Telco billing and cloud services: a multi-facted business challenge

The increase in adoption of cloud-based services for computing infrastructure, software platforms and business applications in many enterprises across multiple sectors has spurred telcos and their suppliers to look for new revenue opportunities. Telecom network operators are well positioned to deliver all kinds of cloud services, and many are already doing so – particularly in North America and Europe. They may also be able to act as trusted providers of management for multiple clouds – or “cloud service brokers”. We expect telcos to take around 11% of total global enterprise and public sector spend on cloud services by 2015, with Europe becoming the biggest market, and Asia growing fastest. Telcos have many of the required systems in place to compete effectively in the cloud services market, and to bundle cloud services with their traditional service offers.

To do this, some will need to invest in new billing systems that can charge flexibly for multiple services in real-time, and in some cases to have true multi-tenant capabilities in order to meet the requirements of customers requiring “pass through” billing capabilities (allowing their customers to build value-added services of their own and bill for them in ways that suit their business model).

However, many cloud services are priced in a simple way and do not necessarily require telco-style billing systems; many cloud service providers have built their own. But there is a trend – as there was in telecom billing systems some 20 years ago – to move from in-house-developed billing to solutions provided by specialists. Cloud-based billing-as-a-service (BaaS) solutions have emerged that offer increasingly sophisticated functionality, which are optimised for the needs of cloud service billing, and which are much lower in cost than buying and deploying a traditional on-premises telco-style billing system.

BaaS challenge to traditional telecom billing vendors

Could BaaS providers threaten established telco billing system vendors? Might we see them displacing established providers, and might telcos bill many services using BaaS? There is evidence from publicly announced contracts that this is starting to happen, and we expect it to continue, but there will be a spectrum of needs, met by a spectrum of solutions. For simple services delivered by smaller telcos, BaaS will make a lot of sense; for complex, bundled services delivered by larger telcos, a more likely scenario is that strategic IT and network platform providers will work with the operator to develop the infrastructure the telco needs, and that infrastructure will contain a mix of on-premises, virtualised and public-cloud-based systems.

Innovation Observatory’s report Opportunities in Telco Cloud Billing looks at these issues and forecasts the markets for telco-delivered cloud services, billing for enterprise cloud services delivered by telcos, and telco billing delivered in the cloud [see the figure]. It also looks at the factors that will influence telcos’ choice of billing solution deployment, and profiles leading providers of telco- and cloud-service-focused billing solutions.

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