The telecom scenario in India is undergoing significant changes. Operators are moving away from vanilla voice services and focusing on data revenues to achieve the next level of growth. Also, with the advent of 3G and the awaited launch of broadband wireless access (BWA) services, the price-based competition is expected to end, and service quality and customer experience are likely to become the key focus areas. In the backdrop of these developments, the operation support system/business support system (OSS/BSS) segment is at the top of the priority list of Indian telecom companies. With the emergence of mobile number portability (MNP), the uptake of sophisticated value-added services as well as high-end applications like videoconferencing and internet protocol television, a state-of-the-art OSS/BSS system is essential for effective functioning of operator businesses.

OSS primarily refers to computer systems used by telecom operators. The term is used to describe specialised software, which helps the telecom network deal with various components within the system such as network operations, service management and service provisioning. BSS, on the other hand, encompasses customer support processes such as customer care, billing services and fraud management.

The growing need of operators to streamline processes related to network management, billing, inventory management and customer relationship management suggests that OSS/BSS solutions will gain significant traction in the future. The advent of next-generation networks is also driving the need for OSS/BSS systems as there is greater service diversity. The role of OSS/BSS is becoming more strategic in nature and is being looked upon as a tool for creating differentiating capabilities in the industry.

Market size and key players

As per Frost & Sullivan estimates, the OSS/BSS market size in the country is expected to grow from $638.1 million in 2010 to $1,992.7 million in 2017, registering a compound annual growth rate (CAGR) of 17 per cent. As per Gartner estimates, the OSS/BSS and service delivery platform (SDP) market is estimated at around $2.3 billion as of September 2011 and is poised to grow at a CAGR of 6 per cent. Also, as per Gartner, the Indian market registered a 10-12 per cent year-on-year growth for the past five years, which is significantly higher than the global CAGR of 6-7 per cent. This maturing domestic market is the key thrust area for the IT industry.

The key vendors managing the OSS/BSS platforms for telecom operators include IBM, Wipro, TCS and Tech Mahindra. In the past few years, IBM has emerged as a clear market leader, followed by Wipro, TCS and Tech Mahindra, which are expected to drive the next wave of innovation in the market.

Other vendors in the market include Comverse, Amdocs, Telecordia, Telesoft, Subex, Oracle, Intec, Ericsson, Congos and Comptec. Amdocs delivers services to Vodafone; IBM’s services are deployed by Idea Cellular, Vodafone, Mahanagar Telephone Nigam Limited and Bharti Airtel; Intec’s operator clients include Reliance Communications (RCOM), Tata Teleservices Limited (TTSL) and Bharti Airtel; Telcordia supplies real-time charging systems to TTSL, Idea Cellular, Aircel and Uninor; and Subex’s clients include TTSL, Airtel, RCOM and Idea Cellular.

The Indian OSS/BSS market is crowded with a number of small vendors. The top 10 OSS/BSS vendors hold less than 50 per cent of the total market share. This has led to intense competition and pressure on profit margins. According to industry analysts, the highly fragmented Indian OSS/BSS market is expected to go through a consolidation phase.

Trends and developments

The OSS/BSS market has gained significant traction over the past two-three years. The underlying telecom infrastructure is changing with a move towards next-generation networks. This, in turn, is fuelling the demand for a more sophisticated OSS/BSS framework. Today, OSS/BSS is playing a critical role in operators’ businesses – from the complete life-cycle management of customers to revenue management and enhancement.

With the introduction of 3G and the upcoming launch of BWA, the focus has shifted from voice to data services. The billing and charging dynamics for data services are more complex as compared to that of voice. Factors like pricing plans based on volume, speed and application need to be taken into account while formulating the billing details. This necessitates significant investments in billing, inventory management, customer relationship management (CRM) and network management functions.

Operators are now keen on customer retention rather than new customer acquisition. The existing long-term customers are the potential adopters of high-end services. “Operators are intensely sensitive about infrastructure performance and also want to build and sustain a trusting relationship with end-users. Therefore, developing a more customer-focused organisation will rely on support from OSS/BSS systems,” says Dhananjay Pavgi, principal consultant and head, portfolio management group, Tech Mahindra.

Most Indian operators are currently battling thinning margins and stagnant ARPUs. Also, the huge investment by operators in licences, spectrum payouts and upgradation to new technologies has left them cash strapped. This has increased their focus on bringing down operational costs and increasing efficiencies. OSS/BSS is being looked at as a medium to improve operational efficiency, revenue margins and customer experience. Telecom companies are turning to OSS/BSS vendors for cost-effective solutions to streamline processes and make system usage cheaper.

Among the various OSS/BSS segments, customer management – CRM  and billing –  is the largest contributor to revenues. While CRM is the most sought after, billing contributes significantly to customer management OSS/BSS applications. Other leading applications are network operations management and emerging services like SDP. Applications like network operations management have gained momentum due to the increased requirement of customers for a superior quality of service. Another key trend is the operators’ shift from silos of fragmented systems to a seamlessly integrated enterprise application that can connect customer usage with billing.

Telecom service providers are now focused on offering value to both the users and partners in the data area, particularly mobile data. “Users have become much more demanding and selective in what they will pay for; meanwhile, operators have been looking at generating profits from mobile data. So, the challenge is to manage network efficiency, plan for and implement network expansion, develop attractive services, and create new business models – all at the same time. Operators are resolving these challenges by using OSS/BSS to manage and plan the network more efficiently while differentiating themselves by developing innovative services and providing powerful capabilities, such as charging to third parties,” says Anuj Kapur, country manager, India (SDS), Telcordia.

In terms of business models, strategic outsourcing has emerged as the dominant model followed by business transformation and application maintenance services. Strategic outsourcing enables telecom operators to significantly reduce the time to market new services and formulate competitive marketing strategies by freeing their resources to work on the most important aspect of their business – the subscribers – and not on back-office operations. In addition, in a low-ARPU market like India, the outsourcing of operations also results in significant cost savings.

The growing trend of adopting the managed services model for network operations is also acting as a boon for the OSS/BSS market. With core network managers employing OSS/BSS solutions, the customer net of vendors would increase. This would help in the integration of processes, with experts in managed services taking decisions regarding new deployments and upgradation of solutions.

OSS/BSS solutions are also expected to play a critical role in the convergence of various platforms and devices. With machine-to-machine communication being seen as the next level of innovation in telecom services, OSS/BSS will become highly relevant in dealing with the complex management of these systems. “OSS/BSS solutions have advanced to handling billing and customer acquisition for multiple services on a single platform, making convergence a reality. Operators now have to manage a single system instead of multiple stand-alone systems,” says Pavgi.

On the technological front, a key trend has been the introduction of real-time policy and charging. The real-time charging model has been in use for some time and has provided users with innovative features such as per-second billing, per-character SMS and dynamic pricing. Going forward, this model will help in delivering tailor-made mobile broadband services, bringing down the price of services and hence, increasing usage. This technology allows service providers to offer low-price plans, with an affordable upgrade option to add new features or provide higher speed access. It would also allow the introduction of special offers or discounts to promote new services, new devices or particular web services.

“Personalised policy and charging are going to completely change the way service providers create offers and take them to market. This will also lead to a transition in the business models and partnerships between operators and OSS/BSS vendors,” says Kapur.

In the future, BWA services are likely to make the legacy charging and billing infrastructures redundant as those solutions would not be able to support real-time charging and balance management. “Operators would need to invest in building a converged billing system, which handles both voice and data services, providing support for prepaid, post-paid and real-time payments on a single platform,” says Pavgi. The trend of flexible charging and rating systems, which enable operators to offer flexible pricing and promotion models, is likely to gain traction. Also, network-independent and standards-based platforms, which facilitate easy evolution to new networks, would be required to support services across any type of network.

The way forward

Operators are increasingly focusing on customer retention, especially of high-ARPU subscribers. With the launch of MNP, the bargaining power of customers has increased immensely. Also, the pressure from users demanding better coverage, better speeds and proactive customer care solutions is giving a huge impetus to OSS/BSS uptake. With intense competition eating into operator margins, accurate and effective billing solutions are mandatory for safeguarding revenues and ensuring customer loyalty. These factors are set to drive the demand for enhanced OSS/BSS solutions.

Going forward, operators need to shift their focus from legacy billing systems to broader and integrated business processes and functions, which can improve customer satisfaction. Customer retention will be a key factor governing future OSS/BSS deployments.