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How Can Service Providers Balance

Customer Experience with Cost


Cutting and the Need for
Sustainable Growth?

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The Customer Is Still King

Business
Benchmarking
The TM Forum Business Benchmarking Program conducts business performance
studies and surveys for the communications industry, providing comparative data for
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2
The Customer Is Still King

Table of Contents

Executive Summary 4

Introduction 5

Economic Landscape 6
Global Market 6
Regional Markets 8
Internet 14
Summary 18

Tracking Customer Experience 19


Service Fulfillment 21
Service Availability 23
Support 25
Billing 31
Summary 34

Conclusion 35

Sponsored Feature by WeDo Technologies 36

About the Contributors 38

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3
The Customer Is Still King

Executive Summary It has been a rough ride and there are certainly potholes in the road ahead,
but the sense is that the global economy is again functioning. CSPs have
cut costs and shed non-strategic assets over the last 18 months. Plans have
been honed to provide the best strategic results. Shareholder expectations
have been reset for slower growth. The focus is now on execution.
This is a time
It sounds simple, but we all know it is not. Even though the plans are clear,
there are a myriad of decisions to be taken on a daily basis. The road
where knowing forward is narrow with many opportunities to take a wrong fork. The trail is
uncharted and the GPS doesn’t work. This is a time where knowing the
the major major landmarks and owning a compass can be critical. This report provides
those landmarks.
landmarks and
There are five key points to consider as you move forward:
owning a Insatiable appetite for bandwidth: In the developed markets, the
winning CSPs will be those that can deliver the quality of service (QoS)
compass can Broadband bandwidth for a competitive price. This applies to both fixed
and mobile consumption.
be critical. Pricing is increasingly competitive: As CSPs use price as a
differentiator, ARPU projections for most services continue to decline,
setting customer expectations at a lower price point.

A mobile offering is a necessity: Increasingly, CSPs are offering


blended services that blur the distinction between mobile and fixed
services. Growth in developed markets is smartphone driven. CSPs in
emerging markets are expanding their reach to cover more of the non-
urban population, as well as offering sophisticated services to city
dwellers. Winning strategies include mobile services.

Triple-play is delivering: As PSTN declines, most CSPs are successfully


converting those subscribers to wireline or fixed mobile broadband, with
VoIP and frequently a digital TV component. Broadband is growing faster
than mobile services worldwide.

Assure positive customer experience: In a competitive environment,


assuring a strong positive customer experience is key to retention. Don’t
overlook the fundamentals. Track the metrics that provide visibility into the
foundation of customer experience.

Copyright ©2010 TM Forum. All rights reserved.


4
The Customer Is Still King

TM Forum Business Benchmarking, with participation from over 160


Introduction
CSPs world-wide and communications industry research specialist HOT
TELECOM, have collaborated to bring you this winter 2010 Insights
Business Intelligence Report entitled, “The Customer Is Still King.”
The report speaks to the necessity to drive sustainable growth and profit
through the twin strategies of providing the customer the services they
desire with a strong customer experience while also cutting costs.

The global economy is struggling back from the recent recession. Whether
one subscribes to the idea that there will be a second dip in world gross
domestic product (GDP) before we truly recover, or whether one subscribes
to the more optimistic view that the worst is over, it is fair to say that the
economy remains fragile. For many nations, small, single-digit growth in
GDP will be seen as wild success. In such an environment, it will be those
CSPs that maximize profit of the current services while building for future
growth that will be successful.

Most CSPs have identified precise plans to achieve future revenue growth.
These plans include acquisitions, expansion into new regions, and for many,
the build out of higher-bandwidth networks for both fixed and mobile
services. So there is clarity on where to invest. The challenge is to assure
the results that support the execution of these plans. For most CSPs, this
means continued cost reductions, while retaining or growing the subscriber
base.

In this report, we look at communications services revenue growth


projections through 2013, with an eye to the increasing world appetite for
more bandwidth. Then, we investigate prevention of the most frequent
unintended consequence of cost cutting – customer attrition. We explore the
practical side of customer experience, establishing a handful of touch points
CSPs can track to improve retention.

And, of course, we hope the insights arising from the report will generate
interest in full participation in the TM Forum’s Business Benchmarking
Program. We hope you find it useful.

Tonia Graham, Business Benchmarking Program Manager, TM Forum

Isabelle Paradis, President, HOT TELECOM

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5
The Customer Is Still King

After the uncertainty of the past year, there exists a strong interest in revenue
forecasts. Assuming that there will not be a second dip to the recession, we
can consider the following projections to be likely.

Figure 1

Economic Landscape

Global Market

TM Forum Business
Benchmarking
Business benchmarking is a
powerful industry tool for
understanding performance and
competitive advantage –
especially for large, complex
Source: HOT TELECOM 2010
organizations where the

Total Revenue grows to nearly 2 Trillion USD by the end of 2013. As predicted
relationship between cost and

in earlier reports, revenue from basic mobile service makes up more than half
advantage is not always

of the total revenue. Internet revenue moves from 14.8% of total revenue in
immediately apparent. It works
like this: Businesses from the
same sector agree to pool 2008 to 18% by end of 2013.

PSTN continues to decline and at an increasing rate. The -6.5% decline in


critical data on their business

revenue for 2008 will become a -9.5% decline by 2012 (See Figure 2). The
performance, which is
processed by a trusted third
party (the TM Forum). The global decline in PSTN revenue growth would be faster if it were not for the
resulting reports provide positive growth taking place in Eastern Europe, the Middle East and Africa
participants with a view of the (MEA) – all of which are expanding PSTN offerings.
industry performance and their
position, while maintaining the Figure 2
anonymity of the participants.
This method ensures that each
participant company can see
where it performs well and
where it performs poorly. That
company can then decide what,
if anything, to do with the
results. Strong performance in a
particular area might be
identified as worthy of even
further improvement in order to
make it a differentiating feature.
Alternatively, minor
improvements expensively
obtained might be viewed as
not worth the effort, thus Source: TM Forum 2010
causing investment to be
scaled back.

Copyright ©2010 TM Forum. All rights reserved.


6
The Customer Is Still King

Most CSPs are converting their PSTN subscribers to other services, such as
VoIP, fixed mobile or in some cases, mobile. This subscriber conversion
positions the CSP well to retain these subscribers long term, as well as to
sell more complex bundles to these subscribers in the future. Figure 2
shows the revenue growth projection for VoIP through 2008. It is clear that
the decline of PSTN is substantially softened by the increase in VoIP. By
2012, almost half of global fixedline voice will be from VoIP (See Figure 3).

Figure 3
Economic Landscape

Global Market

Market Service
Segmentation
This report segments
communications services into
Fixed, of which the significant
components are PSTN and
VoIP; traditional mobile, which
includes voice and text
Source: TM Forum 2010
messaging; Internet, which
includes dial-up, fixed
Figure 4 shows the global forecast for revenue growth from 2008 to 2013.
broadband and mobile
The pattern is easy to see. Revenue growth slows overall with the
broadband (including mobile

continuing squeezing of ARPU and the saturation of the more affluent


data transfers).

portions of the emerging markets.

Global basic mobile service revenues are projected to grow at a healthy


4.2% CAGR 2008-2013 (See figure 4). The star is Internet revenue, which
includes fixed broadband, mobile broadband, and an ever-diminishing
dial-up element. Internet Revenue growth is double digits for 2008 and
2009. If the economic situation proves stronger than anticipated, this service
may provide double-digit revenue growth for the period. As it stands, the
projection is for a sturdy 7.0%.

Figure 4

Source: HOT TELECOM 2010

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7
The Customer Is Still King

The previous global revenue picture comes into sharper focus when seen
from a regional perspective. Figure 5 shows the percent of the global
telecom service revenue contributed by each region. Not unexpectedly, the
developing and emerging markets gain market share at the expense of the
developed markets. The most significant growth of market share is projected
Economic Landscape for the MEA, which is expected to grow 1.8% from 2008 to 2013.
Figure 5

Regional Markets

Source: TM Forum from HOT TELECOM data 2010

A closer view gives a good perspective on the global landscape. Despite


areas of low regional ARPU, Asia generated more total revenue at 504
Billion USD than Western Europe or North America. Latin America, Eastern
Europe and the MEA generated roughly 23% of the global telecom services
revenue for 2008.

Figure 6

Source: HOT TELECOM 2010

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8
The Customer Is Still King

The MEA is projected to grow aggressively over the period with a 7.2%
CAGR and a projected total telecom services revenue of US $199 billion,
pulling ahead of Latin America at US $184 billion. With only a 3% CAGR,
Asia still outperforms the other regions with a total revenue of US $585
billion. Western Europe shows the slowest growth at 1.2% CAGR.

Figure 7
Economic Landscape

Regional Markets

Source: TM Forum from HOT TELECOM data 2010

As discussed earlier, PSTN is falling with the exception of Eastern Europe


and MEA, where new PSTN services are being deployed in some areas. In
the other regions, fixed-line subscribers are encouraged to transition CSP-
provided VoIP and fixed-mobile solutions, slowing the revenue decline for
fixed-voice services.

Figure 8

Source: TM Forum from HOT TELECOM data 2010

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9
The Customer Is Still King

Basic mobile services revenue is projected to increase in all regions, with


the strongest revenue growth seen in Asia at US $335 billion at 4.4%
Economic Landscape CAGR. The highest CAGR is seen in MEA with 8.9% CAGR, followed by
Latin America at 7.1%.

Figure 9
Regional Markets

Source: TM Forum from HOT TELECOM data 2010

Eastern Europe leads the world in exhibiting the highest CAGR for Internet
revenue growth in the period at 11.4%, followed closely by Asia at 9.5% and
MEA at 8.1%.

Unsurprisingly, the highest Internet revenue growth is projected for Asia at


US $107 billion by 2013, followed by Western Europe at US $100 billion,
and North America at US $90 billion.

Figure 10

Source: TM Forum from HOT TELECOM data 2010

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10
The Customer Is Still King

The distribution of regional subscribers by service type is shown in Figure


11. The greatest subscriber growth for Fixed is anticipated for MEA at 4.7%.

Figure 11
Economic Landscape

Regional Markets

The highest
growth is
expected for
Asia as mobile
Source: HOT TELECOM data 2010
subscribers
Mobile services are above 100% penetration in North America, Western
Europe and Eastern Europe. Latin America is anticipated to grow mobile grow 11.2% to
subscribers from a current 90% penetration to almost 110% over the period.
The highest growth is expected for Asia, as mobile subscribers grow 11.2% 2,875 million
to 2, 875 Million in 2013. MEA also shows strong growth, as mobile
subscribers increase from a current 55% penetration to over 68% in 2013, in 2013.
bringing the number of subscribers in the region to the number-two position
(behind Asia).

The strongest percentage growth in Internet subscribers will be seen from


Eastern Europe at 9.9% and MEA at 10.0%. The largest number of new
Internet subscribers will be seen in Asia with 64 Million new subscribers.

Copyright ©2010 TM Forum. All rights reserved.


11
The Customer Is Still King

ARPU has been calculated from the revenue and subscriber projections.
(See Figure 12).

Figure 12

Economic Landscape

Regional Markets

By 2012
almost half of
global fixed
line voice will Source: TM Forum 2010

be from VoIP. Western Europe appears to have an unsustainably high ARPU for fixed
services with a slower decline on fixed ARPU than many other regions
(See Figure 13).

It is interesting to observe that ARPU for fixed, mobile, and Internet services
in North America remains within 10%. The implication is that high
smartphone usage will drive up mobile ARPU in North America, providing
a precursor of ARPU trends in 2018.

Figure 13

Source: TM Forum 2010

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12
The Customer Is Still King

As can be seen in Figures 13, 14 and 15, ARPU is declining for all services
except Internet. In general, this is seen as a reaction to the slow economic
situation and increased competition. The sharpest declines in Fixed ARPU
are seen for Asia, Latin America, and MEA.

Figure 14
Economic Landscape

Regional Markets

Source: TM Forum 2010

Asia is expected to squeeze Mobile ARPU sharply, coming down from an


already low US $13/month to US $10/month by 2013. North America and
MEA are expected to show small reductions. Western and Eastern Europe
are projected to grow mobile ARPU a fraction of a percent.

Figure 15

Source: TM Forum 2010

North America is projected to show a small decrease in Internet ARPU


primarily due to the increased broadband competition. The reduction in
Internet ARPU for MEA reflects the change in the revenue demographic as
Internet access is offered to a larger percentage of less affluent areas.

The other regions are expected to grow ARPU 1.5 to 4% over the period.

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13
The Customer Is Still King

As mentioned earlier, Internet includes dial-up, fixed broadband and mobile


data. There is a strong subscriber desire for Internet access from all
markets. The United States holds the top spot for the highest number of
Internet subscribers at 110 Million, followed closely by China at 97.9 Million.
The largest difference between the two is that in 2008 China had 7.4%
Economic Landscape penetration vs. 36.1% for the United States. To put this into perspective, the
United Kingdom had 19 Million with 31% penetration, while India had 12.9
Million subscribers at 1.1% penetration.

It is easy to see why Internet access, and specifically broadband, is such a


Internet
significant contributor to the global telecom revenue picture. The push for
growth of Internet subscribers is pervasive across the regions. The 2013
Smart Phones
We were lulled into complacency market share of world Internet subscribers is within a percentage point or
with the idea that smartphones two of the 2008 market share, meaning that all regions have increased
weren’t really new. When the penetration during the period.
term became popular, everyone
positioned their offerings as Figure 16
“smart.” You could access the
Internet, get your email, etc.
It was a pain and you needed
excellent vision to see the tiny
screen, but you COULD do it.
In retrospect, that generation of
phones wasn’t really “smart.”
They just weren’t as dumb as
the previous generation.
Now we have REAL smart
phones – phones that make it
easy and useful to exchange
data. And guess what?
They require a lot of bandwidth!
A typical smartphone user
moves more than 13 times the
data traffic than the previous
generation of “not-dumb”
phones. That is expected to Source: HOT TELECOM 2010
increase sharply as satellite

Several interesting dynamics are visible in Figure 16 above. The first is that
radio and mobile video become

by the end of 2010, dial up will be dead in the United States. Internet access
more prevalent.

in the United States will mean broadband. The second dynamic is that there
Customers enjoy this
will be more Internet access than personal computers. This is a sharp
connectivity so much that device

reversal of the trend seen in 2004 through 2007, where the typical scenario
manufacturers are developing

was that a household had Internet access and multiple family members
new personal mobile products,

used that access with separate computers. In 2009 and onward, we see
such as bigger phones, smaller

increasing availability of Wi-Fi hot spot accounts and mobile Internet access,
netbooks, and large-screen

resulting in more Internet access than computers. Finally, the third dynamic
Internet devices. Meanwhile, the

to be seen is that the gap between Internet subscribers and Internet users is
load on the data networks will
explode as customers trade in
their old phones for slowly closing, foreshadowing a world where everyone has their own
smartphones. Internet subscriptions.

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14
The Customer Is Still King

By the time this report has published, China will have supplanted the United
States as the country with the largest number of Internet subscribers. The
forecast shows that by the end of 2010, Internet access will be provided by
broadband connection. The number of personal computers lags behind
Internet access, achieving a one to one relationship by 2012. The most
compelling take away from Figure 17 is that by 2013, there are three
Internet users for every broadband subscriber and PC.

Economic Landscape
Figure 17

Internet

By the end of
2010 dial up will
be dead in the
USA. Internet
access in the
Source: HOT TELECOM 2010 USA will mean
While projected to have much smaller numbers, India shows a very similar
pattern to China. By 2013, personal computers are slightly more numerous
broadband.
than Internet subscribers. Roughly 90% of the Internet subscribers have
broadband and there are more than seven Internet subscribers for every
personal computer.
Figure 18

Source: HOT TELECOM 2010

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15
The Customer Is Still King

From a global perspective, Figure 19 shows an encouraging picture. Internet


access is forecast to move from 72.6% broadband to 92% by 2013. This
means that those that have Internet access will have the bandwidth to really
use the Internet.

Figure 19

Economic Landscape

Internet

What would you do with


1Gigabit/sec?
As you all have heard,
Google has announced its
latest experiment: an ultra-
high-speed network to be Source: HOT TELECOM 2010

Penetration of Internet (and broadband) services will still be low by 2013,


deployed in multiple

though 730 Million subscribers are surely significant.


municipalities in the United
States. At more than a
Gigabit/sec to the home,
there is bandwidth to Figure 20
experiment with new
applications, new services,
and new use models that
exist outside our current
vision.
Assuming that Google
doesn’t run into any
regulatory issues, the
experiment should be
interesting.
The good news is that this
experiment will undoubtedly
lead to some very innovative
thinking. The down side is
Source: HOT TELECOM 2010
that the idea of Google as an
ISP is disturbing.

A Word on Mobile Data


The broadband figures include the small but growing revenue for mobile
Internet access. According to IDC, smartphone sales are up 39% over last
year, with 54.5 Million smartphones shipped in Q4 2009. Smartphone uptake
is expected to continue the Q4 2009 results with strong throughout 2010.

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16
The Customer Is Still King

AdMob, a mobile ad placement company, tracks mobile traffic statistics


based on ad requests. In Figure 21, we see the percentage of requests from
smartphones sorted by region and OS.
Figure 21

Economic Landscape

Internet

Source: AdMob 2009

The large blue segment of each bar represents the iPhone OS, showing the
aggressive uptake of the iPhone and iTouch globally. Android has made
significant penetration in North America, with noticeable share in Western
and Eastern Europe and at least a showing in Asia, Latin America, and
Oceania (Polynesia, Melanesia, Micronesia, Australia). Similarly, Windows
Mobile is in the top four in most regions and is expected to gain share with
the new release late 2010.

The bottom line is that the smartphone market has become very competitive
with a wealth of offerings. All of these smartphones will run applications,
support social networking, get your email, and deliver strong Internet
access. This all takes bandwidth. More bandwidth than initially anticipated,
as some CSPs can tell you.
Figure 22

Source: AdMob 2009

Figure 22, also from AdMob, shows the growth in traffic over the past year.
The chart shows that regions with high smartphone penetration have seen
substantially higher traffic than regions where smartphones are a small
percent of overall mobile phone presence.

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17
The Customer Is Still King

Economic Landscape
Unlike last year the telecommunications industry is projected to show
positive growth in all regions. By 2013 the total revenue for
Summary telecommunication services will be nearly 2 trillion USD.

Revenue Growth from 2008 to 2013 is anticipated to be -2.0% for Fixed


Line, 4.2% for Basic Mobile Service, and 7.0% for Internet Access.

Not unexpectedly, developed markets are projected to have the softest


growth while the developing and emerging markets are stronger.

The key points are:

The ball game has changed:


The new reality has more competition, lower ARPU,
and tight cost control to deliver profit.

Most CSPs are in the midst of a transformation,


typically to provide higher bandwidth connectivity to
more of their subscribers.

The hot services are:


The developed markets are gobbling smart phones
and mobile data.

Emerging markets are buying both mobile voice and


data.

Residential broadband continues to deliver double


digit growth in both developed and emerging markets.

Moving PSTN subscribers to VoIP is still a successful


approach.

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18
The Customer Is Still King

Assuring a positive “customer experience” is more important than ever before. Tracking Customer
A strong, positive customer experience can retain customers and play a
critical role in recruiting new customers. (Who would move to a carrier that
Experience
had poor customer reviews?)

In the previous section, we saw that increased competition and declining


average revenue per user (ARPU) are the norm. The old adage applies. It is
less expensive to retain a customer than to acquire a new one. Customer
Strengths of

retention is cheaper than customer acquisitions, especially since new


Benchmarking

customers are not profitable for the first several months. This report is designed to

As TM Forum’s Rob Rich, managing director, Insights Research mentioned in


give its readers an inkling of
why benchmarking can be a
his Insights Research report entitled “Customer Experience Management: subtle and important business
Driving Loyalty & Profitability,” there are six elements (or more) to a strong tool – more than just a way of
customer experience: productivity enhancement, simplicity, convenience, risk, beating poorly performing
the “cool” factor, and “going green.” Applying the scope of customer
business units over the head
experience and demand characteristics to the service providers’ business
with apparent evidence of
models, the report identified six areas in which service providers can
their shortcomings.

differentiate themselves, including: One key is correlation:


identifying a relationship
Product and service portfolio – The range of products and between two sets of
services a CSP offers its customers, including devices, measurements as an aid to
connectivity services, content, applications, etc. This also
strategy. A simple example
includes aspects of acquisition and fulfillment.
might be measurements of
operational support costs and
Marketing and sales – This includes pricing, merchandising, churn. Before deciding to
offer management, campaign management and initial fulfillment.
increase investment in OpEx
as a means of reducing
Service quality – The perceived quality of services, including churn, benchmarking data
availability, usability, sustainability, capacity, performance, can be used to gauge how
stability and security. strong the relationship
between expenditure and
Customer support – This refers to availability, accessibility, churn actually is on an
breadth, speed and effectiveness of support. industry-wide basis. It might

Billing, charging and cost management – The range and


turn out that no such positive
relationship exists, in which
flexibility of billing/charging options available, and the ability of case other less expensive
the customer to control costs based on transparency of billing churn reduction measures
information. might be considered.

Brand – Includes reputation for product excellence, image,


responsiveness and trustworthiness.

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19
The Customer Is Still King

Tracking Customer While brand management, market segmentation, and product bundles are
Experience important to customer experience, they will not provide retention without a
foundation of solid customer experience at each stage of the lifecycle.
Figure 23 shows a representation of the Customer Experience Lifecycle
from TM Forum. The lifecycle shows the high-level view of the stages of
customer experience.

Each customer flows through a number of stages as he or she shops for a


It is still less product or service, uses the service, requires assistance, pays for the
service and eventually upgrades or moves onto another provider. Each of
expensive these stages has a corresponding state from the CSP perspective. By
capturing data on a handful of critical metrics, the CSP can track many of
to retain a the foundation elements of the true customer experience.

In this report, we will look at metrics that touch on:


customer
Service Fulfillment

Service Consumption
than to
acquire a Support – Call Center

Support – Assurance
new one.
Billing

Taken together, these metrics enable the CSP to understand and deliver a
foundation quality of the customer experience, enabling success of the new
offerings, brand awareness, etc.

Figure 23

Source: TM Forum 2010

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20
The Customer Is Still King

Once the customer has identified and ordered the service, the focus usually Tracking Customer
shifts to ensuring the service is available for use. This comes down to two
Experience
measures:

1. Was the service delivered on time?

2. How long did the customer need to wait to have the use of the new
Service Fulfillment
service?
Unintended Consequences
For mobile services, fulfillment may be effectively instantaneous as the
customer leaves the retail outlet with an active phone in hand. The longest
CSPs are dealing with the pain

delay is generally generated by an on-line purchase, where the handset


of building new networks at the

must be shipped to the customer, generally with one- to two-day delivery.


same time that PSTN
revenues continue to plummet.

For residential services such as VoIP and IPTV, service activation runs from
Additionally, new revenue

real-time to one day. Clearly, the basic broadband service is the


streams exhibit slower growth

dependency. Figure 24 shows service activation time (measured from order


than originally planned due to

to activation) for residential broadband. While we have seen best-in-class


the new economic reality.

performance in the one-hour range, more typical performance remains in the


Controlling costs is the hot

three-day range. Median performance has stalled at approximately ten


new survival trait. Certainly,
savvy CSPs will use standard
calendar days. The interesting phenomenon is the steady increase in implementations to lower cost
lagging times. These are indicative of the expansion of broadband service of the new infrastructure, but
into regions that have not been historically served. the other reductions will be
made into current operations.
Leading performance for on-time delivery is 95%. Average performance
is 71%.
The trick is to make these
changes while delighting the
customers – or to at least do
Figure 24 so without driving them away.
The domino effect applies: It is
easy to see that extended call
waiting times are tied to higher
rates of abandoned calls. Can
you track the link from
abandoned calls to higher
traffic to the level-2 and level-3
support teams? Can you spot
the increase in re-reports? Or
can you track how it all flows
back to increased attrition?
By tracking the metrics we
discuss in this section, you can
Source: TM Forum Business Benchmarking 2010 see the interconnections in
your organization and control
the effect.

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21
The Customer Is Still King

Order-to-activation time for Business Services, such as IP VPNs, is driven


by the complexity of the requirements. International service activations,
while improved with IP networks, can still take weeks, while national service
activation in the developed markets typically requires a speedy 50 hours.

Tracking Customer
Figure 25

Experience

Service Fulfillment

What To Measure?
Over time, device analytics
will enable collection of
substantial data on the
customer experience as it
happens. In the meantime,
savvy CSPs use internal
measures as meaningful
surrogates. Source: TM Forum Business Benchmarking 2010

On-Time Delivery for Business Services has declined in 2008, possibly due
to cost cutting in international business services organizations that are
reacting to the recession.

Figure 26

Source: TM Forum Business Benchmarking 2010

High service availability is a basic customer expectation. Few things are


quite as distressing as not having service when you need it. In this section
we look at service availability for Mobile, residential Broadband, and
Business Services.

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22
The Customer Is Still King

Mobile subscribers have a higher tolerance for temporary outages since


they experience lack of service while traveling and carrying out their daily
routines. Figure 27 below shows that availability for most mobile service
providers has been fairly flat during the last several years. With the uptake of
smart phones in the developed markets, there is increasing concern around
delivery of sufficient bandwidth to provide the desired smart phone experience. Tracking Customer
Figure 27 Experience

Service Fulfillment

High service
availability is a
basic customer
expectation.

Source: TM Forum Business Benchmarking 2010

Residential broadband service availability has been very consistent the last
three years. Figure 28 shows a typical distribution of performance, with 76
percent of CSPs in the studies providing 99-99.999% service availability.
Leaders perform at 99.999% while median performers deliver 99.9 or better.
CSPs who are challenged to deliver that level of availability are at risk of
losing customers to better-performing competitors.
Figure 28

Source: TM Forum Business Benchmarking 2010

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23
The Customer Is Still King

The leaders hold flat with service availability in the 99.999%+ range. Median
performers declined 0.025% almost flat. Lagging CSPs have declined almost
a percentage point to 98.8% availability.

Tracking Customer
Experience
Figure 29

Service Availability

Service availability
is evolving to
include the ability
of the customer to
Source: TM Forum Business Benchmarking 2010
use the complete
Leading performance is very similar across Broadband, Business Services,
bundle. While and Mobile. Business Services has the best median performance. With a rise
in content and data usage, both Broadband and Mobile providers will feel
Internet access increases in customer pressure for higher availability and bandwidth. Service
availability is evolving to include the ability of the customer to use the
complete bundle. While Internet access may be fine for normal activities, a
maybe fine for
fall off of expected bandwidth can result in pixelization of digital video signals.
normal activities,
a fall off of Figure 30

expected
bandwidth can
result in
pixelization of
digital video
signals.

Source: TM Forum Business Benchmarking 2010

Copyright ©2010 TM Forum. All rights reserved.


24
The Customer Is Still King

This section considers support from three viewpoints:


Call Center
Assurance
Tracking Customer
Problem Cause
Experience

Call Center
Support
Once the customer has the service, most call center or web interactions are
related to support or billing inquiries. We look at general and support inquiries
here. Billing inquires are covered in the Billing section.

Enduring long call waiting times can drive a customer to distraction. As CSPs
automate systems and cut costs, it is important to keep an eye on the impact
on the customer. In this case, have call waiting times, first-call resolution, and
abandoned call percentage improved or declined?

Figure 31

Source: TM Forum Business Benchmarking 2010

This chart tells a story of call center evolution. In 2005, interactive voice
response (IVR) systems were less common and less sophisticated. Answer
times were important, so they were short in duration. During the next several
years, increasing emphasis was put on the IVR system – less emphasis on
responsiveness.

In 2008, there was increased interest in customer experience, and wait times
fell for Lagging and Mean performers, but increased slightly for Leading and
Median performers because of leaner staffing in call centers. We project that
2009 numbers will show an increase in wait times across the board, as CSPs
continue to trim costs.

Copyright ©2010 TM Forum. All rights reserved.


25
The Customer Is Still King

This view of wait times associated with assurance calls demonstrates a


trend toward longer wait times. This differs from the previous view of general
queries. The increase in wait times for assurance calls may be due to the
dual impacts of increasing complexity of the new bundles, as well as cost
reduction precipitating fewer staff or outsourced assurance call handling.
Tracking Customer Outsourcing the first- and second-level support teams frequently produces
Experience this effect, as the new resources ramp up to levels of effectiveness similar to
the levels of in-house teams.
Figure 32
Support

Source: TM Forum Business Benchmarking 2010

Mean first call resolution for residential broadband has experienced


significant improvement from 2005 to 2006. Since 2006, first call resolution
rates have been holding nearly flat at roughly 75%. This may reflect the
improvement in the network. The initial roll-out of DSL in areas with older
infrastructure required a high instance of truck rolls to resolve installation
and performance issues.
Figure 33

Source: TM Forum Business Benchmarking 2010

Copyright ©2010 TM Forum. All rights reserved.


26
The Customer Is Still King

Call abandoned rates for residential broadband are declining for all levels of
performance. This aligns closely with improved call waiting times in the same
period.

Tracking Customer
Figure 34

Experience

Support

Leading CSPs
have 1% incident
re-reports for
Source: TM Forum Business Benchmarking 2010
residential
Assurance
broadband – an
Customers feel well supported when problems are addressed on the first call improvement of
to the help desk. That goodwill can be quickly eroded when more difficult
problems arise and time-to-service restoration stretches into hours, days or 78% from the
weeks – depending on the service type and problem complexity.

Figure 35 shows residential broadband incident resolution time has improved previous year.
significantly over the last few years. There is 92% improvement in leading
performance, with leaders delivering closure in 60 minutes. Median performers
have improved 72%, delivering closure in a day.

Figure 35

Source: TM Forum Business Benchmarking 2010

Copyright ©2010 TM Forum. All rights reserved.


27
The Customer Is Still King

Incident re-reports are a significant “dissatisfier”. Visualize the situation in


which the customer has endured the inconvenience of a service concern –
potentially total loss of service – only to have the problem re-emerge. If this
happens frequently, the customer will consider moving to the competition.

Tracking Customer Figure 36 shows 2007 to 2008 performance for residential broadband
re-reports. There has been improvement across all the categories, with the
Experience most significant improvement in the percentage of incident re-reports seen
for leading CSPs, showing 78% improvement with re-reports at 1%.

Support Figure 36

If a customer
frequently
endures the
inconvenience
of a service
concern, they
will consider Source: TM Forum Business Benchmarking 2010

moving to the Business Services shows a significant decline in incident resolution time
from 2006 to 2008. For some CSPs, this reflects the increased loading of
the IP infrastructure with less mature tools intended to address the loading
competition.
issues.

Figure 37

Source: TM Forum Business Benchmarking 2010

Copyright ©2010 TM Forum. All rights reserved.


28
The Customer Is Still King

In contrast to either the improvement in Broadband or the lengthening of


Business Services incident resolution times, Mobile incident resolution times
have been nearly flat from 2007-2008. That is surprising given the increase of
smart phone usage in 2008. It will be challenging to hold these times in the
developed markets because of the exponential increase in smart phone usage,
which will precipitate queries on applications, content, and operating systems. Tracking Customer
Figure 38 Experience

Support

Source: TM Forum Business Benchmarking 2010

Problem Cause
Tracking problem causes can provide critical insights into probable ways to
reduce problem loads. Figure 39 shows problem cause values for residential
broadband. The largest problem areas are Technology Caused and Customer
Caused. Since 2005 there has been a 74% decline in Customer-Caused
problems, while Technology-Caused problems have remained consistent
between 20 to 25%.

Figure 39

Source: TM Forum Business Benchmarking 2010

Copyright ©2010 TM Forum. All rights reserved.


29
The Customer Is Still King

Achieving and maintaining low Customer-Caused values indicate that the


products and services are easy to use without training. High scores show an
opportunity to simplify usability.
Figure 40

Tracking Customer
Experience

Support

Source: TM Forum Business Benchmarking 2010

For Business Services, the percentage of problems that were Customer


Caused and Technology Caused has held steady. Data mismatch increased
from 0% in 2006 to 5.5% in 2008 – a figure that falls in alignment with
residential broadband.

Copyright ©2010 TM Forum. All rights reserved.


30
The Customer Is Still King

0Once the customer has subscribed to a service, the most frequent interaction
with the service provider is through the bill. To assure high customer
satisfaction, the bills should be easy to understand and, of course, correct.
One leading indicator of health in this area is the volume of customer billing
requests. These are calls or other contacts with questions or complaints about
a recent bill.

Figure 41 shows the percent of total customer contacts that are related to Tracking Customer
billing issues. There is a clear trend showing an increasing percent of customer Experience
contact is billing related, an increase of 46% over three years. This trend
reflects the increasing complexity of the bundled offerings and the variety of
items that show up on the bill from voice or data service to new applications
and digital content.
Billing
Figure 41

Source: TM Forum Business Benchmarking 2010

Looking at the customer contact from a different perspective, Figure 42 shows


the “volume of customer requests for billing” as a factor of the total number of
customers. Unlike Figure 41 above, which represents a percent of customer
inquiries, this metric provides an insight into the level of dissatisfaction of the
customers. To read the table bear in mind that the smaller numbers indicate a
smaller percentage of customers are making contact, while the large numbers
indicate that a potentially significant portion of the customers are becoming
motivated to make contact. Thus large numbers frequently indicate a major
issue with bill accuracy or understandability.
Figure 42

Volume of Customer Requests for Billing


Lead Median Mean Lag
Wireline 0.03 24.7 121.51 473.9
Mobile 0.88 16.44 24.57 72

Source: TM Forum Business Benchmarking 2010

Copyright ©2010 TM Forum. All rights reserved.


31
The Customer Is Still King

Figure 42 shows an interesting reversal: The leading Wireline CSPs have


extremely low billing contacts, while the leading Mobile providers – although
Tracking Customer low – are almost 30 times higher than numbers for the Wireline CSPs.
Experience Looking at the median performers, the situation is reversed, with stronger
performance from the Mobile CSPs. This trend continues through to lagging
performance, where lagging Wireline CSPs have 6.5 times as many
Billing contacts than lagging Mobile CSPs for the same number of customers.

While the percentage of customer contacts says quite a bit about the
relationship, the number of bills adjusted due to these customer contacts is
also an important indicator of the experience. Figure 43 shows the Mean %
Bills Adjusted over the past 5 years.
Figure 43

Source: TM Forum Business Benchmarking 2010

Leading Wireline and Mobile CSPs both experience a very low number of
calls resulting in bill adjustments. Mobile performance is much stronger than
Wireline at the median level. When combined with the information in Figure
42, it becomes evident that even while Wireline CSPs may receive fewer
calls for billing, they more frequently have issues requiring adjustment.
Customers value simplicity and accuracy. As bundles become increasingly
complex, with more content and other non-traditional transactions, CSPs
that constantly deliver simple and accurate billing experiences will be valued
by customers.

Along with customer desire for quick (if not real-time) transaction notification
for calls and purchases (e.g., for applications, ringtones, and VoDs),
customers want the on-line billing tools to reflect reality. This is especially
true regarding recognition of payment or topping off a pre-paid account.

Copyright ©2010 TM Forum. All rights reserved.


32
The Customer Is Still King

Along with customer desire for quick (if not real-time) transaction notification for
calls and purchases (e.g., for applications, ringtones, and VoDs), customers
want the on-line billing tools to reflect reality. This is especially true regarding Tracking Customer
recognition of payment or topping off a pre-paid account. Experience
Figure 44

Billing

Definition of Volume of
Customer Requests
The measure is (Number of
customer requests *1,000 /
Total number of customers).
A value of 1000 would mean
that in a typical month, the
CSP received the same
number of requests as if each
customer had initiated a
request. Clearly, scores in the
.88 or .03 range are very good.
Source: TM Forum Business Benchmarking 2010

In Figure 45, we see that by 2008, customers have pressed CSPs to radically
change the payment notification time.

Figure 45

Source: TM Forum Business Benchmarking 2010

Copyright ©2010 TM Forum. All rights reserved.


33
The Customer Is Still King

Tracking a small number of critical metrics can provide clarity on the


underlying customer experience. Meeting or exceeding expectations at this
level provides a strong foundation for new products and services and brand
Tracking Customer awareness and avoiding merely competing on price.
Experience When creating a set of foundation customer experience metrics, the key
portions of the customer experience should be covered. Focusing on a
single area will lead to misleading results. A good set will include metrics
Summary from the following areas:

Service Fulfillment

Service Consumption

Support – Call Center

Support – Assurance

Billing

To see leading, average, and lagging indicators for these areas, please refer
back to the details in the preceding section.

TM Forum recommends the metrics shared in this report. These


metrics provide a good mapping to the customer experience lifecycle.
(See below)

Copyright ©2010 TM Forum. All rights reserved.


34
The Customer Is Still King

The last 18 months have been challenging. Most parts of the world have felt
the impacts of the recession. Telecom service revenues were down, and
some CSPs experienced negative growth. Everyone had to cut costs and
refocus their plans.

Though the economy is still fragile, there exists a general sense of stability. Conclusion
The cost cutting and refocusing are delivering. There are plenty of
challenges ahead, but the sun has come out and we are executing the plans
we need for growth – albeit at not as fast a clip as we saw a few years ago.

The vision of every service, anywhere, is becoming true in the developed


For More Information
markets, and the developing and emerging markets are closing the For more information on
technology gap at a faster pace than before. business metrics, the

The world appetite for bandwidth is on par with the world appetite for
Customer Experience

memory. It is never enough. If we are really going to have everything,


Lifecycle, or Business
Benchmarking, write to
anywhere, then today’s networks aren’t going to be fast enough. We need benchmark@tmforum.org
the next generation. So the transformation plans are going forward. We will or visit the website at:
find new ways to reach the goals. Discussions of sharing the expense of http://www.tmforum.org/
new network build outs are in vogue again. BusinessBenchmarking

By 2013, more than 11% of the world population will have Internet access,
and most of that will be broadband. Global mobile penetration will be at
roughly 85%. The world will be a different place, as it becomes increasingly
connected. Experiencing more connectivity will fuel the appetite for more
connectivity. The speed of connection will accelerate.

There is an increased focus on customers... customer acquisition…customer


retention. All of this is good. With some of the emerging technologies, we
are coming into a period where we will be able to provide true mass
customization of the customer experience. But we aren’t there yet. It is
important that we track the fundamentals. CSPs that take their eye off the
fundamentals of a quality customer experience will pay a steep price. Don’t
be one of them.

So the message is: Pursue those strategic initiatives that you started last
year, and while they are underway, keep a sharp eye on your current
customers. Make sure they see you not only as “cool” but also as
“accessible, reliable, and fast.”

Copyright ©2010 TM Forum. All rights reserved.


35
The Customer Is Still King

Sponsored Feature: Assuring Your Business for the Future


Communication Service Providers (CSPs) operate in an environment characterized by fast
paced business, overwhelming system complexities and huge amounts of data. This
brings continuous change to a company’s processes and systems, forcing it onto much
At the Forefront riskier ground where failures can create massive financial losses or severely impact
customers. Consequently, for the last few years, the industry has contributed to the
of the Industry emergence of true end-to-end Revenue Assurance methodologies, processes and tools to
cope with related operational risk.
Revenue Assurance moved from an interesting subject into a critical process within every
CSP. They have established a dedicated function, provided resources and implemented
tools.
Today Revenue Assurance teams, often under Chief Financial Officers’ responsibility,
perform an important role in ensuring that processes and systems result in complete,
Founded in 2001, WeDo accurate, valid and timely billing and collection. But this falls short when compared with
Technologies has always been at the immense contribution that these teams are able to provide to their companies.
the forefront of the industry
delivering best-of-breed We can realize this fact when looking at how TM Forum has defined Revenue Assurance:
solutions and services to more “Data quality and process improvement methods that improve profits, revenues and cash
than 100 clients spread across flows without influencing demand.” Everyday reality confirms this fact when Revenue
the world, covering 67 countries Assurance professionals are requested to expand the scope of their revenue assurance
on five different continents. work to cover more services and processes.

Right from the beginning, WeDo The Rise of Business Assurance


Technologies’ highly skilled
research & development team It is increasingly clear that all critical processes within a CSP need to be closely monitored
has been committed to delivering to control costs, improve effectiveness and deliver better service to customers. It is also
the most powerful tools for end- clear that approaches first adopted to control revenues can also bring significant benefits
to-end revenue assurance. when applied to other CSP business processes.

Its Revenue Assurance solution – A new approach is therefore proposed: Business Assurance.
RAID – was first released in 2002 Based on a disciplined methodology able to monitor and control business operations and
and combined a deep knowledge prevent risk – and supported by appropriate systems – it underpins the management
of telecommunication requirement that, for every business process, control points and key performance
operations with state-of-art indicators should be established.
software technology.
Having the right Business Assurance tools in place ensures that emerging problems can
This solution contributed to be detected, analyzed and managed through both corrective and preventive measures,
a major breakthrough in the rapidly eliminating the root causes of leakage and failures. In addition, adopting a
industry: the emergence of true Business Assurance strategy creates a more focused and customer-oriented environment,
end-to-end Revenue Assurance integrating different operational areas across a CSP.
methodologies, processes and
tools that could become a de Why do you need Business
facto standard for Assurance?
Communication Service CSPs operate in an
Providers (CSPs). environment characterized by
Recently WeDo Technologies potentially overwhelming
released Business Assurance system complexity and data
RAID v6.0 to respond to the amounts. These growing
latest requirements of complexities bring continuous
Communication Service change to a company’s
Providers (CSP’s) and take processes and systems,
Revenue Assurance to the forcing it onto much riskier
next level. ground where failures can
create massive financial
losses or severely impact
customers.
Most companies, having
placed controls on switch-to-
bill relationships, understand
that these don’t completely
address leakage sources.

Sponsored Feature
36
The Customer Is Still King

Other processes also have direct costs that need to be better controlled and managed.
The consequences of cost leakage or cost creep in a CSP’s network will have a dramatic
impact on the contribution margin from each service or relationship and will ultimately
impact on the operator’s overall profitability.

Expanding RA to Margin Assurance


Today partners’ settlement is becoming a key area for CSPs. Due to globalization and
technological innovation the business relationships with other service and content
providers are growing at a faster pace. Therefore controlling the costs incurred, namely by
verifying third-party billing correctness, and ensuring the complete, accurate, valid and
timely billing and collection, are critical to maintain profitability and, to some extent,
protect the customer experience.

Roaming Partners Summary


CSPs incur roaming costs when their subscribers roam abroad on other operators’ Our industry has already
networks. CSPs also operate in a highly competitive and increasingly regulated moved from assuring Revenue,
environment where fees they can charge their roaming subscribers are being eroded. to assuring Margin. We believe
As a result, CSPs want to ensure that they are generating sufficient margin from the it will end as Business
roaming traffic that they process, while also checking that their costs are under control. (Process) Assurance –
a concept that has been
Interconnect Partners around for a while, but largely
in theoretical form only.
Interconnect represents another significant cost to a CSP. Subscribers inevitably call other Business assurance is
networks, landlines and international destinations resulting in a cost to the operator for “essentially about using
those call terminations. CSPs should control these costs ensuring that the fees charged systems to improve
by partners for the interconnect events are based on the charges established in the operational effectiveness and
interconnect agreement and correctly collected from customers. manage risk” and Revenue
Assurance is already evolving
Content Partners to help CSPs face these
As the market evolves, more CSPs are partnering with third party content, media and VAS challenges.
providers in addition to their traditional interconnect and roaming partners. Typically, Today it is both possible and
when a subscriber downloads content (Java games, ringtones, wallpapers, video, etc.) the affordable to have an
CSP shares revenue with the partner who provided the content. This sharing model can be assurance system – separate
a flat fee or a percentage of the price charged to the subscriber. from the operational systems –
If the direct and indirect costs associated with these services are assured for integrity, that starts from raw data,
alongside the related revenues, then it also becomes possible to monitor the associated follows the value chain,
margins if these are modeled correctly. CSPs need to ensure that their content and controls results, applies
application partners are not overcharging – or undercharging – them for content delivered corrections, identifies leakages
to subscribers. and, increasingly, drives
improvements in overall
commercial efficiency.
Taking RA to the Next Level
Ultimately, a CSP’s board, its
Business Assurance also includes those processes that, although bringing value to the stakeholders, partners and
business, are not directly related to the provision of services or to billing customers. regulators will be able to
Nevertheless, bringing those processes under control is essential in ensuring ensure that things are
cost-effective operations and sustainable profitability. working as planned.
A few examples of these other processes are: Customer management, Credit control, WeDo Technologies believes
Collections management, Handset management and Dealer Incentives management. that bringing true management
control into every aspect of
Example: How to Improve Dealer Incentives?
operations is vital for the better
CSPs are increasingly reliant on third parties to handle the retail relationship with their governance of corporations.
customers and more and more channels are becoming involved in the purchasing or
upgrading of services.
These channels are unfortunately open to errors and malicious or fraudulent activity,
resulting in revenue lost through invalid or inaccurate agent commissions as well as
increased overheads and unhappy customers who fail to receive the service they expect
from their agent. CSPs want to prevent this type of activity and assure the ongoing
commissions paid to their agents.

Sponsored Feature
37
The Customer Is Still King

WeDo Technologies is the leading supplier of Business Assurance solutions


with more than 100 system installations spread across 67 countries. Its range
About of products includes Revenue Assurance, Fraud, Roaming, Credit,
WeDo Technologies Commissions and Churn Management, and it operates its own business
consultancy unit, Praesidium, which has served more than 150 clients
and HOT TELECOM globally.
WeDo Technologies’ primary market is telecommunications, where its global
clients include the Vodafone, Orange, Orascom, Vimpelcom and Digicel
groups. WeDo Technologies has also deployed its solutions in the financial
services, utilities, retail, healthcare and transportation industries. WeDo has
offices in 12 countries and it has three software development centers. WeDo
Technologies is owned by Sonae, the largest non-financial group in Portugal.

HOT TELECOM is a leading telecommunication research company providing


premier quality telecom data, reports and services to the International
telecom community. With its head office in Montreal Canada, HOT
TELECOM’s team is composed of International telecom experts based in
America, Europe and Asia, giving it a unique insight into the global telecom
market.
HOT TELECOM, in operation for over 10 years, has served in excess of 100 of
the industry’s leading operators, consulting firms and governments globally,
providing them with Telecom analysis and reports, Training and Consulting
services across a wide range of subject areas. More information on HOT
TELECOM and its offerings can be found at www.hottelecom.com.
Isabelle Paradis
Tel: +1 514 270 1636
Fax: +1 215 701 7537

One of HOT TELECOM’s most popular reports is the Global Telecom Status
and Forecast report.
This 75-page report, updated once a year, gives telecom managers the
information they need to develop winning and informed strategies to
compete and survive in the increasingly challenging and complex telecom
environment.
The report reviews the world telecom market and its trends, and includes
brand new analysis and 5-year projections of revenues, number of
subscribers, penetration and growth, region-by-region for the fixed, mobile,
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world’s top 20 operators, top 15 equipment vendors, as well as the top 20
countries in the fixed, mobile, Internet and broadband markets.
For more information about this report visit:
www.hottelecom.com/telecom-market-forecast.html

38
The Customer Is Still King

With more than 700 member companies in 75 countries, TM Forum


is the world’s leading industry association focused on improving
business effectiveness for service providers and their suppliers. About TM Forum and
Serving the information, communications and entertainment the Benchmarking
industries, the Forum provides practical solutions, guidance and Program
leadership to transform the way that digital services are created,
delivered and charged.
Members include the world’s largest service providers, cable and
network operators, software suppliers, equipment suppliers and
systems integrators. TM Forum provides a wide range of
information and support to help its members reduce the costs
and risks associated with creating and delivering profitable
services. These include industry research and benchmarks,
technology roadmaps, best practice guidebooks, software
standards and interfaces, as well as certified training, conferences
and publications.
TM Forum also provides its member community with extensive
marketing and networking opportunities, enabling business with
new customers and partners.

Business
Benchmarking

“The Customer Is Still King” is the latest in a series of Insights


Business Intelligence Reports that address strategic operations
within Service Provider organizations. The reports are created by
the TM Forum Business Benchmarking Program and available
exclusively to TM Forum members.
The TM Forum Business Benchmarking Program is a one-of-a-kind
program that provides tools, reports, and analysis that enable
Service Providers to compare their business and operational
performance to the performance of over 130 Service Providers
from 20 countries around the world.
The Business Benchmarking Program manages and delivers
metric-based benchmarking studies, surveys on qualitative aspects
of performance, and business intelligence reports. All Service
Provider data is contributed anonymously through a secure portal
to a secure database.
To learn more about this report or to participate in the Business
Benchmarking Program, please contact Tonia Graham at
benchmarking@tmforum.org or visit
www.tmforum.org/benchmarking.

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