Policy management provides the foundation for service providers’ new horizontally focused services architecture initiatives, sometimes referred to as the service delivery platform (SDP). Simply put, policy management functionality within the SDP comprises the new rules of the road for new IP-based communications networks, as well as legacy networks. It enables service providers to create and deliver more unique value-added services on top of best-effort voice and data services.
Policies are contained in a variety of SDP modules, including real-time charging software that sets conditions on payment limits for prepaid or postpaid accounts; bandwidth-on-demand capabilities that allow a customer to dynamically increase and purchase additional bandwidth for a given large data application; gateways that enable third-party application providers to access service providers’ networks; and rules that enable parents to establish policies for their children’s wireless services, to name but a few. Providing end-to-end control over these policies offers service providers the opportunity to morph their key service offerings by leveraging network capabilities that transform basic voice and data services into more unique and personalized services.
In essence, policy management is one of the key components service providers must invest in to open up their networks to third-party applications providers (i.e., enterprise applications, Web 2.0 applications etc.), and ultimately expand the range of services available to customers. To grow ARPU requires that service providers create a more dynamic ecosystem of applications and services available on their networks.
Policy management also will provide the core functionality that enables service providers to expand business models beyond subscription-based communication offerings into new revenue-generating opportunities such as commerce (i.e., mobile banking services and advertising). With respect to advertising, policy management will enable service providers to create policies or rules, based on customer opt-in preferences, that establish the type (if any) of advertisements that customers will permit to be inserted within their mobile devices or applications. The trusted relationship that service providers establish with their customers enables those providers to retain a unique position in the mobile or IPTV advertising value chain, ensuring their customers will not be bombarded with a slew of unwanted ads.
While the future possibilities for policy management solutions and SDP modules are bright, the current reality on service provider uptake of these solutions is more muted. Today, high prices service providers charge for premium content/data services and their further reliance on conventional business models (i.e. subscription-based models) has limited customer demand for premium data offerings. This muted uptake of advanced data services in turn limits a service provider’s need for policy management solutions. New advertising and commerce-based business models offer the possibility for service providers to stimulate demand for data services that policy management offerings help enable. However, Yankee Group expects advertising and commerce will help supplement and grow ARPU rather than replace data and voice revenue as service providers’ primary revenue base. Establishing supplemental revenue streams is still crucial for service providers to adapt and profit from a changing communications market rather than risk becoming a marginalized party in the IP communications value chain, however.
The future of policy management thus will be inextricably tied to how well and quickly service providers adapt their businesses and collaborate with a whole new range of business partners.
Sharon Ballard is a senior analyst at the Yankee Group. She can be reached at sballard@yankeegroup.com.
Find out more about SDP and how it relates to IMS, SOA and Web 2.0, by reading “SDPs PDQ: Why New Service Creation Platforms Do It Better, Faster, Cheaper” in the August issue of xchange.
Yankee Group www.yankeegroup.com
