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The Customer Is Still King
Business
Benchmarking
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Table of Contents
Executive Summary 4
Introduction 5
Economic Landscape 6
Global Market 6
Regional Markets 8
Internet 14
Summary 18
Conclusion 35
Executive Summary It has been a rough ride and there are certainly potholes in the road ahead,
but the sense is that the global economy is again functioning. CSPs have
cut costs and shed non-strategic assets over the last 18 months. Plans have
been honed to provide the best strategic results. Shareholder expectations
have been reset for slower growth. The focus is now on execution.
This is a time
It sounds simple, but we all know it is not. Even though the plans are clear,
there are a myriad of decisions to be taken on a daily basis. The road
where knowing forward is narrow with many opportunities to take a wrong fork. The trail is
uncharted and the GPS doesn’t work. This is a time where knowing the
the major major landmarks and owning a compass can be critical. This report provides
those landmarks.
landmarks and
There are five key points to consider as you move forward:
owning a Insatiable appetite for bandwidth: In the developed markets, the
winning CSPs will be those that can deliver the quality of service (QoS)
compass can Broadband bandwidth for a competitive price. This applies to both fixed
and mobile consumption.
be critical. Pricing is increasingly competitive: As CSPs use price as a
differentiator, ARPU projections for most services continue to decline,
setting customer expectations at a lower price point.
The global economy is struggling back from the recent recession. Whether
one subscribes to the idea that there will be a second dip in world gross
domestic product (GDP) before we truly recover, or whether one subscribes
to the more optimistic view that the worst is over, it is fair to say that the
economy remains fragile. For many nations, small, single-digit growth in
GDP will be seen as wild success. In such an environment, it will be those
CSPs that maximize profit of the current services while building for future
growth that will be successful.
Most CSPs have identified precise plans to achieve future revenue growth.
These plans include acquisitions, expansion into new regions, and for many,
the build out of higher-bandwidth networks for both fixed and mobile
services. So there is clarity on where to invest. The challenge is to assure
the results that support the execution of these plans. For most CSPs, this
means continued cost reductions, while retaining or growing the subscriber
base.
And, of course, we hope the insights arising from the report will generate
interest in full participation in the TM Forum’s Business Benchmarking
Program. We hope you find it useful.
After the uncertainty of the past year, there exists a strong interest in revenue
forecasts. Assuming that there will not be a second dip to the recession, we
can consider the following projections to be likely.
Figure 1
Economic Landscape
Global Market
TM Forum Business
Benchmarking
Business benchmarking is a
powerful industry tool for
understanding performance and
competitive advantage –
especially for large, complex
Source: HOT TELECOM 2010
organizations where the
Total Revenue grows to nearly 2 Trillion USD by the end of 2013. As predicted
relationship between cost and
in earlier reports, revenue from basic mobile service makes up more than half
advantage is not always
of the total revenue. Internet revenue moves from 14.8% of total revenue in
immediately apparent. It works
like this: Businesses from the
same sector agree to pool 2008 to 18% by end of 2013.
revenue for 2008 will become a -9.5% decline by 2012 (See Figure 2). The
performance, which is
processed by a trusted third
party (the TM Forum). The global decline in PSTN revenue growth would be faster if it were not for the
resulting reports provide positive growth taking place in Eastern Europe, the Middle East and Africa
participants with a view of the (MEA) – all of which are expanding PSTN offerings.
industry performance and their
position, while maintaining the Figure 2
anonymity of the participants.
This method ensures that each
participant company can see
where it performs well and
where it performs poorly. That
company can then decide what,
if anything, to do with the
results. Strong performance in a
particular area might be
identified as worthy of even
further improvement in order to
make it a differentiating feature.
Alternatively, minor
improvements expensively
obtained might be viewed as
not worth the effort, thus Source: TM Forum 2010
causing investment to be
scaled back.
Most CSPs are converting their PSTN subscribers to other services, such as
VoIP, fixed mobile or in some cases, mobile. This subscriber conversion
positions the CSP well to retain these subscribers long term, as well as to
sell more complex bundles to these subscribers in the future. Figure 2
shows the revenue growth projection for VoIP through 2008. It is clear that
the decline of PSTN is substantially softened by the increase in VoIP. By
2012, almost half of global fixedline voice will be from VoIP (See Figure 3).
Figure 3
Economic Landscape
Global Market
Market Service
Segmentation
This report segments
communications services into
Fixed, of which the significant
components are PSTN and
VoIP; traditional mobile, which
includes voice and text
Source: TM Forum 2010
messaging; Internet, which
includes dial-up, fixed
Figure 4 shows the global forecast for revenue growth from 2008 to 2013.
broadband and mobile
The pattern is easy to see. Revenue growth slows overall with the
broadband (including mobile
Figure 4
The previous global revenue picture comes into sharper focus when seen
from a regional perspective. Figure 5 shows the percent of the global
telecom service revenue contributed by each region. Not unexpectedly, the
developing and emerging markets gain market share at the expense of the
developed markets. The most significant growth of market share is projected
Economic Landscape for the MEA, which is expected to grow 1.8% from 2008 to 2013.
Figure 5
Regional Markets
Figure 6
The MEA is projected to grow aggressively over the period with a 7.2%
CAGR and a projected total telecom services revenue of US $199 billion,
pulling ahead of Latin America at US $184 billion. With only a 3% CAGR,
Asia still outperforms the other regions with a total revenue of US $585
billion. Western Europe shows the slowest growth at 1.2% CAGR.
Figure 7
Economic Landscape
Regional Markets
Figure 8
Figure 9
Regional Markets
Eastern Europe leads the world in exhibiting the highest CAGR for Internet
revenue growth in the period at 11.4%, followed closely by Asia at 9.5% and
MEA at 8.1%.
Figure 10
Figure 11
Economic Landscape
Regional Markets
The highest
growth is
expected for
Asia as mobile
Source: HOT TELECOM data 2010
subscribers
Mobile services are above 100% penetration in North America, Western
Europe and Eastern Europe. Latin America is anticipated to grow mobile grow 11.2% to
subscribers from a current 90% penetration to almost 110% over the period.
The highest growth is expected for Asia, as mobile subscribers grow 11.2% 2,875 million
to 2, 875 Million in 2013. MEA also shows strong growth, as mobile
subscribers increase from a current 55% penetration to over 68% in 2013, in 2013.
bringing the number of subscribers in the region to the number-two position
(behind Asia).
ARPU has been calculated from the revenue and subscriber projections.
(See Figure 12).
Figure 12
Economic Landscape
Regional Markets
By 2012
almost half of
global fixed
line voice will Source: TM Forum 2010
be from VoIP. Western Europe appears to have an unsustainably high ARPU for fixed
services with a slower decline on fixed ARPU than many other regions
(See Figure 13).
It is interesting to observe that ARPU for fixed, mobile, and Internet services
in North America remains within 10%. The implication is that high
smartphone usage will drive up mobile ARPU in North America, providing
a precursor of ARPU trends in 2018.
Figure 13
As can be seen in Figures 13, 14 and 15, ARPU is declining for all services
except Internet. In general, this is seen as a reaction to the slow economic
situation and increased competition. The sharpest declines in Fixed ARPU
are seen for Asia, Latin America, and MEA.
Figure 14
Economic Landscape
Regional Markets
Figure 15
The other regions are expected to grow ARPU 1.5 to 4% over the period.
Several interesting dynamics are visible in Figure 16 above. The first is that
radio and mobile video become
by the end of 2010, dial up will be dead in the United States. Internet access
more prevalent.
in the United States will mean broadband. The second dynamic is that there
Customers enjoy this
will be more Internet access than personal computers. This is a sharp
connectivity so much that device
reversal of the trend seen in 2004 through 2007, where the typical scenario
manufacturers are developing
was that a household had Internet access and multiple family members
new personal mobile products,
used that access with separate computers. In 2009 and onward, we see
such as bigger phones, smaller
increasing availability of Wi-Fi hot spot accounts and mobile Internet access,
netbooks, and large-screen
resulting in more Internet access than computers. Finally, the third dynamic
Internet devices. Meanwhile, the
to be seen is that the gap between Internet subscribers and Internet users is
load on the data networks will
explode as customers trade in
their old phones for slowly closing, foreshadowing a world where everyone has their own
smartphones. Internet subscriptions.
By the time this report has published, China will have supplanted the United
States as the country with the largest number of Internet subscribers. The
forecast shows that by the end of 2010, Internet access will be provided by
broadband connection. The number of personal computers lags behind
Internet access, achieving a one to one relationship by 2012. The most
compelling take away from Figure 17 is that by 2013, there are three
Internet users for every broadband subscriber and PC.
Economic Landscape
Figure 17
Internet
By the end of
2010 dial up will
be dead in the
USA. Internet
access in the
Source: HOT TELECOM 2010 USA will mean
While projected to have much smaller numbers, India shows a very similar
pattern to China. By 2013, personal computers are slightly more numerous
broadband.
than Internet subscribers. Roughly 90% of the Internet subscribers have
broadband and there are more than seven Internet subscribers for every
personal computer.
Figure 18
Figure 19
Economic Landscape
Internet
Economic Landscape
Internet
The large blue segment of each bar represents the iPhone OS, showing the
aggressive uptake of the iPhone and iTouch globally. Android has made
significant penetration in North America, with noticeable share in Western
and Eastern Europe and at least a showing in Asia, Latin America, and
Oceania (Polynesia, Melanesia, Micronesia, Australia). Similarly, Windows
Mobile is in the top four in most regions and is expected to gain share with
the new release late 2010.
The bottom line is that the smartphone market has become very competitive
with a wealth of offerings. All of these smartphones will run applications,
support social networking, get your email, and deliver strong Internet
access. This all takes bandwidth. More bandwidth than initially anticipated,
as some CSPs can tell you.
Figure 22
Figure 22, also from AdMob, shows the growth in traffic over the past year.
The chart shows that regions with high smartphone penetration have seen
substantially higher traffic than regions where smartphones are a small
percent of overall mobile phone presence.
Economic Landscape
Unlike last year the telecommunications industry is projected to show
positive growth in all regions. By 2013 the total revenue for
Summary telecommunication services will be nearly 2 trillion USD.
Assuring a positive “customer experience” is more important than ever before. Tracking Customer
A strong, positive customer experience can retain customers and play a
critical role in recruiting new customers. (Who would move to a carrier that
Experience
had poor customer reviews?)
customers are not profitable for the first several months. This report is designed to
Tracking Customer While brand management, market segmentation, and product bundles are
Experience important to customer experience, they will not provide retention without a
foundation of solid customer experience at each stage of the lifecycle.
Figure 23 shows a representation of the Customer Experience Lifecycle
from TM Forum. The lifecycle shows the high-level view of the stages of
customer experience.
Service Consumption
than to
acquire a Support – Call Center
Support – Assurance
new one.
Billing
Taken together, these metrics enable the CSP to understand and deliver a
foundation quality of the customer experience, enabling success of the new
offerings, brand awareness, etc.
Figure 23
Once the customer has identified and ordered the service, the focus usually Tracking Customer
shifts to ensuring the service is available for use. This comes down to two
Experience
measures:
2. How long did the customer need to wait to have the use of the new
Service Fulfillment
service?
Unintended Consequences
For mobile services, fulfillment may be effectively instantaneous as the
customer leaves the retail outlet with an active phone in hand. The longest
CSPs are dealing with the pain
For residential services such as VoIP and IPTV, service activation runs from
Additionally, new revenue
Tracking Customer
Figure 25
Experience
Service Fulfillment
What To Measure?
Over time, device analytics
will enable collection of
substantial data on the
customer experience as it
happens. In the meantime,
savvy CSPs use internal
measures as meaningful
surrogates. Source: TM Forum Business Benchmarking 2010
On-Time Delivery for Business Services has declined in 2008, possibly due
to cost cutting in international business services organizations that are
reacting to the recession.
Figure 26
Service Fulfillment
High service
availability is a
basic customer
expectation.
Residential broadband service availability has been very consistent the last
three years. Figure 28 shows a typical distribution of performance, with 76
percent of CSPs in the studies providing 99-99.999% service availability.
Leaders perform at 99.999% while median performers deliver 99.9 or better.
CSPs who are challenged to deliver that level of availability are at risk of
losing customers to better-performing competitors.
Figure 28
The leaders hold flat with service availability in the 99.999%+ range. Median
performers declined 0.025% almost flat. Lagging CSPs have declined almost
a percentage point to 98.8% availability.
Tracking Customer
Experience
Figure 29
Service Availability
Service availability
is evolving to
include the ability
of the customer to
Source: TM Forum Business Benchmarking 2010
use the complete
Leading performance is very similar across Broadband, Business Services,
bundle. While and Mobile. Business Services has the best median performance. With a rise
in content and data usage, both Broadband and Mobile providers will feel
Internet access increases in customer pressure for higher availability and bandwidth. Service
availability is evolving to include the ability of the customer to use the
complete bundle. While Internet access may be fine for normal activities, a
maybe fine for
fall off of expected bandwidth can result in pixelization of digital video signals.
normal activities,
a fall off of Figure 30
expected
bandwidth can
result in
pixelization of
digital video
signals.
Call Center
Support
Once the customer has the service, most call center or web interactions are
related to support or billing inquiries. We look at general and support inquiries
here. Billing inquires are covered in the Billing section.
Enduring long call waiting times can drive a customer to distraction. As CSPs
automate systems and cut costs, it is important to keep an eye on the impact
on the customer. In this case, have call waiting times, first-call resolution, and
abandoned call percentage improved or declined?
Figure 31
This chart tells a story of call center evolution. In 2005, interactive voice
response (IVR) systems were less common and less sophisticated. Answer
times were important, so they were short in duration. During the next several
years, increasing emphasis was put on the IVR system – less emphasis on
responsiveness.
In 2008, there was increased interest in customer experience, and wait times
fell for Lagging and Mean performers, but increased slightly for Leading and
Median performers because of leaner staffing in call centers. We project that
2009 numbers will show an increase in wait times across the board, as CSPs
continue to trim costs.
Call abandoned rates for residential broadband are declining for all levels of
performance. This aligns closely with improved call waiting times in the same
period.
Tracking Customer
Figure 34
Experience
Support
Leading CSPs
have 1% incident
re-reports for
Source: TM Forum Business Benchmarking 2010
residential
Assurance
broadband – an
Customers feel well supported when problems are addressed on the first call improvement of
to the help desk. That goodwill can be quickly eroded when more difficult
problems arise and time-to-service restoration stretches into hours, days or 78% from the
weeks – depending on the service type and problem complexity.
Figure 35 shows residential broadband incident resolution time has improved previous year.
significantly over the last few years. There is 92% improvement in leading
performance, with leaders delivering closure in 60 minutes. Median performers
have improved 72%, delivering closure in a day.
Figure 35
Tracking Customer Figure 36 shows 2007 to 2008 performance for residential broadband
re-reports. There has been improvement across all the categories, with the
Experience most significant improvement in the percentage of incident re-reports seen
for leading CSPs, showing 78% improvement with re-reports at 1%.
Support Figure 36
If a customer
frequently
endures the
inconvenience
of a service
concern, they
will consider Source: TM Forum Business Benchmarking 2010
moving to the Business Services shows a significant decline in incident resolution time
from 2006 to 2008. For some CSPs, this reflects the increased loading of
the IP infrastructure with less mature tools intended to address the loading
competition.
issues.
Figure 37
Support
Problem Cause
Tracking problem causes can provide critical insights into probable ways to
reduce problem loads. Figure 39 shows problem cause values for residential
broadband. The largest problem areas are Technology Caused and Customer
Caused. Since 2005 there has been a 74% decline in Customer-Caused
problems, while Technology-Caused problems have remained consistent
between 20 to 25%.
Figure 39
Tracking Customer
Experience
Support
0Once the customer has subscribed to a service, the most frequent interaction
with the service provider is through the bill. To assure high customer
satisfaction, the bills should be easy to understand and, of course, correct.
One leading indicator of health in this area is the volume of customer billing
requests. These are calls or other contacts with questions or complaints about
a recent bill.
Figure 41 shows the percent of total customer contacts that are related to Tracking Customer
billing issues. There is a clear trend showing an increasing percent of customer Experience
contact is billing related, an increase of 46% over three years. This trend
reflects the increasing complexity of the bundled offerings and the variety of
items that show up on the bill from voice or data service to new applications
and digital content.
Billing
Figure 41
While the percentage of customer contacts says quite a bit about the
relationship, the number of bills adjusted due to these customer contacts is
also an important indicator of the experience. Figure 43 shows the Mean %
Bills Adjusted over the past 5 years.
Figure 43
Leading Wireline and Mobile CSPs both experience a very low number of
calls resulting in bill adjustments. Mobile performance is much stronger than
Wireline at the median level. When combined with the information in Figure
42, it becomes evident that even while Wireline CSPs may receive fewer
calls for billing, they more frequently have issues requiring adjustment.
Customers value simplicity and accuracy. As bundles become increasingly
complex, with more content and other non-traditional transactions, CSPs
that constantly deliver simple and accurate billing experiences will be valued
by customers.
Along with customer desire for quick (if not real-time) transaction notification
for calls and purchases (e.g., for applications, ringtones, and VoDs),
customers want the on-line billing tools to reflect reality. This is especially
true regarding recognition of payment or topping off a pre-paid account.
Along with customer desire for quick (if not real-time) transaction notification for
calls and purchases (e.g., for applications, ringtones, and VoDs), customers
want the on-line billing tools to reflect reality. This is especially true regarding Tracking Customer
recognition of payment or topping off a pre-paid account. Experience
Figure 44
Billing
Definition of Volume of
Customer Requests
The measure is (Number of
customer requests *1,000 /
Total number of customers).
A value of 1000 would mean
that in a typical month, the
CSP received the same
number of requests as if each
customer had initiated a
request. Clearly, scores in the
.88 or .03 range are very good.
Source: TM Forum Business Benchmarking 2010
In Figure 45, we see that by 2008, customers have pressed CSPs to radically
change the payment notification time.
Figure 45
Service Fulfillment
Service Consumption
Support – Assurance
Billing
To see leading, average, and lagging indicators for these areas, please refer
back to the details in the preceding section.
The last 18 months have been challenging. Most parts of the world have felt
the impacts of the recession. Telecom service revenues were down, and
some CSPs experienced negative growth. Everyone had to cut costs and
refocus their plans.
Though the economy is still fragile, there exists a general sense of stability. Conclusion
The cost cutting and refocusing are delivering. There are plenty of
challenges ahead, but the sun has come out and we are executing the plans
we need for growth – albeit at not as fast a clip as we saw a few years ago.
The world appetite for bandwidth is on par with the world appetite for
Customer Experience
By 2013, more than 11% of the world population will have Internet access,
and most of that will be broadband. Global mobile penetration will be at
roughly 85%. The world will be a different place, as it becomes increasingly
connected. Experiencing more connectivity will fuel the appetite for more
connectivity. The speed of connection will accelerate.
So the message is: Pursue those strategic initiatives that you started last
year, and while they are underway, keep a sharp eye on your current
customers. Make sure they see you not only as “cool” but also as
“accessible, reliable, and fast.”
Its Revenue Assurance solution – A new approach is therefore proposed: Business Assurance.
RAID – was first released in 2002 Based on a disciplined methodology able to monitor and control business operations and
and combined a deep knowledge prevent risk – and supported by appropriate systems – it underpins the management
of telecommunication requirement that, for every business process, control points and key performance
operations with state-of-art indicators should be established.
software technology.
Having the right Business Assurance tools in place ensures that emerging problems can
This solution contributed to be detected, analyzed and managed through both corrective and preventive measures,
a major breakthrough in the rapidly eliminating the root causes of leakage and failures. In addition, adopting a
industry: the emergence of true Business Assurance strategy creates a more focused and customer-oriented environment,
end-to-end Revenue Assurance integrating different operational areas across a CSP.
methodologies, processes and
tools that could become a de Why do you need Business
facto standard for Assurance?
Communication Service CSPs operate in an
Providers (CSPs). environment characterized by
Recently WeDo Technologies potentially overwhelming
released Business Assurance system complexity and data
RAID v6.0 to respond to the amounts. These growing
latest requirements of complexities bring continuous
Communication Service change to a company’s
Providers (CSP’s) and take processes and systems,
Revenue Assurance to the forcing it onto much riskier
next level. ground where failures can
create massive financial
losses or severely impact
customers.
Most companies, having
placed controls on switch-to-
bill relationships, understand
that these don’t completely
address leakage sources.
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The Customer Is Still King
Other processes also have direct costs that need to be better controlled and managed.
The consequences of cost leakage or cost creep in a CSP’s network will have a dramatic
impact on the contribution margin from each service or relationship and will ultimately
impact on the operator’s overall profitability.
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The Customer Is Still King
Business
Benchmarking
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