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Market requirements and the functionality of intelligent networks
Market requirements and the functionality of intelligent networks Armin
Fricke
The provisioning of telecommunications services is no longer the exclusive task of monopolist telecommunications infrastructure operators. Digitisation of the network and the shift of service definition from software that resides in the switches to computer platforms enables new service providers to enter the market of telecommunications. The Intelligent Network (IN) is the central platform and entry point for the competitors. This paper focuses on the requirements from the market side that drive the development of today’s Intelligent Networks. The factors that will lead to successful creation and implementation of new services are discussed in the light of a market oriented approach to be applied by the service providers. The main finding is that in order to be successful the service providers have to fully understand the market segments and specific subscribers’ needs they want to address. once the service has been created the service provider’s key to success is to better understand and serve the customers by using the information that the Intelligent Network provides. future requirements of Intelligent Networks will be driven by open interfaces to the service creation facilities of the Intelligent Network and the network infrastructure operators’ abilities to integrate and manage independent service providers that will in return help generate more traffic in the network. Keywords: intelligent network, market requirements, subscriber needs
THE INTELLIGENT NETWORK FROM A HISTORIC PERSPECTIVE It was in March 1876 when Alexander Graham Bell transmitted the first message ever sent by telephone “Mr. Watson, come here, I want you” - to his assistant, who was linked by wire and receiver to the sending device in Bell’s office. The first telephone networks were built at the turn of the century with relay logic that allowed automatic routing. In the following decades, the technology behind Arthur D. Little International, Inc.. Kurfiirstendamm Berlin, Germany (email: fricke.aWadlittle.com) 0140-3664/95/$09.50 802
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the telephone dramatically improved the reliability of the network, its capacity and the speed at which it could handle calls, while the service as perceived by the customer changed very little. Behind the scenes, however, the computer was replacing fixed relay logic with programmable logic to drive the switching equipment, thus providing the foundation for a more flexible infrastructure. Another important change in the switching architecture occurred when the signals that controlled the routing of calls were moved to a second channel, known in telephony jargon as “out-of-band signalling”. This meant that a second infrastructure grew up in parallel to the voice channels, and it was developed exclusively to carrying the routing and billing information between telephone switching exchanges. The electronic switching system (ESS) made its debut in the 1960s. Its seventh incarnation (SS7) has become a dej&to standard for all telephone exchanges within the US, Europe and many other countries. The term “Intelligent Network” resists a simple definition. What makes it so elusive conceptually is the fact that it’s not a simple technology. It is not even a new technology but rather the evolutionary by-product of a melding between two technologies: switching and computing. Intelligent Network, IN, is a generic approach that is independent of access to open up the telephone networks to third-party service creation, to shorten introduction time for new services and to support personalisation of services. Intelligent Network technologies can be effectively used to spread the control of service definitions to service providers and users. Unlike Intelligent today’s telephone systems, Networks will permit new services and customised versions of existing services without changes to switches and switching software. All such services and customisation will be done through software development on network system platforms, i.e. service control points (SCP), adjuncts and intelligent peripherals (IP). By the end of 1994 most of the Americans should have access to the first release of “Advanced Intelligent
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Market requirements
Network” (AIN), AT&T’s version of the Intelligent Network. The AIN lays the foundation for new services, such as mixed voice, data and video traffic on variablebandwidth, switched lines, and personal numbers that follow a user through the network. Not limited to telephone systems, the concept of the intelligent network applies to local- and wide-area networks as well as other complex systems. In mid-1995, AT&T plans to open up the network to other service providers. Today, AT&T’s revenue from value added services amounts to over 30% of the total revenue. The rest of the world seems to follow this approach sometimes with a respectful distance. For example, Deutsche Bundespost Telekom introduced its IN-based freephone and premium services (that allow call routing depending on the time of day and the location of the originator) in April 1993. An extension to differentiate between more than the current 70 locations will be introduced in 1996 when the location of the originator can be determined to the local loop level.
IN’S ROLE TO FULFIL CUSTOMERS’ REQUIREMENTS In former times, the intelligence in the network was limited to automatic routing and sometimes human operators (who, at least in rural areas, are said to have had quite some knowledge about the subscribers preoccupations but it remains doubtful if this was intended by the network operators!). During these times, the telephone network was basically an infrastructure that had to be procured to everyone at universal tariff. The customers demand was relatively easy to forecast and fulfil. Most often, the time needed to fulfil these needs was determined solely by putting the cables into the ground. With the liberalisation of the telecommunications sector competition was introduced and new players entered the national markets: private companies diversified into telecommunications and public operators from abroad sought international traffic of the former monopolist’s customer base. There is now a new opportunity for non-network operators to provide services. With the right to access the infrastructure that has been built up by the monopolist and switching and transmission equipment prices dropping due to less protection of the national supply markets, new services will be the major differentiating factor of the private competitors. Traditional network operators have to enhance their services to effectively face competition and to protect their existing business. Intelligent Networks will enable an increasing speed in the introduction of new services for both national operators and their private competitors. The process of customising services will not be controlled by long-term planning. Time to market and flexibility to react to market changes have become keys to reaping the benefits from service provision in telecommunications. Intelligent Networks are the principal production
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platform for network operators or service providers to sell the service that can be decomposed into the service itself (including administration and billing), airtime or fixed traffic, customer care and a one-time connection fee. The margin on each of these components will determine the overall profit of the service provider. There are four areas where Intelligent Networks are crucial for the development of the service and thus the market: l
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Corporate Networks(CN)/Virtual Private Networks (VPN), Card Services, CLASS (Custom Local-Area Signalling Services, i.e. call waiting, last-caller ring-back, caller ID, call forwarding, etc.) and Mobile (telephony and data)
There is a need to better understand the ‘market side’ of the Intelligent Network, i.e. the data which the Intelligent Network stores and processes that describes the customers and their communication behaviours, if one wants to understand how Intelligent Networks will have to develop over time. The Intelligent Network collects most of the important information about the service’s success in terms of usage and therefore gives the service provider valuable information about the market requirements. Without the framework of a detailed product strategy, each new product development project becomes a new opportunity to ask a few basic questions that ought to have been addressed up front, e.g.: Which market segment are we targeting specifically with that particular product? What is the role and mission of that specific product in our overall product line? What is the winning product, from the customer’s viewpoint, in that segment? How have we chosen to beat our competitors, generally and in that segment? If it is impossible to meet all customer demands, which ones should we meet? How many variants of the product are we prepared to develop? How fast will we replace this particular product we are developing? etc. Answering these questions can be time-consuming, particularly if basic information on markets and competitors is not readily available. The “fuzzy front end” of many new product deve‘lopment projects often arises because there was no product strategy or plan at the project definition stage. The lack of a clearly stated product strategy and plan specifying priorities over time, forces management to consider each new product development project on a stand-alone basis and not as part of a portfolio of new products. This, in turn, will complicate the tradeoffs that every company must make to optimize both its market impact and the use of its resources.
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THE SERVICE CREATION PROCESS Services must change over time. User needs or the competition between the service providers frequently lead to changes in existing services or the development of new services. When GSM was introduced in Germany in 1991 by DeTeMobil (Dl network) and Mannesmann Mobilfunk (D2 network) it was no more than mobile POTS with a bill that specified whom you had talked to at what time and day if one is not counting the ‘value added’ services, like flower or travel service. New services such as the short message service (SMS) or data and fax transmission have only recently been introduced. There is a need to create new services systematically since much is at stake. Services are the key in modern telecommunications to differentiate - in both directions: a wrongly conceived service or a service that fails in operation or a service that is badly marketed will seriously damage the service provider’s reputation and future business. An example for the latter would be the telepoint services in Germany and even more in the UK. The trigger to create a new service or to change an existing service usually comes up in the usage phase when revenues drop and someone from the marketing department says “There must be an opportunity to make (additional) profit from this (new) service!“. Service creation must be seen as a process. The beginning is most often clearly identifiable as was mentioned above. The ending of the process can be a phase-out that can only be identified by the fact that the marketing phase for the following service has started. The process has gone full circle if the experience from the usage of one service is used for evaluating the demand for a new service or for an enhancement to the old service. The service creation process has four phases: (Figure I): l
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Marketing Phase: Identify subscribers in clearly defined market segments and the revenue these subscribers are likely to generate. Position the service in the services portfolio. Creation Phase: Define the service, install the service creation environment (SCE) and service management systems (SMS) and implement the service. Introduction Phase: Generate market awareness, have test-users test the service and roll-out service. Usage Phase: Monitor usage, send bill and constantly assess subscribers’ perceived value.
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In each of the phases there are clear requirements from the market that have to be translated into IN functionality. Some of these requirements address directly technical features or capabilities of Intelligent Networks whereas others can be fulfilled by organisational or process changes carried out by the service provider. When this change relies on data that can be provided by the Intelligent Network, examples for IN functionality needed will be included. Nevertheless this paper will focus more on the ‘commercial’ rather than on purely technical issues.
REQUIREMENTS FOR IN FUNCTIONALITY FROM THE MARKET PERSPECTIVE The following examples will highlight the close interaction between the market requirements and the Intelligent Network: The success of calling card services can be routed directly back to the fact that the product “calling card” can be very easily customised to specific users’ needs, (e.g. the needs of journalists, salespeople, truck drivers, etc.), to specific billing options or call restrictions (e.g. cards usable with only one destination number for parents of college students or managers of sales forces). Several of the national telecommunications infrastructure providers work hard to introduce national virtual private networks (VPN). There are two major obstacles related to Intelligent Networks that these operators have to face: The equipment installed in the network is rarely capable of performing the functionality of the network elements in an Intelligent Network. Local exchanges need to be digitised to support the service switching points (SSP). The data processing of the network operation is rarely capable of interfacing to the service control points (SCP) or service management systems (SMS). The physical and logical network inventory can sometimes be distributed over several hardware and software platforms. Private competitors to the national infrastructure operators can build up their networks from scratch and rely on latest technology of a handful suppliers. Their choice of an Intelligent Network can be made without taking into consideration legacy systems that will have to be interfaced. Their gain is time to market, more security of operation and a higher system performance due to fewer interfaces between modules and a more modern systems architecture. Estimates given by Northern Telecom suggest that it takes between US$21 million and US$27 million and three years to develop and introduce a new service through switched-based software. With an Intelligent Network those figures could drop to between US$2.1 million and US$4.1 million and less than two years to develop and introduce.
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As can be seen from the above examples there are clear
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Time to market and cost need to be optimized: with the increasing number of competitors, the increasing complexity of the services and in the same time the increasing speed at which new services are introduced the Intelligent Network will be the critical success factor in the creation and introduction of new services. Understand the network from the technical side: although it is theoretically possible to hand over the creation of the service to independent service providers or even users, a thorough understanding of the service creation environment (SCE), the public network, Intelligent Network capabilities and the various central office switches are needed to get the service operational.
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Deliver good customer care: since it is always easier
to retain a subscriber than to win a new subscriber, the customer care component of an Intelligent Network must fully support the service oriented culture of the service provider. Be able to follow demand: the Intelligent Network needs to be scalable to the demand, especially in mobile telephony where the number of subscribers surprised some of the operators or card services where a much higher usage in Europe can be predicted if compared to the US. Offer attractive packaging and tariffing: the time needed for the creation of a service can be small in relation to the time and effort needed to tariff the service according to the customers’ specific organisation, i.e. number and geographical distribution of sites, traffic volumes between sites depending on the time of day, availability of services to employees depending on status, etc.
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Market segments need to be clearly defined: The market strategy of the service provider determines the portfolio of services and therefore defines the ability of the Intelligent Network to support a multitude of services on one platform. Subscriber numbers in each market segment need to be clearly analysed: Once the Intelligent Network is up and running and there is no information available from the system what segments the actual subscribers are in, probably the most valuable support of an Intelligent Network in creating services is lost. Revenue per subscriber needs to be predicted: The revenue of each subscriber is determined by the tariff and the volume (airtime, connection time, transmitted volume, etc.) that is consumed. Understanding price elasticities and to what extent the subscriber is willing to sacrifice other expenses for the new service is key to counter-balance the information about the consumed volume given by the Intelligent Network. Usage characteristics need to be understood: Understanding how and why the service is used means to have a clear picture about the benefit that the service renders to the individual subscriber. Churn to other services needs to be assessed: there can be significant churn to other services from the same service provider or to similar services of competing service providers. The Intelligent Network must enable the service provider to understand the usage characteristics of the service especially in those market segments that are most vulnerable to competition and revenue share.
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success factors for the service providers in every phase of the service creation process. Some of the success factors translate directly into requirements for IN functionality. Marketing
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Over all the four phases the speed at which a new service can be created and introduced will increasingly matter to the overall success of the service. Especially when user habits or market saturation are at stake as is the case in mobile communication or card services or when changes in the customer’s organisation are needed to benefit from the service, as in virtual private networks, the first players on the market can influence the image of the service most. In addition, the service providers should be prepared to address smaller market segments as markets saturate and services get more sophisticated. Should Intelligent Networks really enable independent service providers or users to create their own services as planned by AT&T, there might be a strategy for the operators to effectively manage smaller niche oriented service providers in their business to create niche services. It remains an open question if different service providers need different Intelligent Networks to effectively compete in the market. Although the Intelligent Network takes a central role in the creation and delivery of a service like mobile telephony or card services there is strong evidence that organisational and process factors in the company that provides the service do have a stronger impact on the service provider’s success in the market: l
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As long as the market is not yet fully developed, competencies to react quickly to changes in demand appear to be more important than perfectly designed platforms or tools. This is especially true if the service provider itself is starting up the business as is the case for all the players who diversify into telecommunications from other industry segments. Several service providers have replaced their Intelligent Network within two years after market take-up to follow changing requirements that their first choice Intelligent Network was unable to meet.
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FUTURE REQUIREMENTS FUNCTIONALITY
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FOR IN
Now that the telephone network adopts an open architecture, the intelligent peripheral (an element of the Intelligent Network) will be a key tool for entrepreneurs who wish to sell services over the telephone system, e.g. programming and information services. There is a great opportunity for persons interested in providing niche services for specific geographic regions, specialised business or professional communities or other targeted market groups. The highly defined open-systems environment of modern telephone systems gives developers of intelligent peripherals or other telecommuncations products a running start. A second major driver for the development of Intelligent Networks will be an increasing degree of integration of telecommunications and information technologies into the business processes of the companies. Whereas stand-alone personal computers and plain old telephone services helped to ease the work in former times, all of the businesses of today have processes that critically rely on telecommunications and information technologies, e.g. interconnected local area networks (LAN) or groupware. From that derives a need to procure systems solutions that integrate several technologies and that can be tailored closely to the customers’ needs. Not only that the service providers of Intelligent Network solutions will have to build up competencies in their targeted business segments, there is a requirement for flexible Intelligent Networks to support specific customer processes. Teleworking might fundamentally change the way we work but requires a central informational base, the IN, that keeps track of human workers who will need full mobile access to their employers’ telephone and data network. Some requirements be solved by today’s virtual private networks that allow the teleworker to access colleagues as easily and free of charge as in the office. But the access to the company’s central or distributed data bases where many security and system performance related issues have to be dealt with is a lot more difficult to solve. Further on, there will be a need to support very complex applications, e.g. the monitoring and control of
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an integrated public transport systems that encompasses all urban transport facilities (subways, trains, buses, taxis, etc.) and allows e.g. real-time fare collection and billing as well as capacity management with traffic flow optimisation. But there is also room for many small improvements to the existing Intelligent Networks. For example the mobile cellular network that can route the call depending on the cell the subscriber is in when he makes the call. Applications can reach from a “taxi button” where the nearest taxi stand is called to a “route emergency signal” which is given automatically when a car is turned upside down or decelerated abnormally. It will depend on the creativity of the service providers to identify the opportunities (both in terms of integrating the service into the portfolio of services and of assessing the revenues that can be generated) and to implement the new service in the market.
BIBLIOGRAPHY research and product Press clippings, database information as provided by the Arthur D. Little Market Information Service (MIS)
REFERENCES AT & T: ‘A Calling Card Culture’ in: Telecommunications, March 1994, p A5 Deschamps, J-P: ‘Creating a product strategy’ in PRISM 2Q/1993, p 27 Deutsche Telekom: ‘Produktbeschreibung Telekom Designed Network’, Anlage 1, pp 15-27 Elixmann, M: ‘Creating new services for intelligent networks’ Mobile Comm. Int. pp 68-70 Kistner, H-P: ‘Das Intelligente Netz’ Funkschau, No. 19 (1994) pp 5255
Krusch, W: ‘Deutsche Bundespost Telekom: Das Intelligente Net? Telekommunikation, WEKA Fachverlag, Chapter 6.5.0.0 Ginsburg, L and Londechamp, Y: ‘The Process for dynamic service provisioning’ in: Telecommunicaiions (October 1994) pp 27-30 Sephton, J. ‘Network services: choice without confusion’ Telecommunications (October 1994) pp 33-234 Siiderberg, L: ‘Evolving an intelligent architecture for personal telecommunication’ Ericsson Rev. No. 4 (1993) pp 156-171 Sweeney, T: ‘Intelligence Quotient’ Comm. Week Int. (June 1993) pp 1621
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Fricke
The provisioning of telecommunications services is no longer the exclusive task of monopolist telecommunications infrastructure operators. Digitisation of the network and the shift of service definition from software that resides in the switches to computer platforms enables new service providers to enter the market of telecommunications. The Intelligent Network (IN) is the central platform and entry point for the competitors. This paper focuses on the requirements from the market side that drive the development of today’s Intelligent Networks. The factors that will lead to successful creation and implementation of new services are discussed in the light of a market oriented approach to be applied by the service providers. The main finding is that in order to be successful the service providers have to fully understand the market segments and specific subscribers’ needs they want to address. once the service has been created the service provider’s key to success is to better understand and serve the customers by using the information that the Intelligent Network provides. future requirements of Intelligent Networks will be driven by open interfaces to the service creation facilities of the Intelligent Network and the network infrastructure operators’ abilities to integrate and manage independent service providers that will in return help generate more traffic in the network. Keywords: intelligent network, market requirements, subscriber needs
THE INTELLIGENT NETWORK FROM A HISTORIC PERSPECTIVE It was in March 1876 when Alexander Graham Bell transmitted the first message ever sent by telephone “Mr. Watson, come here, I want you” - to his assistant, who was linked by wire and receiver to the sending device in Bell’s office. The first telephone networks were built at the turn of the century with relay logic that allowed automatic routing. In the following decades, the technology behind Arthur D. Little International, Inc.. Kurfiirstendamm Berlin, Germany (email: fricke.aWadlittle.com) 0140-3664/95/$09.50 802
computer
0
communications
1995-Elsevier volume
66. 10707
Science 18 number
the telephone dramatically improved the reliability of the network, its capacity and the speed at which it could handle calls, while the service as perceived by the customer changed very little. Behind the scenes, however, the computer was replacing fixed relay logic with programmable logic to drive the switching equipment, thus providing the foundation for a more flexible infrastructure. Another important change in the switching architecture occurred when the signals that controlled the routing of calls were moved to a second channel, known in telephony jargon as “out-of-band signalling”. This meant that a second infrastructure grew up in parallel to the voice channels, and it was developed exclusively to carrying the routing and billing information between telephone switching exchanges. The electronic switching system (ESS) made its debut in the 1960s. Its seventh incarnation (SS7) has become a dej&to standard for all telephone exchanges within the US, Europe and many other countries. The term “Intelligent Network” resists a simple definition. What makes it so elusive conceptually is the fact that it’s not a simple technology. It is not even a new technology but rather the evolutionary by-product of a melding between two technologies: switching and computing. Intelligent Network, IN, is a generic approach that is independent of access to open up the telephone networks to third-party service creation, to shorten introduction time for new services and to support personalisation of services. Intelligent Network technologies can be effectively used to spread the control of service definitions to service providers and users. Unlike Intelligent today’s telephone systems, Networks will permit new services and customised versions of existing services without changes to switches and switching software. All such services and customisation will be done through software development on network system platforms, i.e. service control points (SCP), adjuncts and intelligent peripherals (IP). By the end of 1994 most of the Americans should have access to the first release of “Advanced Intelligent
B.V. All rights 11 november
reserved 1995
Market requirements
Network” (AIN), AT&T’s version of the Intelligent Network. The AIN lays the foundation for new services, such as mixed voice, data and video traffic on variablebandwidth, switched lines, and personal numbers that follow a user through the network. Not limited to telephone systems, the concept of the intelligent network applies to local- and wide-area networks as well as other complex systems. In mid-1995, AT&T plans to open up the network to other service providers. Today, AT&T’s revenue from value added services amounts to over 30% of the total revenue. The rest of the world seems to follow this approach sometimes with a respectful distance. For example, Deutsche Bundespost Telekom introduced its IN-based freephone and premium services (that allow call routing depending on the time of day and the location of the originator) in April 1993. An extension to differentiate between more than the current 70 locations will be introduced in 1996 when the location of the originator can be determined to the local loop level.
IN’S ROLE TO FULFIL CUSTOMERS’ REQUIREMENTS In former times, the intelligence in the network was limited to automatic routing and sometimes human operators (who, at least in rural areas, are said to have had quite some knowledge about the subscribers preoccupations but it remains doubtful if this was intended by the network operators!). During these times, the telephone network was basically an infrastructure that had to be procured to everyone at universal tariff. The customers demand was relatively easy to forecast and fulfil. Most often, the time needed to fulfil these needs was determined solely by putting the cables into the ground. With the liberalisation of the telecommunications sector competition was introduced and new players entered the national markets: private companies diversified into telecommunications and public operators from abroad sought international traffic of the former monopolist’s customer base. There is now a new opportunity for non-network operators to provide services. With the right to access the infrastructure that has been built up by the monopolist and switching and transmission equipment prices dropping due to less protection of the national supply markets, new services will be the major differentiating factor of the private competitors. Traditional network operators have to enhance their services to effectively face competition and to protect their existing business. Intelligent Networks will enable an increasing speed in the introduction of new services for both national operators and their private competitors. The process of customising services will not be controlled by long-term planning. Time to market and flexibility to react to market changes have become keys to reaping the benefits from service provision in telecommunications. Intelligent Networks are the principal production
computer
and the functionality
of intelligent
networks:
A Fricke
platform for network operators or service providers to sell the service that can be decomposed into the service itself (including administration and billing), airtime or fixed traffic, customer care and a one-time connection fee. The margin on each of these components will determine the overall profit of the service provider. There are four areas where Intelligent Networks are crucial for the development of the service and thus the market: l
l l
l
Corporate Networks(CN)/Virtual Private Networks (VPN), Card Services, CLASS (Custom Local-Area Signalling Services, i.e. call waiting, last-caller ring-back, caller ID, call forwarding, etc.) and Mobile (telephony and data)
There is a need to better understand the ‘market side’ of the Intelligent Network, i.e. the data which the Intelligent Network stores and processes that describes the customers and their communication behaviours, if one wants to understand how Intelligent Networks will have to develop over time. The Intelligent Network collects most of the important information about the service’s success in terms of usage and therefore gives the service provider valuable information about the market requirements. Without the framework of a detailed product strategy, each new product development project becomes a new opportunity to ask a few basic questions that ought to have been addressed up front, e.g.: Which market segment are we targeting specifically with that particular product? What is the role and mission of that specific product in our overall product line? What is the winning product, from the customer’s viewpoint, in that segment? How have we chosen to beat our competitors, generally and in that segment? If it is impossible to meet all customer demands, which ones should we meet? How many variants of the product are we prepared to develop? How fast will we replace this particular product we are developing? etc. Answering these questions can be time-consuming, particularly if basic information on markets and competitors is not readily available. The “fuzzy front end” of many new product deve‘lopment projects often arises because there was no product strategy or plan at the project definition stage. The lack of a clearly stated product strategy and plan specifying priorities over time, forces management to consider each new product development project on a stand-alone basis and not as part of a portfolio of new products. This, in turn, will complicate the tradeoffs that every company must make to optimize both its market impact and the use of its resources.
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THE SERVICE CREATION PROCESS Services must change over time. User needs or the competition between the service providers frequently lead to changes in existing services or the development of new services. When GSM was introduced in Germany in 1991 by DeTeMobil (Dl network) and Mannesmann Mobilfunk (D2 network) it was no more than mobile POTS with a bill that specified whom you had talked to at what time and day if one is not counting the ‘value added’ services, like flower or travel service. New services such as the short message service (SMS) or data and fax transmission have only recently been introduced. There is a need to create new services systematically since much is at stake. Services are the key in modern telecommunications to differentiate - in both directions: a wrongly conceived service or a service that fails in operation or a service that is badly marketed will seriously damage the service provider’s reputation and future business. An example for the latter would be the telepoint services in Germany and even more in the UK. The trigger to create a new service or to change an existing service usually comes up in the usage phase when revenues drop and someone from the marketing department says “There must be an opportunity to make (additional) profit from this (new) service!“. Service creation must be seen as a process. The beginning is most often clearly identifiable as was mentioned above. The ending of the process can be a phase-out that can only be identified by the fact that the marketing phase for the following service has started. The process has gone full circle if the experience from the usage of one service is used for evaluating the demand for a new service or for an enhancement to the old service. The service creation process has four phases: (Figure I): l
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Marketing Phase: Identify subscribers in clearly defined market segments and the revenue these subscribers are likely to generate. Position the service in the services portfolio. Creation Phase: Define the service, install the service creation environment (SCE) and service management systems (SMS) and implement the service. Introduction Phase: Generate market awareness, have test-users test the service and roll-out service. Usage Phase: Monitor usage, send bill and constantly assess subscribers’ perceived value.
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In each of the phases there are clear requirements from the market that have to be translated into IN functionality. Some of these requirements address directly technical features or capabilities of Intelligent Networks whereas others can be fulfilled by organisational or process changes carried out by the service provider. When this change relies on data that can be provided by the Intelligent Network, examples for IN functionality needed will be included. Nevertheless this paper will focus more on the ‘commercial’ rather than on purely technical issues.
REQUIREMENTS FOR IN FUNCTIONALITY FROM THE MARKET PERSPECTIVE The following examples will highlight the close interaction between the market requirements and the Intelligent Network: The success of calling card services can be routed directly back to the fact that the product “calling card” can be very easily customised to specific users’ needs, (e.g. the needs of journalists, salespeople, truck drivers, etc.), to specific billing options or call restrictions (e.g. cards usable with only one destination number for parents of college students or managers of sales forces). Several of the national telecommunications infrastructure providers work hard to introduce national virtual private networks (VPN). There are two major obstacles related to Intelligent Networks that these operators have to face: The equipment installed in the network is rarely capable of performing the functionality of the network elements in an Intelligent Network. Local exchanges need to be digitised to support the service switching points (SSP). The data processing of the network operation is rarely capable of interfacing to the service control points (SCP) or service management systems (SMS). The physical and logical network inventory can sometimes be distributed over several hardware and software platforms. Private competitors to the national infrastructure operators can build up their networks from scratch and rely on latest technology of a handful suppliers. Their choice of an Intelligent Network can be made without taking into consideration legacy systems that will have to be interfaced. Their gain is time to market, more security of operation and a higher system performance due to fewer interfaces between modules and a more modern systems architecture. Estimates given by Northern Telecom suggest that it takes between US$21 million and US$27 million and three years to develop and introduce a new service through switched-based software. With an Intelligent Network those figures could drop to between US$2.1 million and US$4.1 million and less than two years to develop and introduce.
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As can be seen from the above examples there are clear
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Time to market and cost need to be optimized: with the increasing number of competitors, the increasing complexity of the services and in the same time the increasing speed at which new services are introduced the Intelligent Network will be the critical success factor in the creation and introduction of new services. Understand the network from the technical side: although it is theoretically possible to hand over the creation of the service to independent service providers or even users, a thorough understanding of the service creation environment (SCE), the public network, Intelligent Network capabilities and the various central office switches are needed to get the service operational.
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Deliver good customer care: since it is always easier
to retain a subscriber than to win a new subscriber, the customer care component of an Intelligent Network must fully support the service oriented culture of the service provider. Be able to follow demand: the Intelligent Network needs to be scalable to the demand, especially in mobile telephony where the number of subscribers surprised some of the operators or card services where a much higher usage in Europe can be predicted if compared to the US. Offer attractive packaging and tariffing: the time needed for the creation of a service can be small in relation to the time and effort needed to tariff the service according to the customers’ specific organisation, i.e. number and geographical distribution of sites, traffic volumes between sites depending on the time of day, availability of services to employees depending on status, etc.
phase
Market segments need to be clearly defined: The market strategy of the service provider determines the portfolio of services and therefore defines the ability of the Intelligent Network to support a multitude of services on one platform. Subscriber numbers in each market segment need to be clearly analysed: Once the Intelligent Network is up and running and there is no information available from the system what segments the actual subscribers are in, probably the most valuable support of an Intelligent Network in creating services is lost. Revenue per subscriber needs to be predicted: The revenue of each subscriber is determined by the tariff and the volume (airtime, connection time, transmitted volume, etc.) that is consumed. Understanding price elasticities and to what extent the subscriber is willing to sacrifice other expenses for the new service is key to counter-balance the information about the consumed volume given by the Intelligent Network. Usage characteristics need to be understood: Understanding how and why the service is used means to have a clear picture about the benefit that the service renders to the individual subscriber. Churn to other services needs to be assessed: there can be significant churn to other services from the same service provider or to similar services of competing service providers. The Intelligent Network must enable the service provider to understand the usage characteristics of the service especially in those market segments that are most vulnerable to competition and revenue share.
of intelligent
Usage phase
success factors for the service providers in every phase of the service creation process. Some of the success factors translate directly into requirements for IN functionality. Marketing
and the functionality
Over all the four phases the speed at which a new service can be created and introduced will increasingly matter to the overall success of the service. Especially when user habits or market saturation are at stake as is the case in mobile communication or card services or when changes in the customer’s organisation are needed to benefit from the service, as in virtual private networks, the first players on the market can influence the image of the service most. In addition, the service providers should be prepared to address smaller market segments as markets saturate and services get more sophisticated. Should Intelligent Networks really enable independent service providers or users to create their own services as planned by AT&T, there might be a strategy for the operators to effectively manage smaller niche oriented service providers in their business to create niche services. It remains an open question if different service providers need different Intelligent Networks to effectively compete in the market. Although the Intelligent Network takes a central role in the creation and delivery of a service like mobile telephony or card services there is strong evidence that organisational and process factors in the company that provides the service do have a stronger impact on the service provider’s success in the market: l
l
l
As long as the market is not yet fully developed, competencies to react quickly to changes in demand appear to be more important than perfectly designed platforms or tools. This is especially true if the service provider itself is starting up the business as is the case for all the players who diversify into telecommunications from other industry segments. Several service providers have replaced their Intelligent Network within two years after market take-up to follow changing requirements that their first choice Intelligent Network was unable to meet.
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Market requirements
and the functionality
FUTURE REQUIREMENTS FUNCTIONALITY
of intelligent
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FOR IN
Now that the telephone network adopts an open architecture, the intelligent peripheral (an element of the Intelligent Network) will be a key tool for entrepreneurs who wish to sell services over the telephone system, e.g. programming and information services. There is a great opportunity for persons interested in providing niche services for specific geographic regions, specialised business or professional communities or other targeted market groups. The highly defined open-systems environment of modern telephone systems gives developers of intelligent peripherals or other telecommuncations products a running start. A second major driver for the development of Intelligent Networks will be an increasing degree of integration of telecommunications and information technologies into the business processes of the companies. Whereas stand-alone personal computers and plain old telephone services helped to ease the work in former times, all of the businesses of today have processes that critically rely on telecommunications and information technologies, e.g. interconnected local area networks (LAN) or groupware. From that derives a need to procure systems solutions that integrate several technologies and that can be tailored closely to the customers’ needs. Not only that the service providers of Intelligent Network solutions will have to build up competencies in their targeted business segments, there is a requirement for flexible Intelligent Networks to support specific customer processes. Teleworking might fundamentally change the way we work but requires a central informational base, the IN, that keeps track of human workers who will need full mobile access to their employers’ telephone and data network. Some requirements be solved by today’s virtual private networks that allow the teleworker to access colleagues as easily and free of charge as in the office. But the access to the company’s central or distributed data bases where many security and system performance related issues have to be dealt with is a lot more difficult to solve. Further on, there will be a need to support very complex applications, e.g. the monitoring and control of
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an integrated public transport systems that encompasses all urban transport facilities (subways, trains, buses, taxis, etc.) and allows e.g. real-time fare collection and billing as well as capacity management with traffic flow optimisation. But there is also room for many small improvements to the existing Intelligent Networks. For example the mobile cellular network that can route the call depending on the cell the subscriber is in when he makes the call. Applications can reach from a “taxi button” where the nearest taxi stand is called to a “route emergency signal” which is given automatically when a car is turned upside down or decelerated abnormally. It will depend on the creativity of the service providers to identify the opportunities (both in terms of integrating the service into the portfolio of services and of assessing the revenues that can be generated) and to implement the new service in the market.
BIBLIOGRAPHY research and product Press clippings, database information as provided by the Arthur D. Little Market Information Service (MIS)
REFERENCES AT & T: ‘A Calling Card Culture’ in: Telecommunications, March 1994, p A5 Deschamps, J-P: ‘Creating a product strategy’ in PRISM 2Q/1993, p 27 Deutsche Telekom: ‘Produktbeschreibung Telekom Designed Network’, Anlage 1, pp 15-27 Elixmann, M: ‘Creating new services for intelligent networks’ Mobile Comm. Int. pp 68-70 Kistner, H-P: ‘Das Intelligente Netz’ Funkschau, No. 19 (1994) pp 5255
Krusch, W: ‘Deutsche Bundespost Telekom: Das Intelligente Net? Telekommunikation, WEKA Fachverlag, Chapter 6.5.0.0 Ginsburg, L and Londechamp, Y: ‘The Process for dynamic service provisioning’ in: Telecommunicaiions (October 1994) pp 27-30 Sephton, J. ‘Network services: choice without confusion’ Telecommunications (October 1994) pp 33-234 Siiderberg, L: ‘Evolving an intelligent architecture for personal telecommunication’ Ericsson Rev. No. 4 (1993) pp 156-171 Sweeney, T: ‘Intelligence Quotient’ Comm. Week Int. (June 1993) pp 1621
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