needed with real-time consumption updates as well as basic bandwidth assurances. With these in place, users will be more convinced that they are in fact getting what they pay for, and some will prove willing to pay more for premium access and quality guarantees. This means differentiation and, hence, monetization.

In more technical terms, operators must fully capitalize on their pipe advantages so that traffic becomes entirely manageable, controllable, and operable, so that they can implement user-centric traffic management for service quality assurance. Operators can fully converge and analyze service data that relates to users’ identities and parse their interests from it to recommend related services accordingly, so that data value increases as well as volume. Once traffic assets are matched with user requirements (based on user behavior analysis), the process of traffic operations becomes a completely closed loop where users’ needs are discerned, with the relevant services promptly designed, delivered and charged, and feedback is monitored afterwards.

Huawei VGS

Huawei helps bring this traffic operations loop into being with its Value Grow Solution (VGS), which delivers the following key benefits.

Resource visibility and user behavior analysis

Identification and management of traffic for different networks, subscribers, and services; by analyzing user behaviors and preferences, operators can deliver customized and differentiated solutions.

Optimized user experience and cost reduction

Thanks to a more intelligent and reliable operational model, end users can subscribe to online services immediately via a variety of devices, and the system can recommends more tailored services shortly thereafter. The greater system intelligence and reduced manpower involved also minimize CAPEX and OPEX in terms of administrative management, service launch, maintenance, and equipment migration.

Service lifecycle management and efficient operation

Even as traffic increases for a particular user, operators can still respond rapidly to the particular demands involved and recommend suitable services accordingly, making for a complete service lifecycle that includes product definition, product quotation, customer experience, customer charging, and service acquisition.

Traffic operation models

Global operators are finding their own paths to traffic operations. Vodafone focuses on the commercial value of end users by bettering their service experiences. As users grow increasingly satisfied with Vodafone's network performance, its traffic volume will grow, giving the incumbent a competitive edge. A second approach is to stimulate demand through open cooperation with innovative CPs and SPs, and this has been pioneered by the likes of KDDI and StarHub. These operators have created new online channels and used them to deploy a greater number of applications, monetizing traffic by improving the usefulness of what it carries.

A third model focuses more on leaner operations, and prominent examples here include MegaFon, Telefónica, and Telkomsel. By identifying and segmenting service traffic, these operators can discern user needs and supply relevant services according to location, bandwidth conditions, and time of day; this makes for differentiated services that maximize traffic value. MegaFon, in particular, has embraced traffic operations to its very core, being the world's first carrier to have a traffic operation system that spans its entire network. By leveraging Huawei's VGS solution for real-time charging, flexible data service charging, and differentiated traffic control, MegaFon has successfully combined its sales of both services and traffic. Thanks to the proliferation of its bundled service packages, including its fair usage, suburban area-exclusive, mail, sporting event, and Opera Mini data packages, MegaFon’s growth is thriving in terms of both service revenue and subscribers. Also notable are MegaFon’s charging reminders (so that subscribers avoid bill shock), as is, of course, Turbo Button, which is now a textbook example of traffic monetization, as it allows subscribers to temporarily purchase extra bandwidth for intensive activities such as HD video streaming. Through these assorted measures, MegaFon is now the second largest operator in Russia, ranking first in the data market nationwide (Q3 2012) with a 36% market share.

However, what worked for one operator may not necessarily work for another, given the broad diversity out there in terms of network development and coordination between elements. China Unicom and China Telecom are both aggressively trying to boost traffic volume, while China Mobile is committed to the convergence of its TD-SCDMA, LTE TDD, GSM, and WLAN networks, which should lay a solid foundation for traffic monetization. Despite these disparities, all three titans are endeavoring to improve their traffic visibility and user behavior analysis so that user-centric operations come into being.

Traffic operational changes are carried out on the three aforementioned fronts, but each front goes through two phases - traffic boosting and traffic monetization. At present, most operators are still in the first, trying to stimulate traffic consumption through better services and experiences; but later, they will explore the commercial value of traffic, at least more intently. This is why operators should prioritize precise management of network resources and their better alignment with end users. In other words, traffic must be managed with user-level granularity if operators hope to win in the data era.

Huawei offers a customized solution that helps operators excel in both phases. Huawei VGS empowers operators and end users with alternatives, such as installation of the built-in client on users' mobile terminals. Through this client, operators can promote real-time charging rates, packages, and services. By analyzing user behaviors and preferences, operators can offer customized services and, therefore, propel traffic consumption. Huawei also keeps operators well informed about legacy network status, user behaviors, and potential value, so as to ensure premium service quality and configure/recommend personalized offerings, in real time, accordingly.