Policy and Charging

The surging popularity of smartphones over the past few years has caused some serious issues for the broadband networks which consumers depend on every day. Network issues revolve around a growing capacity crunch, mainly due to the availability of streaming media and rich content being accessed by next-generation devices. A report released by ABI Research in September 2010 estimates there will be more than 1.5 billion active mobile broadband consumers by 2015. In other words, network performance will continue to decline unless solutions are put in place to mitigate the congestion.


The surging popularity of smartphones over the past few years has caused some serious issues for the broadband networks which consumers depend on every day. Network issues revolve around a growing capacity crunch, mainly due to the availability of streaming media and rich content being accessed by next-generation devices. A report released by ABI Research in September 2010 estimates there will be more than 1.5 billion active mobile broadband consumers by 2015. In other words, network performance will continue to decline unless solutions are put in place to mitigate the congestion.

Operators are in a tough position. There is no single perfect solution for relieving congestion and mitigating the ongoing capacity crunch. To overcome these challenges, operators must balance between solutions ranging from new investments in LTE/4G networks, a build out of current infrastructure, stricter enforcement of broadband caps and tiered pricing structures. To achieve this, operators must alleviate current and forecasted congestion while determining how to utilize resources already in place more efficiently. In addition to these traffic management strategies, operators need to monetize new services to create additional revenue. This is where policy management and charging come into play.

Policy controls and charging systems are essential elements to managing the resources of a network, and ideally, are tightly integrated into the billing and operating software system. Essentially, policy management provides the rules of how resources are used on the network and responds accordingly to subscriber requests on next-generation devices. Charging then works in tandem to ensure that subscribers’ network activities are recorded and tracked against their plans.

Looking Back: A Simpler Time

How did policy management and charging become such an important piece of an operator’s back-end strategy? As wireless web browsing took on more importance with subscribers, policy management and charging capabilities became vital and offered more dynamic capabilities through the use of existing resources. This transition to PCC enables operators to transition from the previous status unlimited data services to new business models to provide more dynamic and personalized services.

Prior to this rapid consumption of data, operators implemented localized policy systems that worked independently of the more global and dynamic policy management systems (PCRFs). However, operators have looked to leverage their investments by managing traffic in the IP core reducing traffic or network resource constraints within the subscriber data path from the device all the way to the Internet. A new generation of PCRFs are beginning to address this.

The Future is in the Network

Policy and charging are not just about more effectively managing the network. Operators are looking for new ways to monetize existing resources and provide new services to meet the needs of every subscriber and device. Policy and charging tools are working to help operators find new revenue channels, especially when preparing for the next incarnation of broadband – Long-Term Evolution or 4G.

When 3G became the standard, “fair usage” policies were put in place to allow for traffic management of excessive subscribers to help reduce congestion issues during peak usage periods and limit bandwidth hogs. Now that 4G is starting to launch, and seems to be the global network preference, this new resource will need dynamic policies and charging to manage the new flood. A December 2010 report by In-Stat puts the estimated number of LTE subscribers at 115 million globally. The forecasted rate of adoption, faster speeds and larger bandwidths, along with the positive consumer reaction to the next-gen network, will create new expectations for high bandwidth networks. If these new high bandwidth networks such as 4G aren’t intelligently managed by Policy and Charging Controls systems many of the problems from 3G very well may become relevant for 4G.

From a global perspective, policy and charging are also allowing operators to prepare differentiated offerings to reduce churn and break through the noise of other operator’s offerings. In Europe, operators are combining voice, data and popular social media platforms, like Facebook, into one packaged plan in an effort to lure teens into becoming subscribers. Other unique offerings from service providers are also arising around loyalty programs, where subscribers are rewarded for meeting certain usage levels. This is particularly becoming a popular policy and charging feature in countries that have high rates of subscriber churn.

New LTE services and global policy implications are only part of the rapidly changing network environment. Operators are also moving towards more converged services with the deployment of new offerings like TV Everywhere. Cable and telecom providers are enabling services that work together to merge traditional cable with wireless and applications. The movement towards these services is an indication of consumer reliance on the Internet, but also a transition to a new application-oriented environment. The use of policy and charging within these environments will ultimately create new revenue opportunities.

Current subscriber dependence on, and usage of, applications offers a glimpse into the importance of future policy and charging architectures. ComScore recently projected that app usage was around 31.4 percent in July 2010, up 1.6 percent from previous months. Subscribers are essentially online all day through mobile applications, consuming large amounts of network data. This demand has led operators to consider bundling consumption with content ― providing consumers the opportunity to pay for the usage that is most important while operators prioritize the traffic appropriately.

For operators, policy and charging are now, more than ever, an important element to effectively manage their networks. Subscribers will ultimately benefit, as they will not only have the opportunity to utilize new feature rich mobile devices, but they will start to see more personalized plans offered by operators, giving them more flexibility to use Internet applications and services that are most important to them. Policy controls and charging systems are shaping the future of the network; enabling subscribers to do exciting new things while creating new revenues for operators.