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Heavy Reading Research

Pure-Play Policy Market Is Dead

The pure-play policy management market is dead. That does not mean policy management is not important; it is absolutely critical for service providers. However, more and more service providers are looking to vendors that can include policy as part of charging and billing to enable a more flexible array of service plans that can be personalized and can operate across service silos and lines of business, including wireline and wireless services. In light of a recent slew of acquisitions – Oracle acquiring Tekelec, Cisco buying Broadhop, Amdocs buying Bridgewater – the market has been constantly moving toward the scenario I discussed way back in 2011, when I predicted the demise of this market "within the next two to three years." (See Pure-Play Policy's Future Is Fading.) Next in the acquisition lineup is Openet – a company I believe will be bought in the next 12-18 months. Many suitors have looked at Openet over the past few years, and it is now just a matter of time before the expected happens. Why is a policy management solution such an interesting component for a BSS/OSS vendor to have as part of its portfolio? We at Heavy Reading have done extensive work in this space. Some key highlights from a recent study make it abundantly clear that charging and policy integration is a must-have for service providers to maximize their revenue potential from 4G LTE and data services. According to a recent survey by Heavy Reading, more than 85 percent of service providers admit there is continual pressure from their marketing departments for innovative data pricing plans, with the majority of respondents stating that their companies cannot enable innovative data price plans because of IT limitations. 70 percent of operators surveyed/interviewed believe that lack of integration between policy management and billing systems is the key challenge that inhibits their ability to support the types of innovative plans requested by their marketing departments. The second-highest identified reason is the lack of real-time transaction management capability. The vast majority of respondents from Europe, North America and Asia/Pacific (100, 90 and 80 percent respectively) said their companies see a need to integrate charging and policy management capabilities, while 40 percent in Latin America agreed. Asia/Pacific operators that displayed some resistance in our "Phase 1" survey in 2011 are now more receptive to policy and charging integration. So what's next, you may ask? I believe the next evolution in this space is the integration of policy and charging with advanced analytics. As operators move forward with their interest in policy and charging, they should keep other lines of business and parts of the back-office in mind, as it will be crucial that they all work as a whole. Service providers that already have or are implementing an analytics solution should ensure it is closely aligned with their policy management and charging solutions. An analytics-driven approach to policy management and charging will help enhance customer experience by building services, taking into account subscriber behavior and creating and launching personalized offers to customers based on the analytics. — Ari Banerjee, Senior Analyst, Heavy Reading
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