A 5G paradigm shift in monetization models

This article was written by STL, a member company of TM Forum. As we step into a new decade, there’s an increasing understanding that 5G will bring in an all-pervasive 360-degree transformation -- from networks to IT, from mindsets to toolsets, from controlled growth to disruptive explosions. The most profound and awaited change will be driven by partnerships, collaborations, and co-creation in the telecom space. Currently, driven by reseller or outsourcing business models, partnerships are not new to telcos. Leading telcos are already adopting platform-driven approaches to enable co-creation and collaboration with multiple partners, particularly independent software vendors. However, the underlying multi-sided business model requires a complete shift in the way monetization is enabled by these platforms.

5G is proving to be the driving force behind the emergence of multi-sided business models in telecommunication. Getting consumers and partners to pay for services is only the starting point, with gradual progression to fully multi-faceted, multi-tenant models where access, insights and assets would get monetized through partnerships, co-creation and co-innovation.

5G is completely different from the previous generations due to its service-based architecture, meaning the network design and characteristic is entirely based on service design requirements. To extend the change in network to include IT, the business design has to become services focused and the monetization platform must include the ability to model, launch and monetize these services with extreme agility. Traditionally, retail and wholesale billing systems (including partner billing and settlement applications) have been isolated and siloed systems despite their similar functional needs. These included billing, settlement, invoicing, contract management, dispute management, charging, balance management, discount management functions and more. Until now, wholesale billing systems were built around offline, multiple proprietary file format processing of call and event detail records (CDRs and EDRs). This adjunct architecture resulted in: Very often providing a digital interface (like a partner self-care portal) has been unsuccessfully used as a stop-gap-arrangement to manage the partner expectation, without any significant change due to the challenges with the underlying platform. The new experience economy for partnership and collaboration means that:

• High compute cost after having to reprocess events multiple times
• Error-prone processes resulting in disputes
• Longer settlement periods
• Lack of business predictability with high business risk
• Limited tools for influencing or driving customer demand
• Inflexibility to adapt to new revenue models
• Experience (or lack thereof) of partners who are a critical part of the value chain
• People dependent processes
• Partners are also becoming consumers of product and services provided by telco (e.g. infrastructure, APIs, insights)
• They need an ability to understand consumer and network behavior vis-a-vis the product and services being consumed
• Real-time settlements, payments, insights and decision tools are available making parties agile and responsive.

A multi-sided business model requires three fundamental changes for charging and billing systems: Billing and charging systems thus require reinvention and re-architecture:

1. Ability to identify all applicable parties in a single event and rate, charge, bill, and manage balances in real-time.
2. Flexibility to support rating and charging based on any attribute and any unit-of-measure.
3. In-built microservices design patterns to enable unique services, and support elasticity and real-time service quality.

• Multi-dimensional rating and charging as the criteria, rate, unit and charges may vary based on the involved party and type
• Parallel event-driven charging model enabling same time multi-party charging and settlement.
• Single balance management function supporting multiple balance for each party
• Open APIs making information available in real-time

The diagram below represents the conceptual model for a multi-dimensional charging and billing platform.

With unprecedented investments in network modernization, their cloudification and availability of programmable, open and disaggregated networks, IT teams now have extreme flexibility to create and manage networks the same way they could manage IT systems and create new-age products and offerings. These offerings demand that digital service providers now look at all the three sides of the business – the customer, partner, and network. Breaking down the 5G use cases in between retail and enterprise markets, we expect that communications service providers will focus on enterprise for their 5G offerings.

However, as you can see – partnership is the catalyst in both the cases and pricing innovation demands a complete relook at the monetization capability of the underlying platform. Here are a few ways in which charging paradigms are set to change.