Are new revenues available before 5G?

5G is coming but service providers still need to generate new revenues from their existing business. Our new analysis shows that many existing Ericsson Charging customers can upgrade to new revenues.

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Software upgrades: we all hate them. They interrupt what we are doing, they require planning, they take focus away from business value. Everyone tells us they are necessary, to reduce costs, to improve security, and to keep getting support but what is the benefit?

That is the question our customers ask us.

So, we have created a Return on Investment (RoI) tool to answer that question. We have had a team of charging experts analyzing the costs and benefits for service providers upgrading their existing Ericsson Charging systems to the latest versions. That tool looks at hundreds of parameters to build your business case for upgrading today. The upgrade RoI tool is available to your local Ericsson BSS experts who would be happy to go through it in detail for your particular needs.

One of the things we have discovered from this project is that every charging upgrade adds new features which enable new revenues with massive potential. This comes as a surprise to many customers, who normally consider upgrades to mostly be a cost.

I have been experimenting with a simplified Value Calculator version of this tool which concentrates on the new revenues and am seeing great results. The simplified version only requires a few high-level parameters, like the number of subscribers and the ARPU from some major customer segments, and it estimates potential benefits enabled by upgrading.

BSS parameters

Figure 1: Showing the parameters selected for my medium-sized operator example (20 million subs).

 

How do upgrades generate benefits?

The Value Calculator takes into account several sources of revenue improvements and cost reductions.

One major area of benefits is due to improved time-to-market. This arises from increased automation in development and testing of offers and services, as well as usability improvements making staff more efficient. Not only does this save cost, but it opens up new services and new business models to target. This speed also allows service providers to be first to market with key offers, gaining first-mover advantage, premium pricing and market control.

Another major area is increased customer satisfaction. This results both from new offers and also from improved communication and real-time notifications. Reduced customer care calls save considerable cost but also lead to reduced churn, which in some markets is a vital factor affecting profitability.

Upgrades also add marketing features which improve targeting and take-up of promotions and add-ons, which are often very profitable.

And last, but by no means least, upgrades improve efficiency in many ways, leading to reduced hardware costs, reduced operational cost in updating and testing of existing services and offers, and reduced support and maintenance costs.

 

New revenues for all

I considered a medium-sized operator in a fairly developed market, upgrading from the venerable (but still used) Ericsson Charging System 6. In this case, the operator could unlock benefits of $300M over 5 years. Wow!

Another case I looked at was a large operator in a consumer-dominated emerging market. This showed benefits of $1.3Bn enabled by the upgrade. A significant part of that is churn reduction driven by improved customer satisfaction and loyalty features introduced over the last few years.

Value calculator output

Figure 2: Value calculator output showing benefits for a large operator of $146M in the first year, rising to $350M in the 5th year and totaling $1.3Bn. The breakdown on the right side shows the largest benefits coming from revenue growth.

In all cases, these are not waiting for 5G: these revenues can be achieved with existing phones, networks and technology. As described in our latest 5G reports, 5G business compass and the 5G consumer potential , 5G will bring new opportunities in all these markets, but those benefits will be on top of the new baseline created by a simple upgrade today, as the upgraded release already supports 5G.

 

What does this mean for me?

If you are interested in seeing the benefits for your own network, we will be showing the Value Calculator in shows and events throughout 2020, starting at Mobile World Congress 2020 in February. Or you can book a consultation with one of our experts to show you the return on investment for your particular upgrade scenario using the full RoI tool.

Want to understand more about the return on investment for upgrading your charging system? We can help you with value calculation!

Contact us

 

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