Caroline Chappell, Associate Analyst, Heavy Reading

There is no longer any doubt that application services are going to be a key source of operator revenue in the years ahead. The mobile content market is beginning to fulfill its early promise as growing numbers of subscribers look for mobile content to buy. According to a recent industry research, 73% of AsiaPac subscribers expect to be downloading ring tones in 12 months time, with 49% wanting games. In Europe, those figures are 20% and 15% respectively. Operators are eager to pick up on this trend, and Accenture claims that most mobile operators expect 25% of their data services to come from mobile content by 2008.

But in order to remain competitive in this fast-moving market, operators need to equip themselves with two key capabilities:

• a ready and ever-expanding source of new mobile content to tempt the market – in other words, an ecosystem of application developers that can work with the operator to create new applications
  
• a cost-effective and rapid way of delivering new applications – that is, a platform for accepting the applications from the developers in the ecosystem, preparing them for the operator's network environment and the end-user's mobile device, and ensuring that users can find and be charged for the new services. This platform is defined as the service delivery platform (SDP).

The important characteristic of a service delivery platform is that it provides a consistent set of functions to a wide range of network applications. Instead of application developers having to hard code over and over again into their end-user services capabilities such as access control, content management, or low-level calls to network devices (the so-called ‘silo' or ‘stovepipe' approach), they use a high level interface to plug into these capabilities within the SDP.

But the SDP is ‘enabling' technology and many operators don't want to spend months and millions of dollars building the perfect service delivery architecture, only to find that they have no applications to run over it. They like the idea and cost benefits of having a single architecture to run all their services, but they want applications from day one that will run across it. Some SDP vendors, such as Telenity, have long recognized the value of applications as the ‘back door' way of introducing their SDP technology into operator organizations. They sell services – and the enabling technology automatically comes too. The next service they buy automatically slots into the infrastructure and is cheaper, because the SDP function is already in place.

No single vendor is able to deliver all the components, or indeed all the applications, for the SDP. So operators need to look for SDP suppliers that have strong partnerships in the market with vendors that deliver complementary function: the more pre-integrated function an SDP vendor can offer, the cheaper it will be for the operator to acquire this all-important technology. And they will need to work with vendors that are building up application provider ecosystems. The more applications that are being written for the vendor platform, the wider the choice of content and applications the operator will be able to deliver to its market.

However, as mobile networks move from being ‘walled gardens' – with new application development limited to a number of trusted partners - to ‘open gardens', where the operator allows untrusted application developers to offer services over its network, the issues of network security and access control come to the fore. The SDP needs to control who can do what, when and where, with which services, and, increasingly, with which quality of service. The SDP therefore needs to be able to apply policies that control subscriber, service and third party content provider behavior in the operator's network. This is an area of the SDP that needs market education so that operators understand its considerable implications.

An SDP positions an operator at a key point in the service delivery value chain, enabling it to generate revenues, both for itself and its content provider partners, from value-added applications. According to Heavy Reading research, the world's most advanced Tier 1 mobile operators, including Sprint and Wind, have already put in place sophisticated SDPs. Operator groups, such as the Bridge Mobile Alliance in AsiaPac, are collaborating to build SDPs, sharing the cost and risk – and providing an attractive combined subscriber base for content providers. In a Heavy Reading survey of 65 operators last year, however, 22% of respondents, were uncertain of their organization's timeframe for SDP adoption. However, a third of respondents felt that their organization would have an SDP in place by the end of 2006.

Operator-cited barriers to SDP implementation include the complexity of the technology and uncertain return on investment. However, both the technology and the market are maturing fast and operators should partner with technology vendors that have a portfolio of applications built on open and standards-based SDP platforms, a strong ecosystem of partners, and the ability to demonstrate the business case for an SDP versus a silo approach.