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Accommodating growth: How operators can get ready for the LTE future

KT Korea has purchased 500,000 NFC SIM cards from Morpho

Growth in the Long-term Evolution (LTE) market is accelerating. Operators are moving forward with plans and auctions taking place, helping the technology to become a global standard. As of August this year, operators had launched 24 commercial networks in 16 countries worldwide. Only one year ago, the total was three, and the number is expected to grow to 71 by the end of this year, according to the Global Mobile Suppliers Association (GSA).

Today, according to analyst In-Stat, more than half of all new network deployments are LTE based. The firm predicts the US will see the biggest increase in LTE based subscriptions, with growth of 2,100 per cent from 2011 to 2015.

While the ongoing economic downturn may have slowed market growth a little, the appetite of subscribers for the latest smart phones and mobile devices remains largely undiminished. More bandwidth is therefore required to accommodate this growth and that in turn is driving the uptake for LTE.

Challenges Ahead

However, many questions do remain about the future of the technology – not least how are legacy services like voice and SMS going to be rendered? With the focus of the new LTE world on mobile broadband, operators will need to support these next-generation solutions while continuing to support 3G, 2G and, where appropriate, CDMA devices. This will inevitably result in growth in the number of devices and SIM cards moving through distribution channels.

As mobile broadband expands, developing competitive services and points of differentiation will be increasingly critical to operators in winning market share.

A significant proportion of new mobile broadband subscribers are prepaid. The anonymous nature of this payment method makes it hard for operators to engage with these subscribers, particularly if they are using the pre-provisioning model common in most markets.

Some operators are already moving away from pre-provisioning for their 2G and 3G services, and instead adopting dynamic provisioning. This is an approach that delays network provisioning and the allocation of resources to SIM cards until the point of first use. Importantly, it also enables an on-device interaction with the user at that point. Dynamic provisioning therefore gives operators an immediate opportunity for engagement, interaction and dialogue. Using this method allows them to gather the missing information they need and deliver tailored marketing messages and promotional incentives to new subscribers.

As LTE and mobile broadband drive the development of a wider range of devices, the ability to make this interaction, both device and location aware, is an important part of a competitive strategy.

As Susan Welsh de Grimaldo, director of the Strategy Analytics Mobile Broadband Opportunities (MBO) service, highlights: “in 2014, almost half of mobile broadband net subscriber additions will be on devices other than mobile phones.”

Operators need to know that there is a significant difference between the kind of interaction suitable for a user with a feature phone connected to a GPRS network, and that appropriate for a LTE-network connected tablet with large colour screen and multi-touch capability. If the operator wants to provide the best possible user experience, it needs to understand the nature of each device with which it is engaging – whether a GPRS connected feature phone or the latest state-of-the-art tablet.

With Dynamic SIM Allocation (DSA), operators can tailor the sign-up and products offered depending on the device type and/or other factors like location. They can use the capabilities of the browser on the device to explain tariffs and options clearly – reducing confusion and increasing customer satisfaction. And they can offer relevant promotions – including operator-supporting two-sided business models and advertising.

The ability to offer personalisation is further enhanced by recent upgrades to DSA which allow operators to engage with prepaid subscribers not just at the point of first use but also through the lifetime of the contract to offer vanity number selection, new tariff options or service upgrades. For operators, one of the key benefits of delivering this level of personalisation is that it helps them keep churn rates under control.

Boom in Connected Devices

Sophisticated connected devices are thriving, and this will accelerate as LTE is deployed. The proliferation of these devices offers a great opportunity to transform the way that operators market themselves to mobile subscribers by changing the nature of the user interface. For example, users of connected devices can automatically be taken to an easy-to-use web portal or landing page that they can personalise according to their specific requirements, allowing them to choose suitable tariffs, price plans and data limits. This browser-based approach also opens up opportunities for the operator to promote its brand more effectively and to deliver high-impact and highly persuasive marketing campaigns.

The other problem with the existing pre-provisioning models, when it comes to supporting increased numbers of SIM cards, is that every card will require space on the HSS and other key network elements. This not only reduces available capacity, it is also extremely expensive.

The operator will typically be forced to make a large upfront investment both in the cards and in the network space they occupy. To add to the problem, much of this investment ends up wasted because a significant proportion of SIM cards shipped are never used.

Pre-provisioning can also lead to an uneven distribution of SIM cards across vital elements like the HSS. Uniform loading of these elements relies on accurate forecasting significantly in advance of sales, and any variation from forecasts can result in a sub-optimal distribution that may ultimately involve expensive re-homing of subscribers between HSSs.

Assessing the Benefits

The pre-provisioning model does have one important advantage, however: namely, that the SIM works immediately it is in the user’s hands. So, how do operators find a cost-effective alternative that preserves this important benefit?

Dynamic provisioning achieves this by allowing new SIM cards to interact with the provisioning process via the mobile network despite not having previously been provisioned. This means that the allocation of network resources can be deferred until the point of first use.

There is no need, for example, to buy HSS capacity to support SIM cards that are inactive in the supply chain and uniform loading of HSSs can be ensured by appropriate selection when the SIM is first used, rather than weeks in advance.

In commercial terms, the main benefit is that this new approach allows operators to eliminate upfront costs they would typically incur if using the pre-provisioning model. In particular, it helps them avoid the requirement to buy and commission more network platforms than are actually needed, simply in order to accommodate SIM cards that may never be used nor generate any revenue.

Operators who are implementing systems and processes for LTE should seize the opportunity to implement dynamic provisioning and optimise their logistics. The ideal is to deploy a dynamic provisioning solution that supports integration with 3G and LTE networks and build processes for allocating resources appropriate to the devices and networks used.

Positive Prospects

The dynamic growth in LTE networks and consequent rapid increase in the volume of mobile broadband and connected devices is presenting opportunities to wireless operators to drive incremental revenues.

However, it also brings challenges including the requirement to effectively manage the dynamic growth in SIM card volumes and associated issues of cost and capacity and the need to handle the dramatic increase in end users opting for pre-paid subscriptions as mobile broadband becomes ever more popular. Consequently, they will need to engage proactively with end users to deliver exceptional quality-of-service and high-impact marketing campaigns and promotional incentives.

With the availability of dynamic provisioning solutions, operators are well placed to address these challenges, capitalise on new market opportunities and face the wireless future with confidence.

Thad Dupper is chairman and CEO, Evolving Systems


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