Trends in Global and Indian Telecom OSS/BSS Market
Date: Sunday , January 03, 2010
The Operations Support Systems (OSS) are computer systems used predominantly by telecommunication service providers. The term is normally used to describe specialized softwares which help the telecom network deal with various components within the system such as network operations, service management and provisioning services. The Business Support Systems (BSS) usually refers to software dealing with customer support processes such as Customer Care, Billing Services and Fraud Management.
The global OSS/BSS market is a competitive landscape with about 400 players. The consolidated revenue for the OSS/BSS market stood at USD 15-15.5 Billion in 2008, recording a CAGR of 6-7% for the past five years. In spite of the economic downturn, the market is projected to maintain the same growth rate and touch USD 21-22 Billion in revenues by 2013. The Indian OSS/BSS market generated USD 490-500 Million in 2008 and is expected to grow at 15-17% till 2013 to reach USD 1,050-1,100 Million approximately. The OSS/BSS products have come a long way since they were introduced in the 1970s to replace manual administrative processes. Since then, the industry has undergone a lot of ‘focus shifts’ from manually operated switch management systems to creating automated interfaces. After witnessing a spurt in demand for systems with VAS compatibility the focus is now towards open, interoperable OSS/BSS solutions. This is due to carriers and service providers coming under greater pressure to increase revenues and decrease operating costs in order to survive leading to a greater demand for OSS integration.
Growth: A single OSS/BSS can only manage a pre-decided number of end-users. Companies are forced to install a new system or upgrade the existing one as the number of subscribers increases.
User requirement: As the ARPU (Average revenue per user) falls, telecom companies are hard pressed for cost-effective solutions turning them towards OSS/BSS vendors for streamlining the processes and making system usage cheaper.
Services: A consistently growing number of value-added services like mobile-TV and video-SMS means that the systems need continuous modification or up gradation to handle such content.
Competition: Seeing the growth prospects, more and more companies, which specialize in related domains, are jumping in to the fray, leading to more innovations.
Increasing complexity: New technologies such as 3G and Wimax have resulted in increased complexity in operations and billing such as authentication and handoff, network management, dissimilar network roaming that align goals for network operation and user experience.
Legacy Systems: Until recently, companies had been deploying systems as and when they required and the vendors (and products0 varied across circles in many cases. Since there was no standard framework or language, system integration becomes a huge task.
Customer base: Telecom industry provides great potential but only limited to few players as this is a consolidated industry with a high entry barrier. But this is changing in the Indian context.
Recession: In a time when telecom companies are struggling to make ends meet, IT budgets have been slashed which has impacted new system installations and up grades for OSS/BSS.
Range of Services
The domain is marked with rapid technology up gradation. The range of products varies from pure OSS/BSS systems to customized skill-set extension like content settlement. Although almost all the companies specialize in customized niches, the main focus still remains the traditional OSS/BSS services. We have further compiled a list of various functionalities prevalent in the market (please refer appendix). They have been divided in to 9 major market segments, namely: Billing, Customer Care, Order Entry & Provisioning, Network Operations & Management, Service Assurance, Antifraud & Security, Marketing & Sales Support and Other functionalities. All the services listed as Other Functionalities are taken as VAS. For more details please see the appendix towards the end of this article. On further analysis, we found that “Performance Management” will register the maximum absolute growth in terms of revenues among the traditional OSS functions followed by Provisioning and Service Activation and Inventory Management.
Revenue Assurance, Billing & Customer Care and Mediation will record almost equal growth in terms of revenues in traditional BSS functions. Revenues of Billing & Customer Care will be almost flat while Revenue Assurance will emerge as the fastest growing BSS function.
The field is diversified in terms of profitability as only the big players have been able to make sustainable profits in the last 5 years which leaves a lot of scope for M&A. The top 10 players in the field control about 45% of the market and the top 100 account for a 95% share. In spite of clear divisions, there is still no dominant leader as most companies cater to niche markets and offer specialized services. Following is a description of a few companies and their major products.
Presently the operational framework and programming language differs with each vendor ranging from C language to XML. However, telecom companies are now initiating a move towards common platforms to enhance interoperatability and ease of integration. In this regard, there have been two major initiatives, complimenting each other: the New Generation OSS (NGOSS) by Telemanagement Forum (TMF) and the OSS through Java (OSS/J) initiative. These two initiatives promise to alleviate the cumbersome process of systems integration.
While the NGOSS is a development framework which is generic and technology neutral, the OSS/J, which is Java specific, provides practical implementation for new OSS applications and interfaces. Together, NGOSS and OSS/J lay the foundation for OSS/BSS products and components market by defining industry architecture and interfaces. The model is being widely deployed in the industry.
The standards based approach will enable the operator to respond to the challenges arising from the changing business and technology environments. When moving into the proposed direction, it will be easier to add or remove any OSS/BSS applications, which in turn creates greater flexibility and has an impact on many areas, such as:
1. Changing to new technologies or vendors
2. Developing and deploying new services
3. Improving business process performance – lead-times, quality, costs etc.
4. Being based on standards, it will lower the cost of deploying and managing OSS/BSS applications over their life cycle.
Market size and growth: The global market is worth USD 15363.6 million and is expected to grow at 6-7% for the next 5 years
Geography: Emerging economies’ markets with a high wireless usage are expected to grow at 15-17%. Players from developing countries will globalize and MNCs will focus more on developing markets
M&A: The market is prone to M&A with the smaller companies struggling to maintain profitability
Parallel markets: Some companies have already extended their customer base to related domains like ATMs, Railway networks and Airports. Move to target banking and other domains will be evident
Infrastructure: Difficult to find skilled manpower and infrastructure in developing economies
Alternative Products: Customers now have the option to install systems like ERP, PLM for replaceable services
NGOSS: Vendors are now required to quickly move towards NGOSS, a standardized system from legacy systems which are diversified
Shorter Product Life-cycles: Telecom companies now compete to gain time-advantage on VAS launches and hence demand lower time frames for systems modification from OSS/BSS vendors.
The author is Managing Partner, Knowledgefaber