The sophistication of smartphones and netbooks coupled with the explosion of person-to-person, video and gaming applications that ride on these devices presents a major challenge for telecom companies, which are struggling to accommodate the exponential increase in traffic over fixed and mobile networks.

Operators have started the process of migrating from flat rate pricing to value-based billing. For instance, AT&T has shifted from the all-you-can-eat data plans to usage-based plans. Verizon has also moved away from flat rate pricing plans as its networks were getting stalled due to the increase in data traffic.

According to a Yankee Group research in 2009, 57 per cent of operators were of the opinion that flat rate pricing has become unsustainable. A part of the problem is the fact that bandwidth is already constrained and is becoming more scarce with the increase in all-you-can-eat subscribers. For instance, according to the analyst firm, a carrier experienced a 492 per cent year-on-year growth in traffic while realising a revenue increase of only 60 per cent. Clearly, the huge volume of data is burdening operator networks and the installed OSS/BSS.

As operators move to value-based billing and attempt to strike a balance between customer usage and the increasing traffic volumes, they have three options for dealing with the rising tide in network traffic. These are: building more capacity, striking deals to carry a portion of the load and incorporating ways to optimise the available capacity. Policy management and control can help operators manage traffic, and can be coupled with a real-time rating and charging engine to allow customers to take control. With this tool, operators can define how and when their services will be used. Over the past one year, this tool has moved up the stack in the OSS domain and has witnessed considerable growth in scale as well as scope. The policy server market was valued at $289 million in 2009 and Infonetics estimates it to reach $1.6 billion by 2014 from about $471 million currently.

The Yankee Group defines policy management and control as a centralised software that performs functions such as subscriber authentication and access control; customer self-provisioning; service creation and deployment for network administrators; and communication of subscriber profile data to BSSs and OSSs. The policies are enforced in the network layer, and there is a very clear line between policy management and policy enforcement.

While traffic management remains a key driver behind policy management deployments, operators are increasingly implementing policy solutions to better monetise their networks. They are doing so with tiered services and subscriber control capabilities, especially in emerging markets where low ARPUs have forced operators to focus less on bandwidth management and more on incremental service revenues.

Policy management solution development 

Key vendors in this segment are of the view that the subscriber and resource control intelligence layer should be centralised to avoid the creation of new silos in the network. This approach has laid the foundation for a next-generation service that consists of an independent policy control and management solution, which is closely networked with a consolidated subscriber data management solution. With the rapid uptake of technologies like long term evolution, it has become critical for network operators to prevent the proliferation of subscriber data silos.

In fact, operators’ demand for solutions that enable enforcement and management at high volumes is driving vendors to develop solutions combining application identification, and the policy and charging enforcement function. These enable mobile operators to enhance the user experience, optimise bandwidth and identify additional revenue opportunities within their mobile broadband services.

OSS can also contribute to policy by collecting metrics and key performance indicators that can be used to determine policy decisions. Moreover, OSSs can be used to implement policy decisions like disabling a service that is being used in a fraudulent manner.

Policy is also a segment where the network and OSS functions converge. As the policy and charging control (PCC) solution provides traffic management services, OSSs will need to monitor these services to ensure that the policies are having the desired effect. On the BSS side, policy control gets integrated with rating and charging, so that the financial aspects of policy can be worked in properly. It also requires the customer management side to provide customers the information to make informed decisions about mobile data and voice plan usage.

A customer-centric approach to this tool is also important to monitor customer satisfaction levels, resources and long-term business sustainability. Effective and customer-focused policy management should involve three components – a customer usage identification and data collection function to understand the type of services in use; a policy definition and management function to enable both operators and customers to customise the way a pricing package is used or a service is accessed; and a policy enforcement function to apply defined policy rules. Over the past two years, a small but increasing number of service providers have implemented business strategies involving policy management integrated with real-time rating and charging, which is possibly the most important constituent as it facilitates a number of business functions used to create services.

Roaming cost control, policy management 

Over the past year, huge roaming bills or bill shock have seen customers unsubscribe to services that many operators are betting their futures on. This forced the regulators to step in and, most notably, the European Union (EU) issued a regulation, which imposes a Euro 50 revenue cap for data roaming subscribers and penalties for non-compliance on communication service providers (CSPs). The regulation requires a change in how roaming subscribers are managed, from an account-centric model (prepaid and post-paid) to a service-centric one. The regulation also lays emphasis on real-time management of data service balances, regardless of prepaid or post-paid, and primarily impacts the BSS layer. It provides an opportunity for CSPs to deploy real-time policy management and charging solutions that will help them differentiate by offering personalised services and price plans. This is critical for CSPs looking to fully monetise mobile broadband services. The PCC architecture can address the EU data roaming regulation.

3GPP standards have introduced the concept of PCC rules, which enable a Policy and Charging Rules Function (PCRF) to execute policies in a dynamic environment. PCC includes two main functions – policy control like gating control and quality of service control; and flow-based charging, including charging control and online credit control.

This PCC architecture extends the architecture of an internet protocol-connectivity access network, where the Policy and Charging Enforcement Function (PCEF) is a functional entity in the gateway node, enforcing dynamic policy decisions based on network usage and resources in real time. In the PCC architecture, the PCEF is informed about how a subscriber is charged but it does not apply the charging. Instead, it interfaces with an offline or an online charging solution – a charging, rating and account balance management function – to implement the actual charging.

In the latest release, 3GPP Release 8, a number of new capabilities have been added including policy peering, which enables policy rules to follow subscribers whenever they roam or use visited networks. This centralises prepaid and post-paid policies and is highly flexible, policies can be added therein to extend solution investment. 

By using policy control, operators acquire the capability to dynamically control subscriber entitlement to a network resource. As networks become more complex, centralised policy controls reduce the administrative overhead of managing and maintaining hundreds of policies distributed across the network, and improve control over the integrity of the policy catalogue