The Yankee Group is forecasting that the market for policy management is facing rapid growth, and that it will be a central component of next-generation network architectures. Policy management solutions are expected to generate more than $100 million in product investment in 2007. This modest amount is expected to grow to more than $700 million by the end of 2010.
Mark Bieberich, author of the study, sees three main drivers.
“First, the ARPU (average revenue per user) trends in fixed and mobile are down. This forces service providers to look for new revenue streams. Second, video is the key driver of IP traffic and bandwidth growth now and for the next five years. And finally, adoption rates for new services are unpredictable, and providers need to be ready.”
Wireless and fixed-line telecommunications operators are poised to contribute more than 85 per cent of the market’s revenue during the next four years. Security is a central part of the story. Policies can be a great enabler for security, especially at the control layer, and are applicable in numerous environments.
“If you want to secure IP-based inter carrier connections,” says Bieberich, “policy management ensures that you can control all policies at the border.”
The market is divided between large infrastructure vendors, pure-play ISVs, and operations support system (OSS) players such as Telcordia (owned by SAIC), Amdocs, and Mississauga, Ont.-headquartered RedKnee.
On the ISV front, Bridgewater Systems of Ottawa is a niche player in subscriber-centric policy management.
“We basically create that decision point so that the service provider can make policy,” says Ann Hatchell, director of marketing for Bridgewater. “This allows the operators to control access to the network for IP-based services, from downloading ring tones to movie clips.”
According to Yankee Group, there is increasingly strategic value of policy management in next generation networks. The research firm interviewed network planners at wireless, fixed and cable operators worldwide. Respondents saw favourable results for revenue, network resource/control, quality of experience, security, and operational efficiency for cost reduction.
These arguments won’t find any disagreement from Bridgewater. The company provides policy management solutions that are technology-agnostic and vendor-neutral. All doors are open for next generation technologies, whether based on GSM, CDMA, WiMAX, fixed line, or converged.
Whereas Bieberich saw three adoption drivers, Hatchell identifies three subscriber information types.
“The first is static and defined by the service tier and the billing model. The second is more dynamic, based on the IP address, device type, and time. And then there is the more historical information: is there a pre-paid account balance, or does the subscriber have to be redirected to a payment portal?”
Among Bridgewater’s approximately 20 customers in the wireless space are Aliant, Bell, Sprint, and Verizon. Overseas, wireline customers include Telecom New Zealand and British Telecom (BT).
Daryl Dunbar, director of portfolio innovation at BT, confirms the Yankee Group’s observation that service providers are experiencing a decline in their traditional market.
“We are approaching the saturation point in broadband connectivity,” he says. “Innovation is the growth area, and that will come with service applications.”
The problem for vendors in the space — and for carriers too, although they may not realize it — is that each service provider organization has so many different internal players.
“Many people are invested in solving point problems on an ad hoc basis,” says Bieberich. “If Bell Canada needs a video caller admission control function, the transport layer people might be involved. But policy management for network attachments, or the rating and charging policies on a per-charge basis, those might come from the OSS side.”
What does this mean? Expect intense partnering activity between the OSS companies, policy management ISVs, and the large infrastructure companies.