Yield Optimization. Increased revenue improved user experience

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1 Yield Optimization Increased revenue improved user experience

2 INTRODUCTION User experience is central to operator success. Satisfied subscribers are more loyal an essential consideration in competitive markets. A better user experience reduces churn and helps an operator stand out in the market. And happier subscribers buy more, increasing operator revenue. An improved user experience places greater demands on network resources, to ensure quality of experience (QoE) for data services and to avoid peak-hour congestion in the voice network. Yet in many cases, operators already have the resources they need. Network resources are scaled to cope with peak demand, resulting in excess capacity being available at non-peak times. With Yield Optimization from Ericsson, operators can use that excess capacity to change user behavior. The solution is based on the concept of yield management. A yield management business model provides a strong competitive advantage, especially for those who are first to implement the solution in their markets. Ericsson Yield Optimization uses three key mechanisms discounts, quality of service (QoS) and data bundles collectively referred to here as tariffs. For voice, data or SMS, Yield Optimization applies specific tariffs for a particular time, cell or user group, and then alerts users to the opportunity. The service can be used to improve the user experience for voice and data. This document describes Ericsson Yield Optimization. The solution is typically used in an Ericsson Business Support Systems (BSS) environment, although it can also support other vendors online BSS. Data case: a university campus generates high levels of data traffic during specific times of the day with students, for example, spending a lot of time downloading movies they have bought, playing online games, and so on. At peak times, this results in a negative user experience for all students. Encouraging students to download movies late at night, when data traffic is lower and they can get higher bandwidth, improves their QoE, even during peak periods. Online gamers suddenly have access to more resources (bandwidth), improving the gaming experience for everyone. 1 Yield management: the process of understanding, anticipating and influencing consumer behavior to maximize yield or profit from a fixed, perishable resource (such as airline seats or telecom network capacity). This process involves the strategic control of inventory to sell it to the right customer at the right time for the right price.

3 Market overview Executive Summary The world now has close to 6 billion mobile subscriptions, with global mobile penetration around 85 percent. In both mature and emerging markets, the emergence of new players, service commoditization and market saturation has led to cutthroat competition. User experience is a top priority for leading operators around the world a better user experience is the best way to stand out from the crowd and to combat subscriber churn. Ericsson Yield Optimization let s you do this while optimizing network utilization. The challenge is to create an affordable and attractive data and voice offering that gives all subscribers a good user experience one that matches what they have paid for, while remaining profitable and creating upsell opportunities when usage patterns and requirements change. Tailored offerings There is a trend toward differentiated offerings, tailored to customer requirements for bandwidth, usage and willingness to pay. Operators can then offer premium customers the best possible experience one that is unaffected by peak-traffic congestion. Ericsson Yield Optimization provides a simple, efficient and automated way for operators to improve the QoE for data, messaging and voice customers. It does so while safeguarding revenues and protecting your network investment. The system uses underutilized, non-peak network capacity to provide incentives that change subscriber behavior. By encouraging subscribers to use the network at non-peak times or in non-peak locations through discounts, greater bandwidth, larger data bundles or improved QoS operators can shift traffic from peak periods. The Dynamic Tariffing Engine (DTE) at the heart of Yield Optimization ensures that the tariff mix matches business goals, be they increased subscriber numbers, higher revenue or a combination of both. And a comprehensive reporting system ensures you can monitor your progress toward achieving your business goals. This increased competition has resulted in a struggle for subscribers, with targeted promotional campaigns and vigorous efforts to improve the user experience, in both data and voice services. The dramatic growth in mobiledata traffic in recent years has completely changed the dynamics of the market. Standard mobilebroadband offerings reflect early fixed-broadband business models, dominated by flat fees, standard (non-differentiated) charging and unlimited usage. This has been successful in stimulating subscriber growth, but has created problems such as: > > reduced QoS and declining user experience during peaktraffic periods due to the huge increase in data traffic > > a poor user experience for low- and medium-capacity users, as the bulk of available bandwidth is consumed by relatively few heavy users > > a significant reduction of data margins as extensive investments in infrastructure are needed to ensure a good user experience for all consumers. Operators need tools to monitor the volume of traffic per subscriber and to manage excessive traffic. They need solutions to protect their margins and to secure the user experience for the majority of subscribers. By implementing solutions based on Ericsson Yield Optimization, operators can meet these challenges. They can even increase profitability by optimizing the way they use their resources and by differentiating their offerings to cater for different subscriber segments.

4 Key capabilities Key benefits Discounts Optimized discounts to customers based on time, location, network resources and revenue objectives. These discounts are adjusted to encourage or discourage usage at particular times. Quality of service The data users that generate most data traffic are those who have large bundles or unlimited usage packages. These customers are not sensitive to price, but rather to QoE. Ericsson Yield Optimization can influence this segment s behavior by dynamically changing the QoS rather than price. Data bundles Ericsson Yield Optimization typically influences the pricesensitive user, which in data relates mostly to the user who has a small bundle. But users with larger bundles can also benefit from the option of increasing the size of their data bundles. By offering off-peak discounts, you can steer data traffic away from the higher-priced, peak hours, which results in more network capacity for higher-traffic premium users. Revenue A larger subscriber base thanks to reduced tariffs brings in additional revenue. It stimulates higher rates of service use by leading customers to see the services as more affordable and giving them more value for money. Messages inform subscribers about the current tariff or bandwidth, so they can decide when they want to use the service. It s their call: they can use the network now and pay a higher rate or accept a lower bandwidth, or wait an hour or two and pay less or enjoy a higher bandwidth. Customers Optimized tariffs (such as significant discounts and the ability to get greater bandwidth) increase customer satisfaction, which in turn increases customer loyalty. People will switch to an operator that gives them a better experience. Yield Optimization lets operators introduce business models that improve the user experience, win new subscribers and retain existing ones. It is easy for users to register for the service. They regularly receive notification of the current tariff level (the discount level and maximum bandwidth they can get) for a specific time in a specific cell, enabling them to follow how the tariff rises or falls. Networks Yield Optimization results in a more evenly utilized network, with reduced traffic peaks, helping you get the most out of network investments. By shifting traffic from peak to off-peak times, operators can defer additional capital investment and improve user satisfaction. Ensuring sufficient capacity to handle peak traffic a regulatory requirement in many markets means much of that capacity is underutilized during off-peak times. Ericsson Yield Optimization shifts traffic from high-traffic periods to low-load times. As well as using underutilized capacity, this reduces peak-period pressure on the network, resulting in better QoS for data sessions, improved call completion, and greater customer satisfaction and loyalty. MTN Zone helped us to grow revenues in the dead hours (midnight to 6am) from USD 300,000 to USD 1.5 million per month. Zone is far more lethal than it appears. If in doubt, imagine if your competitors had it and you did not. CMO of MTN Uganda MTN Uganda launched MTN Zone in August 2008 and gained 13 percent market share between December of that year and June This allowed the operator to retain its No. 1 spot in terms of market share despite an increasingly competitive landscape. At Grameenphone, a leading service provider in Bangladesh and part of the Telenor Group, off-peak traffic rose 18 percent in one year, while peak traffic rose only 3 percent thanks to better use of network resources.

5 Solution overview Yield Optimization gathers statistical information from each cell (utilization data) and combines this with usage (revenue) data from call detail records (CDRs), which include summary data, usage and revenue reports. It then determines the tariffs that should be offered to subscribers, and when and where they should be offered. Once the optimal tariffs have been determined, the relevant discounts, bandwidths and data allowances are provisioned in the network. The valid tariffs are communicated at all times. Dynamic Tariffing Engine Setting the optimal tariff is essential. In data, if the bandwidth is set too high, then exhaustion of the available resources may lead to a negative user experience, which ultimately affects the revenue generated from consumers. Set the bandwidth too low and you may have sufficient resources but still not achieve an optimal user experience. Similarly, too high a discount leads to the risk of revenue loss, while too low a discount will have limited impact on subscriber behavior. The Dynamic Tariffing Engine (DTE) finds a balance between these extremes, putting the best possible tariff at the heart of your pricing structure. A good algorithm makes a world of difference. To control the tariff calculations, the operator can define business rules such as maximum and minimum discount, special dates and utilization targets. Predefined business rules can easily be adjusted depending on the operator strategy. Communication is critical Communication with subscribers is one of the most critical success factors for Yield Optimization. Information on available tariffs and on the currently applicable tariff provides an incentive for them to change their behavior to optimize their customer experiences. Two types of information need to be communicated: > > the planned tariff (discount, bandwidth or data allowance) that a customer could receive at this moment in the current location > > the actual tariff, which is the tariff that the customer is currently being charged in the ongoing voice call or data session. > > Yield Optimization provides a range of communication options suitable for different customer needs and operator environments: > > Cell Broadcast a simple way to provide customers with information about planned tariffs. > > Call Setup Notifications triggered by the Online Charging System (OCS), these provide customers with immediate information about the actual tariff when setting up a voice call, sending a text message or starting a data session. > > Customer Communication Center (CCC) IP communication of both planned and actual tariffs to all kinds of devices. The CCC receives the planned tariffs from the DTE and is informed by the OCS about actual tariffs for voice calls and data. > > USSD Query: any device supporting USSD can send an interactive request to the system, which will return a response about either the planned tariff or, in an active session, the actual tariff at the time. Charging The OCS, such as Ericsson Charging System, rates charging requests for voice calls, SMS and data sessions based on the time and user location, and determines which tariff to use for the charging request. SMS charging is event-based, with the tariff determined according to the time and location. For voice calls, the location information is provided to the OCS at call setup, and is generally not changed during the call. This means the discount remains the same for the duration of the call, for an optimal user experience. For a data session, the tariff to be used is determined at the start of the session based on the time and the user s location. Data sessions, however, can involve multiple tariff levels because they can be much longer than voice calls. Maintaining the same tariff throughout a data session can have a negative impact on the network and the operator s business, so the tariff is reevaluated at regular intervals during the session. If a tariff change is identified, the new tariff (such as a new discount level, or a change in bandwidth allocation or the data bundle) is communicated to the user. Customer-service staff have access to current and historic tariffs for every cell, so they can respond to customer queries. Reporting The reporting suite in Yield Optimization enables detailed analysis of revenue, network traffic and usage, customer uptake, tariffs and other parameters. The system also provides executive summary and KPI reports. All reports can be presented in different dimensions, allowing them to be customized for the business context in which they are needed. The solution provides support at every stage of the process. The Customer Communication Center provides tariff information. The system selects the best form of communication for each user and device.

6 Complete solution Yield Optimization is a business solution designed to help you find the balance between attractive tariffs and income, between subscriber growth and revenue growth, and between growing network traffic and shifting it to off-peak times. Our business consultants, with their extensive experience and broad competence, can help you analyze your market, network and subscriber base, setting the parameters that enable Yield Optimization to help you achieve your business goals. As a truly global company, we have access to best practices developed while implementing Yield Optimization in networks around the world. We can help you maximize the revenue from your customers, win new customers, keep your existing customer base happy and improve the efficiency of your network. Ericsson is the industry leader in telecom services, with the most comprehensive network of experts covering all areas of communications technology. Through our support services, we ensure that networks in 180 countries can deliver reliable services to more than 2.5 billion consumers.

7 Ericsson is shaping the future of mobile and broadband internet communications through its continuous technology leadership. Providing innovative solutions in more than 180 countries, Ericsson is helping to create the most powerful communication companies in the world. The content of this document is subject to revision without notice due to continued progress in methodology, design and manufacturing. Ericsson shall have no liability for any error or damage of any kind resulting from the use of this document Ericsson AB SE Stockholm, Sweden Telephone Fax Ericsson AB 2012

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