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Vinson Kurian

The advancement in telecom technology and voice data convergence and transition of major part of usage from voice to data service will have certain adverse impact on the of current telecom business models.

Thiruvananthapuram , Nov. 30

TELECOM and IP related e-business cannot be expected to take off nor network operators/ISPs hold on with sustainable business plans unless the issue of handling micro-payments is addressed and effectively resolved, according to a leading telecom expert.

E-business and e-services related to 2.5G and 3G and data services over Internet involve high volume of low value payments and these cannot be performed by direct payments nor handled economically by banks or regular credit card companies, according to Mr P. Abraham Paul, a leading specialist with 45 years of experience in the field.

He said this while presenting a talk on "Wireless data applications and e-business" hosted by the Kerala State Centre of the Institute of Engineers (India) here.

As data related services become predominant and the revenue potential moves from network operators/ISPs to service providers and e-business units, the network operators/ISPs have to look for methods to grab their share of revenue generated in the packet data network (PDN) to survive. Here is where the emphasis on payment broker systems — which account for payments, apportion it and share revenue generated between the stakeholders — becomes relevant.

Special methods are needed to handle micro-payments involved in e-business. A micro-payment gateway in PDN is one mechanism through which a part of the revenue generated from e-business based on data services could be retrieved, Mr Paul said.

The payment broker system cannot be managed by individual network operators/ISPs as the service providers and e-business units are common platforms shared by customers of many different networks/ ISPs.

According to Mr Paul, the advancement in telecom technology and voice data convergence and transition of major part of usage from voice to data service will have certain adverse impact on the of current telecom business models in terms of investment and revenue realisation.

Explaining, he said the vast amount of individual and standalone e-business units and service related applications widely spread beyond the boundaries of network operators licensed area would have to be taken care of by a large number of service providers and business units in the PDN. It is more likely that the network operators also will prefer to hand over the application business to external service providers.

The result is that major portion of revenue moves from network operators to service providers and e-business units in PDN. A good part of end user revenue will move from public switched telephone network/public land mobile (PSTN/PLMN) network operators to various content providers/service providers/e-business units in the PDN which are spread far beyond the licensed area of the individual network operators.

The network operators have only limited control on tariffing, rating, charging and billing of `external client' based services and usage.

The value of the transaction can be determined mostly at the service provider level. At the most, the network operators can hope to only charge their subscribers for the access by measure of quantity and not the real value of the transaction.

Therefore, the revenue realisation also will be with external service providers making them the real beneficiaries of the advancement of high technology in telecom arena.

The network operators/ISPs are mainly access providers and cannot effectively perform as application providers.

This is because the major data related activities would be in the PDN and the vast IP world. The network operators/ISPs will not be able to effectively provide and manage these highly diverse and dynamic requirement of extremely large base of clients widely distributed in the limitless area of IP network.

In effect, the customers use the operator's network but the major portion of the revenue generated from them directly goes to the pockets of large number of external agencies that provide e-business and e-service. The same is true with the ISPs, too.

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