With the launch of new technology infrastructures such as IP-based multimedia systems, increasing competition and customer churn, OSS and BSS have emerged as key elements of an operator’s network. OSS primarily refers to specialised software that helps a telecom network support various components within the system, such as network operations, service management and provisioning services. BSS usually refers to software that deals with customer support processes, billing services and fraud management.
According to Frost & Sullivan, OSS/BSS solutions have for decades played an integral role in business communications. The systems help in streamlining operations and implementing service fulfilment. They ease assurance and billing processes like service quality monitoring, network management, service activation, billing and customer relationship management. Today, OSS/BSS solutions have evolved from being merely back-end support to being part of the service. OSS/BSS applications are being used extensively to manage complex networks and IT infrastructure, service delivery and customer support.
Therefore, telecom operators are either undertaking large transformation projects or a more measured approach to augment and update select operational processes and systems. Regardless of the methodology involved, telecom operators across the globe have invested large sums of money in revamping their OSS/BSS solutions. The key growth drivers for OSS/BSS are the increased demand for data services, market competition in Europe and North America, wide-scale deployments of universal mobile telecommunication systems and the growing focus on customer experience.
Market size
According to Mind Commerce, consolidated OSS/BSS revenues will grow from $17 billion in 2011 to $39 billion in 2016, witnessing a compound annual growth rate of 18.3 per cent. Meanwhile, as indicated by Visiongain, the global OSS market will reach $11.2 billion by end-2012.
According to the report, “Next Generation Network OSS/BSS Market and Forecast 2011-2016”, released by Eogogics, Inc., the global OSS/BSS space has close to 400 vendors, most of which specialise in niche areas and have a strong services arm. As per the report, OSS/BSS vendor categories include pure OSS/BSS vendors providing comprehensive solutions, composite vendors, skill-set-extension solution providers as well as core strength concentrators.
According to Eogogics, Inc., in conformance with the trend over the last decade, traditional OSS functions will grow faster than traditional BSS functions. Among the traditional OSS functions, inventory management will register maximum absolute growth in terms of revenue, followed by provisioning and service activation and network planning and engineering. This, the firm says, is a clear indicator of intense roll-out activity.
Further, revenues from billing and customer care, and mediation will grow at a lower-than-average rate while revenue assurance will emerge as the fastest growing BSS function.
Key trends
Over the past year, the global OSS/BSS space has witnessed extensive merger- and acquisition-related activity. In September this year, for example, Ericsson announced the acquisition of a Canadian company, ConceptWave, in an all-cash transaction. The latter provides software solutions to telecom operators.
In July this year, CSG Systems International, Inc. announced the acquisition of Ascade, an independent Swedish software company that provides trading and routing software solutions. The total cost of the acquisition, excluding transaction fees, was approximately $19 million.
Meanwhile, Nokia Siemens Networks has reached a definitive agreement with Redknee to take over its BSS business. Approximately 1,200 employees will be transferred to Redknee as part of the deal. Nokia announced the acquisition in early December 2012 and the process is expected to be completed by June 2013.
Region-wise trends
As per Eogogics, Inc., the Asia-Pacific (APAC) region will witness the maximum growth in this segment in terms of revenue. In terms of percentage share among geographical regions, the Central America-Latin America (CALA) region will witness maximum growth.
According to Research and Markets, the strong growth in the OSS/BSS segment in the APAC region can be attributed to the fact that service providers in this region are facing a changed market scenario. The falling ARPUs for voice, increasing demand for mobile internet, increased convergence and intense competition are necessitating operational efficiency, combined with innovation in rolling out new data services. In this context, OSS/BSS will help support operators’ day-to-day processes. Hence, telecom service providers will most likely deploy OSS/BSS tools like unified real-time rating/charging, integrated network management, data analytics and business intelligence, and customer experience management to meet changing customer and sector demands.
Meanwhile, North America will continue to be the largest market for OSS/BSS solutions, according to Eogogics, Inc. While the region will have fewer new network roll-outs, it will continue to register substantial customer additions. The APAC and CALA regions are likely to witness significant activity on both fronts while modest activity is foreseen for the Europe, Middle East and Africa (EMEA) region.
According to industry estimates, the global market for external spending on telecom operations management systems, including BSS, OSS and next-generation service delivery platforms (SDPs), grew at a rate of 4 per cent in 2011-12. Worldwide, external spending on OSS, BSS and next-generation SDP solutions accounted for $47.2 billion in 2011.
The global convergent charging market, including software and services, is forecasted to grow to $3.9 billion by 2016. APAC and EMEA are the leading regions for convergent charging activities, together accounting for over 80 per cent of the total revenue in 2011. Network upgrades to technologies such as long term evolution (LTE) are driving the investment in convergent charging. Operators are expected to spend a cumulative amount of $14 billion over the next five years on convergent charging software and services.
Key players and growth drivers
According to Knowledgefaber, the top 10 players in this field hold about 45 per cent of the market share while the top 100 players account for a 95 per cent share. However, the firm adds that a clear market leader cannot be identified as most companies cater to niche markets and offer specialised services. Some of the key players are Amdocs, Redknee, CSG International, Telcordia, Axiom Systems and Ericsson.
Faced with rapidly falling ARPUs and wafer-thin margins, operators are increasingly opting for cost-effective OSS/BSS solutions to ensure streamlined business processes and reduced system usage costs.
Moreover, OSS/BSS help an operator’s network to accommodate increasingly popular but bandwidth-hungry value-added services such as mobile television and video SMSs. Deploying OSS/BSS would mean that the operator does not have to focus on continuously modifying or upgrading its systems.
Knowledgefaber is of the view that new technologies such as 3G and Wi-Max have resulted in increased complexity in operations and billing, for example, authentication and handoff, network management, dissimilar network roaming that aligns goals for network operation, and user experience. This improves the business case for OSS/BSS solutions.
Issues and concerns
•Legacy systems: Until recently, telecom companies had been deploying systems as per their requirement. The vendors and products varied across circles in many cases. In this context, system integration becomes an issue due to the absence of a standard framework or language across circles.
•Shrinking IT budgets: Telecom operators have reduced their IT budgets, which has impacted new system installations and upgrades for OSS/BSS.
Future road map
According to Visiongain, operators are likely to consider a converged and holistic OSS infrastructure as a viable method for reducing operating expenditure and maintaining a competitive edge. Going forward, service providers are expected to undertake transformative OSS projects during 2012-17, bringing about radical changes in the OSS market and, by extension, in the overall customer experience.
With the launch of new technologies such as software-as-a-service and cloud computing, industry analysts are hopeful that OSS/BSS solutions will help service providers in optimising operations.