While cable operators prepare for a full-fledged leap into the murky waters of data, interactivity and telephony, Operations Support Systems and their subscriber-management relatives — customer care and billing — have moved from the back office to the front burner.
OSS and subscriber-management issues routinely top the list of the obstacles that prevent operators from making a smooth transition to advanced services — and the attendant jump in revenues they're expected to generate.
When operators mix in the puzzling array of software now required to craft customer profiles, those concerns only intensify.
The result has been an often frustrating and mind-numbing exercise in building and maintaining a symbiotic relationship between OSS and subscriber-management functions. If such a relationship doesn't occur, experts said, operators can wave goodbye to those new revenue streams.
"The lack of OSS is prohibiting the launch of next-generation services," said McKinsey & Co. associate principal Jon Wilkins, a key contributor to the firm's Broadband 2001 Industry Analysis. "The OSS and enterprise software is entirely new for operators; in the past, it has been very rudimentary. It's very hard to get OSS right."
The study — conducted jointly with J.P. Morgan Securities Inc. — projected that 12 million new residential subscribers would be online by year-end 2002, and that 57 percent of online households would have broadband connections by 2005 — translating to $16 billion in revenue.
Factor in a small- and medium-enterprise (SME) market at $2.6 billion, and getting OSS right takes on a whole new urgency.
"Bringing together all of the OSS components has lots of moving parts and integration issues, but they're not unsolvable, and cable has the time to get OSS right," Wilkins said. "Some operators will do it better than others, and those that get it right will be the best-practice operators."
For larger MSOs such as Charter Communications Inc., however, practice is over. Now, it's game time.
"Customer care, billing and OSS are dictating operational changes, and we're learning lessons and validating operations models through beta trials, with much still in the incubation stage," said Charter senior vice president and CIO Mike Riddle.
Yet Riddle admits there's growing market pressure to roll out next-generation services.
"There's a lot of pressure to deploy the right technology at the right cost and minimize the effects on our customers while reducing costs," he said. "We have a fiduciary responsibility. This is not an experiment with trivial dollars."
Riddle conceded that it won't be easy. "We need to backward-engineer into billing systems, and that comes with lots of overhead costs. We've become so dependent on the three major billing vendors that they are the stewards of accounts receivable and collections, and the true concept of OSS is new to them."
"It requires lots of cooperation on their part with vendors they've never worked with and for us it requires access to their products," he said.
Those traditional billing vendors — Convergys Corp., CSG Systems Inc. and DST Innovis Inc. — are well aware of the OSS/subscriber-management issue and the fundamental changes it entails. "We're being asked to integrate with systems that didn't exist five years ago," said DST Innovis senior vice president of sales and marketing Bob McKenzie. "There are no flat rates anymore. It's on-the-fly consumer transactions and we must have the ability to do that with flexibility and modularity.
"Whether IP telephony, data or interactive, in order to be successful, we have to open our systems," he added. "Those who don't will be left behind."
Staying on top of the OSS issue means that billing vendors must make some hard decisions, as back offices are redefined and relationships with MSOs change.
"We must be able to accommodate those new services," said Convergys president of the cable and broadband solutions group George Von der Haar. "Carriers have invested lots of capital in infrastructure and architectures and now want to see a return on investment.
"We must have the ability to rate usage of any service and a rating engine is the heart," he added. "And flexible statementing is crucial as well. It will allow operators to efficiently package and sell services customers want."
Getting customers what they want will be up to an operator's OSS and subscriber-management systems, experts agree. Just how effective they'll be in achieving that is open to some debate.
"It's a big headache and a big deal, and has stymied most new service deployments like VOD and cable telephony, but the technology is in place to tie head-end elements together on the OSS and customer care and billing sides," said The Strategis Group analyst Keith Kennebeck. "Operators want to be sure they're not losing money to CSR inefficiencies and software issues."
Efficiently switching from a traditional single product billing system to a more complex "usage-based" system that can offer myriad bundled products, customer-care opportunities and billing options is the key to the next generation of OSS and subscriber management systems, according to observers. It is also the road to cable's promised land of revenue.
The path isn't fully paved, though.
"The usage-based piece isn't quite there yet," said CSG vice president of product management Sally Else. "It's not being used in the field. Work-force management is a huge issue, too.
"The tendency is to look at all this as very complicated, so we have to break it down and focus on scalability, order-taking and provisioning," she added. "Those are top-of-mind issues with operators and critical to how they run their business."
NEW OSS ENTRANTS
Those complexities have also given rise to an industry of their own. Software companies such as Alopa Networks Inc., BroadJump Inc., Emperative Inc. and others are now squeezing into the OSS and customer-care market. Yet, behind the back-office doors, issues remain, and the biggest one is OSS.
"There are lots of new entrants in OSS and lots of vision, but it will still take a series of small steps," Wilkins noted. "There are pieces falling into place like core technologies, regulatory issues and infrastructure, but operators can't get to the mass markets without OSS. It's the biggest behind-the-scenes issue."
Some think that it won't be for long. As cable operators push advanced services to a new generation of customers, the competition intensifies and the revenue stakes rise, the need for reliable, flexible OSS and subscriber-management systems is nearing mission-critical status. As such, it is moving beyond back offices and into boardroom discussions. Yet many MSOs remain behind the OSS curve, according to industry observers .
"Operators don't have a lot of IT [information-technology] experience and that has to change," said Randy Fuller, vice president of marketing for provisioning-software developer Emperative. "Telephony and interactive services require reaching deeper into the network and stepping into sophisticated OSS and IT functions, and that means investing in OSS.
"Telecommunications companies invest nearly $2 billion a year in software and OSS, while cable is well under $1 billion. If cable operators want to compete for new services, they have to compete at the OSS level too."
Pursuing the revenue derived from those new services is what OSS is all about, experts said. And the return on an operator's huge investment in building an infrastructure to allow those services and consequent revenues isn't lost on OSS vendors.
"We can't pay out the investments with only high-speed data, so the model going forward will be enterprise software models to manage an operator's infrastructure. They must find a way to maximize dollars out of the network," said Alopa president and CEO Michael Foley.
That must translate into a more efficient OSS and subscriber-management model, experts suggested. Most cable operators remain in the OSS development stage, but some are breaking out, albeit with caution.
"In our discussions, operators are saying there are ways to work out the OSS issue, but generally, we don't see a big push to integrate a holistic, seamless OSS/back-office system," said Matt Tormollen, vice president of marketing for BroadJump, a system-management software provider. "Customer care, however, is seeing significant movement. Now, it's about deployment, not trials."
Ultimately, it's also about revenues.
"Operators have wanted to roll out these new services for years, like modems, and offer service level agreements, throttled bandwidth, cable telephony and more," Kennebeck said. "They have the stuff lined up for customers. Now they want to be sure the nitty-gritty stuff, like OSS, works."