Operations support systems (OSS) and business support systems (BSS) are critical solutions that ensure telecoms network capacity and service quality. They also enforce charging parameters for next-generation high-speed mobile broadband services such as policy control and charging, real-time service delivery, and customer support.
As customer demand changes and new services appear, telcos must develop their telecoms networks, and vendors must adjust their product development priorities to correspond to the growing needs of telcos. This article explores the key market drivers behind Ovum’s OSS/BSS revenue forecast through 2020.
Competition from OTT players is pressurizing telcos. Increasing customer demands require telcos to create more agile business models to boost margins and generate sustainable revenue streams. Telcos will look to cloud-based services to reduce opex and increase agility, driving service revenues during the forecast period.
Capabilities enabled by LTE networks will require telco investment in network management services such as network optimization, policy control, and network monitoring. Network management revenues are expected to drive overall OSS revenues, while the need for revenue management systems - particularly transformation projects - will drive overall BSS revenue growth.
OSS/BSS by the numbers
Annual revenues for the global OSS/BSS market will grow from $54.3b in 2015 to $63.1b in 2020 - a CAGR of 3.05% (see Figure 1).
OSS and BSS revenues will keep pace with one another. OSS revenues will grow from $29.1b in 2015 to $33.7b in 2020(at 3% CAGR). Network management - particularly network monitoring and optimization - will drive OSS growth.
BSS revenues will grow from $25.1b in 2015 to $29.3b in 2020 (3.1% CAGR). Revenue management will drive BSS growth at a CAGR of almost 5% through 2020.
The revenue/business model is changing: software-led revenues will decrease slightly from $22b in 2015 to $21.9b in 2020, while service-led revenues will grow from $32.2b in 2015 to $41.1b in 2020 (a CAGR of just over 5%). Cloud-based services will drive overall OSS and BSS service revenue growth as telcos look to move to SaaS and virtualized networks.
Growth rates are similar across the globe. Revenues will be highest in Western Europe and Asia-Pacific, while Latin America will see the largest CAGR through 2020, growing at a rate of 3.9%.
The OTT pressure cooker
The telecoms industry has become hostile over the past decade. Once highly profitable telcos now feud with OTT players and other service providers that offer competing services. These new market conditions mean telcos are suffering revenue leakage with subsequent reduced profit margins. As telcos change business models and strategies, revenues will remain flat with slow but steady growth until 2020.
The desires and behavior of customers is changing faster than ever, and the demand for blended service offerings and more digital services is growing just as fast. While there’s been much discussion on how telcos can adapt to this changing market, the biggest obstacle for them remains agility.
The quickly changing telecoms market requires telcos to be able to effectively launch new services and offerings with brief turnaround times. However, many of the legacy systems currently in place do not allow for easy deployments. To resolve this, telcos will invest in cloud-based/SaaS services - including NFV and SDN - which will give telcos the needed agility to successfully launch new services. While vendors have been making a push toward NFV/SDN, there has been very little uptake by telcos until recently. But cloud-based revenues are expected to have a significant impact on OSS/BSS revenues as telcos begin to see the long-term benefits.
In adapting to new customer expectations of on-demand and omnichannel services, telcos will also seek to phase out legacy billing systems. The systems currently in place are too cumbersome and impractical - telcos must keep up with OTT players. Many legacy billing systems support only specific services or business units and require costly modifications or the addition of new, separate billing systems to support new services, thus creating additional silos.