Network Axiom - Huaweimarket.huawei.com/hwgg/access/en/pdf/how_to_operate.pdfWhy Axiom? First of all, here are some facts about ... how hard the telecom operators squeeze their costs,

How to Operate

58 HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16

Why Axiom?First of all, here are some facts about

the telecommunications market: the

worldwide revenue of fixed lines in

2003 decreased by 2.2% compared

with 2002, the year in which the glo-

bal revenue of voice traffic was about

510 billion USD while that of data ser-

vice was 170 billion USD (source: ITU);

a consulting company conducted a

survey on 22 fixed line carriers in Asia-

Pacific only to see two with a negligible

growth in 2003 and the rest with

reduced revenue or profit. So this is the

situation in the global telecom market.

Traditional operators are undergoing

the following challenges: the fixed and

wireless voice market is now approaching

the "economical" saturation point;

new technologies like IP and VoIP are

sapping the profit out of TDM; the

development of broadband (data

communications) lacks an effective

strategy and profit model; the fixed

voice traffic is diverted to mobile; the

competition field turns from voice traffic

management to complicated NON-

VOICE SERVICE operation.

Technologies and regulations are lowering

the boom of the industry: technologies

such as VoIP, PLC, 2G-3G PLMN,

BB, Cable, Wi-MAX and HSDPA can

provide more effective and valuable

communication services; the regional

regulatory rates of voice are diversified,

most of which are preferable to the

consumers; the tariff of voice changes

from regulatory rate to at-auction price,

representing its revenue as precarious

as the Sword of Damocles; No matter

how hard the telecom operators

squeeze their costs, they are unable to

make ends meet because the saved

pennies still cannot offset their loss

of income; it is too difficult for the

operators to survive from voice

operation; thereafter, the business

model of traditional voice operation is

an irretrievable failure in itself.

Almost all carriers (the whole telecoms

market) will transform from "basic tele-

communications" to "consumption

telecommunications", from price mode

to value mode and from network-

capability service provider to business-

Network AxiomA Close Look at the Key Issuesof Network Transformation

By Liu Nanjie

– Plus Discussion about Profit Models of3G/Broadband/NGN

How to Operate

59HUAWEI TECHNOLOGIES APRIL 2005 . ISSUE 16

Intelligent Network and Soft Switch are

to enable voice-added service. Al-

though IN only solved part of the prob-

lems in voice service application, it can-

not be properly reckoned as a top-layer

application protocol. It cannot eventu-

ally solve the issues about NGN/IMS

service. Parts of the value-added voice

processing functions in packet voice

Soft Switch are the rudiment of Service

Network.

The concept of Communication Sub-

net and Resource Sub-net models may

explain all the questions about NGN,

IMS, and Enhanced Service Network

(ESN). The whole network will return

to the OSI framework.

What is shown in figure 1 is the model

of Communication Sub-net and Re-

source Sub-net, respectively called as

"Egg Yolk Network" and "Egg White

Network", with the former providing

"Basic Communication" services and

carrying the Resource Sub-net while the

latter supplying "Consumption Com-

munication" services (non-essential and

personalized telecommunication). Both

sub-nets need operators and SPs.

Nevertheless, traditional internet does

not need carriers; it is thereby an inop-

erable network resource, not a resource

network.

The evolution of the telecommunica-

tion network from carrying operation

to service capability (resource) opera-

tion brings a broader horizon for

development. Facing the situation that

the price of the traditional service runs

to the cost, and the new services need

creativity and TVO/TCO (Total Value of

capability service provider.

As a matter of fact, the whole tele-

communications market is bringing

in the trends that mobile replaces

fixed, non-voice replaces voice, ICT

convergence supersedes traditional

business customers, value commu-

nication takes the place of price

communication, and resource

operators take over from network

carriers

Following this tendency, the next 3 to

5 years will see enormous changes and

transformation in the global telecom

industry: stagnant or negative growth

in the world fixed line market may

come along in the near future. The 3G/

BB/NGN based service operation will

gradually breed a new business model,

operation model or profit model.

Ther whole telecommunications market

is bringingg in the trends that mobile ser-

vice rereplaces rixed; non-voice substitutes

voice; ICT convergence superpersedes

traditional business customers; value

communication takes the place of price

communication takes the place of price

communication; and resource operators

takes over network carriers.

The so-called "network axiom" men-

tioned below is actually a summary,

generalization or abstraction of the

practices of non-voice service, mainly

addressing concepts that are clarified

to us if the network is viewed as a com-

bination of "Carrying Network" and

"Service Network". Once we assume

that the entire network is composed

of "Communication Sub-net" and

"Rethe service controlling parts using

packet switch technologysource Sub-

net", we will clearly understand service

operation and network operation, dis-

tinguish value from price, and explore

operation disciplines and profit model.

The concept of "Network Axiom" may

help to understand and solve most of

the doubts concerning convergence

between computer and communica-

tion and the practical problems oc-

curred dur ing NGN/3G/BB/ IMS

operation.

Axiom 1: The entire network is

made up of "Communication sub-

net" and "Resource sub-net".

"Network" is divided into two layers:

"RESOURCE SUB-NET" and "COMMU-

NICATION SUB-NET" (Core, Metro, AN

and W-AN belong to Communication

Sub-net) from essential and objective

perspectives, according to the OSI sys-

tem and the rules of a network's capa-

bility to carry and process information.

The important role of Resource Sub-net

can only be detected when communi-

cation is merged with IT.

In terms of the 7 Layers of the OSI

Model, COMMUNICATION SUB-NET is

engaging in the correct transmission of

information under Layer 4 (Transport),

while RESOURCE SUB-NET is dealing

with the accuracy of the grammar,

meaning, presentation, understanding,

synchronization and application col-

laboration of information. The principle

of the 7 Layer can easily clarify those

scrambling "convergence" between

networks, the confusion between ser-

vice and network, and the bewilder-

ment about price and value.

How to Operate


Ownership / Total Cost of Ownership)

capability, operators should convert to

the systematic transformation oriented

to market application so that they can

completely conform to the objective

law of market requirement and keep

growing. Transformation from

denotational Expand & Reproduce to

connotational Expand & Reproduce,

from extensive operation to intensive

operation, from quantity oriented to

quantity & quality focused, from mere

attention to product management to

equal stress on both product and

resource management, and from

closed-end development to open-end

development.

Only through product and marketing

innovations can telecom operators

actively build up a state-of-the-art next

generation business model applicable to

personal communication, shifting their

role as traditional voice operator

(Carrying Network oriented) to new ser-

vice operator (Service Network oriented)

to maximize their market value.

Axiom 2: "Consumption Communica-

tion" is the most profound realm of

telecommunication operation; It is

boundless.

The carrying service in Communication

S u b - n e t p e r t a i n s t o " B a s i c

Communication", and the service

in Resource Sub-net belongs to "Con-

sumption Communication". Carry is

universally required. Operators buy

MOU, bandwidth and ports to provide

price-based service. Nevertheless,

Consumption Communication is

personally demanded to bring value on

the basis of applications. An operation

system that fully satisfies all personal-

ized requirements is the profit direction

in the future. The telecommunication

industry is in the transition from

basic voice communication period to

Consumption Communication times.

The so-called "Basic Communication"

can be compared to peop le ' s

essential requirements (like food provi-

sions characterized as allowance, wel-

fa re and pub l i c in te res t . ) fo r

telecommunication, which falls into the

realm of telecommunication right. On

that account, there are some so-called

killer services (just as everybody

needs "communication"). However,

"Consumption Communication" does

not fall under fundamental needs. It is

the service with substantial valuable

content catering to individual telecom-

munication interest. It is in the realm

of value consumption. Basic commu-

nication is only a particular case in the

preliminary phase of Consumption

Communication.

PEOPLE'S REQUIREMENTS FOR

TELECOMMUNICATION EVOLVES

WITH THE DEVELOPMENT OF

TECHONOLOGY AND INDUSTRY TO

THE PURSUIT OF VALUE CONSUMP-

TION AND PERSONALITY. CONSUMP-

TION COMMUNICATION IS ENDLESS.

THE GROWTH OF THE INFORMATION

INDUSTRY DEPENDS ON THE BUSI-

NESS OPERATION MODEL WITH CON-

SUMPTION COMMUNICATION AS ITS

CARRIER. If there is a file recording each

individual's telecommunication require-

ments (including the processing of re-

quested information), this file should be

specific to each person like a fingerprint.

We may call this personalized file "tele-

communication fingerprint" (personal

permanent telecom "Number").

There are substantial differences between

Basic Communication and Consumption

Communication in the aspects of the

business model, operation model and the

profit model.

Basic Communication or carrying

communication is never dispensable,

yet people's demand for information

communication is not just carrying and

transmission, but more processing on

the content, as the volume of egg white

is always bigger than that of the egg

yolk. The service "embedded" (born

with the network) in Communication

Sub-net is voice, which is a must to

everyone, but is not always commer-

cially valuable. THE ISSUE WITH

TRANSFORMATION FROM BASIC

COMMUNICATION TO CONSUMP-

TION COMMUNICATION IS THE

RADICAL CHANGE IN SERVICE

MODEL, WHICH PREVIOUSLY

PROVIDED ONLY ONE TYPE OF

SERVICE OR OPERATION TO ALL

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communication fingerprint) to win

more segments. The times when it is

possible to use single service to gain all

users has gone forever. Thereupon,

how to provide the requested service

according to each consumer's "tele-

communication fingerprint" becomes

the critical profit mode in the next

phase competition. What is showed in

figure 2 illustrates the issues and solu-

tions that the operators will face with.

In the concept of Resource Sub-net, IT

and telecommunications will be con-

verged more closely. Service "compu-

tation" capability depends more on

telecommunication. Likewise, next gen-

eration telecommunication also needs

to support the processing of services

at higher layers (IT architecture) more

strongly. Thanks to the realization of

high-speed wide area communication,

Resource Sub-net leads telecommuni-

cation to the layer of resource, further

arousing the great potential of

applications. This is also the point of

reference for those proactive and stra-

tegic products of companies such as

MS, IBM and Qualcomm.

The innate character of Communica-

tion Sub-net and Resource Sub-net

results in the fundamental changes

in the business model, operation

model and profit model of the

traditional telecom operators and

equipment manufacturer. TELECOM

OPERATORS SHOULD TRANSFORM

FROM MERE VOICE NETWORK OP-

ERATION TO HIGH-VALUE-ADDED

SERVICE NETWORK OPERATION,

FROM VOICE OPERATION TO NON-

VOICE OPERATION, FROM NET-

USERS, NOW HAS TO PRIVIDE MIL-

LIONS OF PRODUCTS TO MILLIONS

OF INDIVIDUALS WHO MAY NEED

ONLY A FEW OF THE PRODUCTS.

People's requests for communication

products are similar to their needs for

agricultural products. Agricultural products

are still indispensable, though the number

of types of edibles is beyond man's

imagination. Moreover, the number is

still growing at a faster speed, creating

a food industry system. The revenue of

agricultural product is much lower than

that of the food industry. From this, we

can see a brighter future for Consumption

Communication rather than Basic

Communication.

The Communication Sub-net provides

the "Basic Communication", whereas

the Resource Sub-net supplies the

"Consumption Communication".

What the traditional operators operate

on is the Carrying Network the

Communication Sub-net. Its game

rules, operative characterist ics,

protocol (function), intelligence,

profit model, construction rules

& specifics, investment peculiarity,

technical trait and regulations of the

Communication Sub-net are clear

enough. It is in the realm of traditional

telecommunication network. Because

the operation revenue is closely related

to the telecom equipment (build-in),

it is more and more close to the

cost of service with the progress in

technologies. The "CAPEX"-based net-

work service model gradually enters

into the "phase of traditional industry".

At the same time, people's require-

ments for communication and its quality

are also creeping. The task of processing

on the non-voice telecommunication

service and computation should be

completed by the Resource Sub-net

which is more complicated than the

voice communication network.

Consumption communication is char-

acterized (defective) by its abundant

varieties but rare usage. Therefore,

"convergent service" (a collection of

related services) arises. The profit model

of operators is to provide each con-

sumer with the personalized service

that he needs (according to his tele-

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How to Operate


WORK-CAPABILITY OPERATION TO

SERVICE-CAPABILITY OPERATION.

THEY SHOULD SEEK PROFIT OPPOR-

TUNITIES NOT ONLY FROM NET-

WORK PRODUCTS BUT ALSO FROM

SERV ICE CAPAB IL ITY. THEY

SHOULD CONDUCT RESEARCH ON

THE REVENUE RULES AND MODEL

OF SERVICE OPERATION. THE NEXT

3-5 YEARS WILL BE AN IMPORTANT

PHASE FOR TELECOMMUNCATIONS

INDUSTRIAL TRANSFORMATION. In

the view of differences in the new type

of service and its rules, the transforma-

tion should involve many aspects like

operation model, market, regulation,

value-chain, industrial structure, prod-

uct structure, consumption behavior,

profit model, operation organization,

billing, settlement, interconnectivity

and etc.

Intensive personalization of communi-

cation will be the trend of the telecom-

munication development in the future.

Effectively merging the advantages of

mobile network with those of fixed

network and developing converged

personal communication and in-door

telecommunications are what users

require and are the future road for

telecom operators. With the develop-

ment of NGN, IP, wireless coverage and

terminal technologies, fixed & mobile

convergence (FMC) provides the users

with the possibilities of best convergent

services. Service convergence can bring

the users with brand-new services and

applications. When it brings conve-

nience to customers, it will trigger

customers' further requirement for tele-

communications service, too.

Axiom 3: The core profit of basic

communication is "price" while that

of consumption communication is

"value".

Profitability of Carrying Network comes

from CAPEX. Network capability is the

profitability, so the core of profit lies in

the pricing (cost) attributes of CAPEX

which is the result of regulations. Basic

communication belongs to the realm

decided by regulation and cost.

"Killer services" are mainly Basic

Communication, which are based on

price instead of value, thus they run into

flat rate. In accordance with the "com-

position of egg white", non-voice

communication, integrated with

the elements that are not closely

associated with network equipment

investment_service capability, content

element, SP/CP management cost,

customer management and billing,

becomes the ratio of value and

cost_providing what kind of customer

value with how much cost. The service

provided varies in value for customers

with different telecommunication

fingerprint. Service cost mainly comes

from OPEX, thus the basis of profitabil-

ity in Consumption Communication is

to provide value. It is more than neces-

sary to start "telecommunication pro-

file management" to properly provide

each individual with different value

service. Profile Management will be the

commanding elevation for controlling

user consumption value in Service

Network. It will be the core requisite

for profitability. AT THE SAME TIME,

IT IS THE TERMINAL, INSTEAD OF

NETWORK, THAT LEADS THE VALUE

OF CONSUMPTION SERVICE.

TERMINAL WILL BE THE UNIQUE

INTERFACE FOR END USERS TO

EXPERIENCE AND CONSUME

VA L U E . N O T E R M I N A L , N O

CONSUMPTION!

On account of the transformation,

the telecom market requirements can

be classified into two types_basic

requirements and consumption

requirements, most of the latter are

non-voice services.

The profitability of traditional telecom-

munication network lies in those

factors relative to network capability

such as MOU, wavelength, bandwidth,

port and QoS; thereupon, its profitabil-

ity is derived from the collection of car-

rying capability, which is mostly in close

relationship with the capability of

tangible equipment (network product).

The profitability of resource (service) is

based on the collection of the capabili-

ties of services like high layer protocol

switching, content, software platform,

middle ware, session management (By

Transaction, On-demand, Streaming),

mobil i ty management, industry

application, resource server, storage,

collaborative processing, stream

media distribution, DRM, Profile

Management, Application Driven

QoS, service authentication, security

connection, Presence Management,

content process, service CRM, carrying

ERP, dynamic IP Billing, SDP like service

fast delivery and terminals, which are

the capability elements of service

delivery, management and execution.

The profitability factors of Communi-

cation Sub-net are all correlated


with cost and the relevant price and

pricing (regulation); whereas, those of

Resource Sub-net are associated with

the size of the user requirements.

Customers will pay for the value that

they have consumed. Even the same

service will be paid at different value

on different occasion and at different

time. This is the magic of the Resource

Sub-net. As to the application oriented

service operation, the personalization

makes the service unpredictable with

varied length of application value chain

and in immature service delivery platform

architecture. The ownership of Service

Network or Resource Sub-net is taken

by several SPs, so the rules of Service

Network have not been recognized by

the majorities of the industry. It takes

time for operators to transform, thus

there will not be any incumbent players

or service providers for the Service

Network in a quite long period. With

the improvement in Service Network

profitability, sooner or later, dominant

players in Service Network will come

to their place and transform from mak-

ing profit by their capability of network

(carrying) coverage to profiting by con-

sumption services (successful business

model for consumption network).

Axiom 4: Only consumption com-

munication possesses the character-

istics of the value chain and value

allocation and needs a new busi-

ness model.

The "application value" of Resource

Sub-net is provided to the end users by

service operators through the product

design, product delivery, cross offering,

dynamic billing, composite binding,

c u s t o m e r - s e r v i c e t a i l o r i n g

management, service synchronization

a n d Q O S . U n l i k e t h e B a s i c

Communication, the requirement of

Consumption Communication needs to

be completed by a series of steps,

which call out the value chain mode

The value chain of Consumption

Communication is so long that it needs

a kind of fair adjustment mechanism

or business model which defines the

processing and operation rules for each

player of the chain. There should be a

service business & operation sub-

system for each product value chain

and a cross S-BOSS for multi-services.

That is why there are requirements for

a sophisticated industry model. This is

a new field which is often neglected

by people because of their insufficient

understanding of the business. Before

the perfect solution comes out, the

whole industry is in confusion, crying

out for a business model. In fact, it is

safe to say that the business model for

non-voice communication or Con-

sumption Communication is already

defined, but it will take some time for

it to appear.

The business model for Resource Sub-

net operation is the composite func-

tion of the business models of each

simple service.

The product development and opera-

tion should build up a complete indus-

try chain including telecom carriers,

telecom service operators, equipment

manufacturers, content providers,

information service providers, industry

application ISV and terminal vendors,

each of which should play a specific role

during the course of product develop-

ment and operation; otherwise, the

value chain will fall apart. Only a solid

value chain model can lock all players

onto creating value for product devel-

opment and operation.

Most products of Service Network or

Resource Sub-net cannot go directly to

full deployment. After the new prod-

uct is developed, produced and deliv-

ered to market, the development of the

product is not yet complete. The pro-

motion and sales of new products are

not the selling of simple voice. The ex-

isting mode is not adaptable to guar-

antee the full deployment, promotion

and service of the new products. The

operation of a Service Network is en-

tirely different from that of a Carrying

Network. The high risk and uncertainty

of the new product development calls

for the assurance mechanism of risk

management. New products need in-

cubation and should be developed in

the market to be operable services.

Accordingly, new product trial environ-

ments with relevant new mechanism

should be built up. A comprehensive

interactively experiencing environment

should be set up for new products char-

acterized as large quantity, short life

cycle, small market segmentation and

high cost.

To bring the above-mentioned environ-

ment into operation is actually to re-

build a whole new network space. We

believe that the experience of the end

users is the critical success factor for

non-voice Service Network (Resource

Sub-net) operators. Operators can suc-

cessfully improve their ROI of the Re-

How to Operate


source Sub-net construction by mak-

ing the users pay for their choice of

new services, the value of which they

already experienced in the service.

Axiom 5: The value of consump-

tion service lies in satisfying con-

sumer behavior "TRICKS". Telecom

product development is to satisfy

the customer and create maximum

value.

The characteristics of consumption

operation are the comprehensive re-

flection of bandwidth, mobility and

personalization. The consumer habits

of non-voice service users will conform

to the principle of "TRICKS". As we all

know, in market requirement analysis,

market segmentat ion rel ies on

consumer behavior. In terms of non–

voice services, consumer behavior is not

decided only by age, profession and

income; it is the innate relation of

"application service" consumption.

Based on such market segmentation

and various "collection" of telecom

profile, ARPU, together with its

supportive products, can be designed

to provide customers with proper

products and create maximum market

value.

The reason why the previous market

segmentation failed is that the segmen-

tation is subjective rather than

objective. For example, many custom-

ers are "convenience- oriented" while

some customers are "price-oriented".

To provide differentiated quantity and

quality of services to market segments

with different value orientation will cre-

ate the maximum value.

The so-called consumer behavior does

not exist in traditional telecom

products. There are only general rules

for consumption, for example the busy

interval. The characteristic of consump-

tion is a comprehensive reflection of

broadband, mobi l i ty ( including

roaming) , personal izat ion and

intelligence. The consumption habit of

non-voice service consumers follows

the principle of "TRICKS":

Transparency: Transparency of usage

and bil l ing (l ike the deal in the

marketplace);

Reliability: The stability and reliability

of network service;

Low Cost: Unnecessary to change ter-

minals or platforms frequently for dif-

ferent services; add the low-cost

solution;

Convenience: Services and terminals

are closely bound, more convenient to

use;

Know-how: Even with no specific

skills, users can enjoy the friendly guid-

ance and training and learn in spite of

the complexity of data services.

Security: Secure usage and payment;

The TRICKS of service consumption

behavior has been the rule of service

design. Priority of different segments

becomes the comprehensive index for

market segmentation. Correct ARPU

design is based on correct market

segmentation. The essential in prod-

uct profitability research is the research

on consumption behavior and differ-

ence in personalization. These are

both social and market issues which

may be solved by long term accumula-

tion in the entire value chain and

environment, which is also the only road

for Consumption Communication.

The leaders of non-voice consumption

are the consuming value of "terminals"

and applications instead of price. The

competition in operation derives from

the competition in service delivery,

management and execution. Terminal

customization, in some sense, is the

measure to realize user requirements

and protect the interests of operators

by leveraging the differentiation in

service management and execution. All

of these present great challenges to the

traditional voice service operators.

The law of Metcalfe states that the

usefulness, or utility, of a network

equals the square of the number of

users. However, user consumption of

Resource Sub-net is personalized; that

is to say, the number of users is in line

with the size of network services. From

here, we can say the value of Resource

Sub-net is in direct proportion to the

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square of services. The granularity of

personalized service is quite small. Only

if the number of such granularities in-

creases to a certain point, the number

of users will grow. So will the network

value and network revenue.

Considering the specific characteristics

of China, the stand point of recent

product development is to satisfy the

basic requirements, but consumption

requirements should not be neglected.

Meanwhile, the ratio of consumption

product should be increased and the

construction of operability should be

strengthened.

There are four success factors for

telecom product development:

1. Focus on the resource investment,

cost and IOR analysis in product

development.

The investment of Communication

Sub-net mainly goes to "Network

Unit". The service revenue mostly

comes from network CAPEX, that

is to say, the revenue is in direct

proportion to the network carrying

capabil i ty. The investment of

Resource Sub-net mainly goes to IT

architecture, platform, service

servers, application software, service

capability parts and CRM. The rev-

enue "implicatively" aligns with the

OPEX, service capability and services

instead of the CAPEX. In compliance

with the division of Communication

Sub-net and Resource Sub-net, the

relevant resource investment in net-

work product development should

be noticed. The relative cost should

be checked and the IOR should be

analyzed.

2. Quick response to market. Although

it will take some time for network

evolution and product development,

the delivery time to market and cus-

tomers should not slow down, or it

may not stand the competition. In

the current market, the following is-

sues should be carefully considered

in product development: 1) voice

traffic shunting; 2) high customer

churning rate; 3) to which value area

should the increase of new users go;

4) small proportion of "VAS" in the

total revenue; how to make more

profit through changing the business

structure and operation model. Prod-

uct development should be innova-

tive and fast; besides it should grasp

the best time to enter market.

3. Creating requirements and leading

consumption with a certain lead

time are necessary in product

development. The satisfaction for the

market and customer requirements

is essential to product development.

On such basis, it is necessary to

consider, in advance, the facilitation

of consumption and the emergence

of new requirements in product

development. The two products of

British Telecom_ICT and AAI effec-

tively integrated their resources to

provide customers with proper ser-

vice in reference to their research into

customer requirements. They have

done well.

4. Conduct research on consumer be-

havior and its trends, pay attention

to customer experiences and see

their readiness to accept. To conduct

research on consumer behavior and

its trends and thereafter define the

counter plan is a must in product

development. The changes in con-

sumption requirements should be

embodied in product development in

time. Sometimes, customers may not

know their real demands, but their

readiness to accept should be con-

sidered according to the nature of

consumption products. First let the

user experience the products; then

pay close attention to their reaction.

Only by doing this, can a company

develop products acceptable by us-

ers and market and create outstand-

ing achievements.

British Telecom's ICT and AAI effectively

integrated resources to provide service

in direct response to research into cus-

tomer requirements

Brief Summary:The in-depth connotation of "Network

Axiom" has been proved by history.

Its only objective is to answer the

questions about the operation model,

business model and profit model for

non-vo ice communicat ion and

Consumption Communication. It ex-

British Telecom's ICT and AAI effectively integratedresources to provide service in direct response toresearch into customer requirements

How to Operate


plains the operational problems that

appeared in the practice of BB/NGN/

3G/IPTV. The "answer" to the business

model of data services (BB/B3G/3G/2.

5G) lies in the rules of Resource Sub-

net. In the new business model, the

operation model will also be updated.

The equation of operation profitability

is P=C_carry_+S_service_. NGN

network will have two layers: Carrying

Network and Service Network. Charge

on the traditional operation is simply

the fee for carrying (constant number

C), excluding the expenditure in ser-

vices (it is just a channel charged with

flat rate. The expenditure for carrying

has nothing to do with what it carries.).

Nevertheless, the profitability in S

(service) mainly draws on the platform's

capability to percept, authenticate,

innovate, manage and execute the

services. In any case, the platform

should have the functions of charging

by "service transaction" _ not only

charging the service operation fee for

the operators, but also charging by ser-

vice transaction fee for each player on

the value chain. Charging by transac-

tion is the foundation for the so-called

service operation (the third generation

profit) mode. With the open API, as

long as ICP/ASPs provide services and

content, they can profit from the con-

sumers' usage of services and contents.

The new operation (value chain model)

can ensure this. In this way, a service

development model can be established.

It will attract a lot of ICP/ASPs to ac-

tively attend the market application

design & planning, develop market and

provide contents. If so, the issues with

the business (profit) model, operation

model and service development model

of the data services are all solved.

Consequently, what is discussed is not

a theory on paper. It is actually practi-

cal and operable. Quite a lot of inter-

national first tier operators and equip-

ment manufacturers have begun to put

it into practice. Out of confidentiality,

the inside story could only be sensed

by the readers themselves. The last

table demonstrates the comparison of

the two types of operation rules in net-

work axiom.

Communication Sub-net

Collection of bearing capability: Network relies on

carrying resources such as bandwidth, MOU, QOS,

ports, reliability and connection to charge.

Basic Communication: The L1to L4 is dominated by

equipment. Its usage is checked based on visible cost.

It is classified as basic telecommunication facilities, in

strict constraint of telecommunication regulations.

Price-oriented: ( general service, public service,

essential service, etc.) Monolithic service (voice) with

heavy traffic, price sensitive, finite number of service

packages (similar to inorganic chemistry); terminal

insensitive, limited income.

Investment: Network resource or CAPEX related

Income: "Price" decided by the cost based on

resources and regulations.

Public basic consumption: Undifferentiated, price-

driven, price sensitive, uniform profile, unified CRM,

simple profit model.

Resource Sub-net

Collection of Service Capability: Service access authentication,

telecommunication profile management, service semantic

control, resource scheduling, content distribution, stream

smoothness, content assembling and searching, dynamic billing,

RT settlement, service deliverability.

Consumption Communication: The L4-L7 gives first place to the

switching between IT and Server and the software functional

parts. The capability to deliver, control and execute the services

is the foundation of service.

Value-oriented: (personalized service, charge on the usage

value, consumer segmentation) Abundant service products with

light traffic, forming a type of consumption that each product /

service has its own specific value. Infinite number of service

packages (organic chemistry). Terminals lead consumption,

experiencing economy. Revenue can increase through ARPU

design. (the same with fixed and mobile)

Investment: Resource network or OPEX related (including SP

platform and infrastructures) TCO/TVO

Income: "Compound value" of the service provided in the

platform based on service; satisfaction of personalized

requirements (new margin for income).

Personalized consumption: Value-driven, consumer behavior

conforming to the principle of TRICKS, personalized telecommu-

nication attributes (telecommunication fingerprint profile)

management will be the critical point for controlling user

consumption behavior. Complex CRM, relatively complicated

profit model.

Profit Fundament

Network Specific

Application Service Attribute

Income vs. Investment

Product & Consumption Specific

Documents

Network Axiom - Huaweimarket.huawei.com/hwgg/access/en/pdf/how_to_operate.pdfWhy Axiom? First of all, here are some facts about ... how hard the telecom operators squeeze their costs,