Increasingly agile and programmable networks are giving operators new ways to deliver benefit for their customers. Policy and charging network functions are key levers for enterprises to deliver the next generation of network services. In this article, we explore how these functions will be fundamental to driving greater revenue, speed and control for operators.
Patrick Montague-Jones, Senior Consultant
What is policy control?
Network policy control is the process of creating, implementing and maintaining rules in the network to determine how the network, data or services should behave. The rules have influence over network Quality of Service (QoS), access and data control and in-life service tracking. These end-to-end rules ensure structured and efficient operation of the network, increasingly important traits as operators virtualise and expand their networks.
What is charging?
Charging is a network function that monitors usage of products and services and generates records based on this. Charging can come in two main models: offline and online. Offline charging monitors usage and processes the charge at the end of a given session or timeframe. These charges then flow down and are reflected on the bill. Online charging processes data and service usage in real time and customers can view their bills in real time too. Where a customer follows a pre-paid model, services may be impacted if the user does not have sufficient funds.
How have these systems transformed by 5G?
As operators virtualise their networks in preparation for the next generation of solutions and a chance to increase revenue, policy control and charging systems have been central to this transformation. Customers are looking for flexible, scalable service and operators need systems to support this demand. Moreover, ability and desire to manipulate the network, both from operator and customer perspective, has increased.
The new wave of mobile connectivity, 5G, has ushered in change in this respect. From an architectural perspective, policy and charging functions sit in a consolidated function for 4G. For 5G, however, the PCRF (Policy and Charging Rules Function) has been bifurcated, into two discrete functions and takes direct input from more network functions. The reduced number of hops will serve to reduce network latency. From a business perspective this means that operator decisions can be optimised for policy application and network resource allocation.
What are the benefits of combining the two functions?
Operator transition to cloud-native technology platforms and an increasing vendor willingness to offer open platforms means IT stacks can work in concert with far less integration work. This model supports ‘best of breed’ approaches, where operators choose the best vendor for a given module based on the features available. With the possibility of interweaving different vendor solutions together with decreasing complexity, operators may wonder what benefit efficient policy control and charging systems might bring them.
Operator revenue opportunity – use of agile and scalable systems means that operators will have new means of monetisation. The policy control function will be able to track and enforce policy on a deeper level. This applies across B2B and B2C segments. In B2B, an operator could apply a different QoS to devices based on location (e.g. inside the customer manufacturing plant vs back office) over the same network. Charging can also progress to become more tightly linked with customer outcomes (e.g. a price per successful hour of uptime; price per successful VoIP call). Customers may see this as more equitable and a step change in operator approaches to demonstrating direct business value. Operator commercial and technology teams must collaborate to understand what metrics will be the most useful to apply policy and charges on for end customers.
Quick provisioning and charging – customers increasingly expect services to be provisioned and data to be available in real time. As network slicing becomes more prevalent, businesses are likely to want specific slices spun up at will to cover specific use cases. One such example might be a 5G slice, with specific QoS requirements, for broadcast at a live music or sporting event. Network customers will want to ensure that all footage is received without interference from mobile users in the venue and quickly transmitted back to the base station. Operators will want to charge in real time for these services and so a ‘hand-in-glove’ relationship between policy and charging is vital.
Service granularity – next generation policy and charging systems have created greater network visibility and control than ever before. Turning data into real insight is a challenge that telcos have faced for many years. The next step in this journey is understanding that insight to drive tailored offerings that are relevant to end customers. Policy can be applied to a network based on location, time of day, current data usage in the billing period. For example, a consumer’s network speed could be throttled if they consume more than their data allowance in a month. This could apply to both B2C and B2B customers. For the B2B sector, in a manufacturing facility a higher QoS could be applied to the production line than to devices located in the administrative back office. The real challenge for operators is to decide on which policy metrics to apply charging. Getting this right will ensure an equitable transaction where the operator is generating revenue on a service that the customer feels is being charged for on real business outcomes.
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How STL Partners Consulting can support you
STL Partners has developed industry-leading expertise, backed by extensive thought leadership, and supported telecoms vendors in identifying the best approach to engage telcos on the topic of 5G.
There are three main ways we can do this:
- Strategic positioning: Evaluating how telcos are thinking about their IT evolution with 5G, and analysing how vendors can support in their roadmap and address key pain points stalling growth
- Business model development: Developing potential business models for new strategic opportunities, including potential go-to-market strategies
- Customer engagement: Creating thought leadership and (marketing and/or sales) collateral that can accelerate engagements with existing customers and new prospects
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