Analytics Holds the Key to Cable's Future
As interdependencies between vast and complex systems grow -- and as competition increases -- revenue assurance has become vital to ensuring that cable businesses run profitably, and that subscribers are billed accurately and fairly. While revenue assurance currently is seen more as a short-term tactical measure, it has the potential to take on a far more strategic role, driving completely new and innovative business models in the cable industry.
Data hungry and spoiled for choice
If you look at the market forces currently driving the direction of the cable industry, there are a number of key factors to consider. On the one hand, operators are being forced to build out their networks to support increasingly data-hungry subscribers, who not only want more data, but also want it faster than ever before. Cisco Systems Inc. (Nasdaq: CSCO)'s Visual Networking Index (VNI) forecasts that global IP traffic will grow at a compound annual growth rate (CAGR) of 23% between now and 2019. Furthermore, it predicts that video will account for 80% of that traffic.
This surge in video traffic is largely being bolstered by the continued uptake of OTT services, such as Netflix and Amazon Prime. These new competitors are eroding cable operators' core revenues as subscribers cut the cord and abandon fixed-term rigid packages in favor of flexible pay-as-you-go video services. Illustrating the scale of this threat, Juniper Research forecasts that we're about to see a surge in OTT subscriptions, which will grow from 92.1 million last year to 332.2 million globally within the next five years.
Can I get a gigabyte to go?
If they want to remain competitive in an increasingly tough market, cable operators need to design the customer experience around subscribers, in the same way that OTT providers have brought their services to market. Fixed-subscription packages have had their day; customers now want choice and flexibility. As such, operators will need to transition towards usage-based billing models that enable subscribers to consume the content they want to, while only paying for the data they use. In effect, data will be consumed in the same way we consume other utilities, such as gas or electricity.
In order to support this new business model, the ability to capture and process highly accurate and granular subscriber usage data will be essential. The good news for operators is that the information they need to do so is already present on their networks; they just need to find a way to unlock the insights that it contains and integrate this with their service assurance function.
Fusing Internet Protocol Detail Record (IPDR) data with customer care, network and application data gives operators a detailed summary of subscriber usage to deliver highly accurate "billing-ready" data. This can be fed directly into billing systems to ensure that the balance on subscribers' accounts is accurate; preventing revenue leakage for the operator and ensuring a fair charge for subscribers. One Tier 1 carrier in North America is using this approach to identify subscribers that are abusing its data plans by using apps to hide their activity in order to steal more LTE tethering data than they are entitled to.
As a further advantage, these insights can also be used to create a 360-degree view of the customer experience, helping operators to manage consumption and allocate network resources to support subscribers more effectively. By reconciling subscriber consumption data with billing and operational information, operators can identify and rectify any inconsistencies between what's being used and what's being paid for. Having this visibility into customer usage is invaluable for care teams when it comes to resolving billing disputes. When a customer calls in to question a charge on their account, the care team will have a detailed overview of their usage over the billing period; enabling them to identify an error and rectify it, or to explain the reason for the charge with confidence in instances where the customer has incurred the charge legitimately.
Getting in the fast service lane
Of course, these changes can't be implemented overnight. Traditionally, revenue assurance teams have been hampered by a lack of timely and accurate information, with much of the process being manual. This reduces the speed with which it can be accomplished and increases the margin for human error. Implementing automated systems and processes that work in real time can both accelerate the delivery of data and ensure that it is processed accurately. This will ensure the delivery of high-quality, actionable operational intelligence for revenue assurance. It will also be important to bear in mind that these systems and processes must be fully compatible with next-generation network technologies, such as DOCSIS 3.1 and CCAP, which will be essential as operators race to boost capacity to support the growing demand for data.
Success in the cable industry will ultimately be driven by the ability to create an innovative business model that puts the customer experience first. Operators need to offer subscribers the choice and flexibility that they demand, but at the same time they must be able to manage usage and allocate resources effectively if they still want to turn a profit. As such, revenue assurance will no longer be a tactical measure, but a key strategic business function. Yet to achieve this operators need to evolve by harnessing data analytics and integrating it seamlessly with their infrastructure and back-office systems in order to avoid introducing greater complexity and safeguard the customer experience.
— Chris Menier, Vice President, Products and Strategy – Cable & Media at Guavus Inc.