Billing must get real-time; 2.5G and 3G networks can expand cellco service offerings like never before, but it won't mean a thing unless their billing platforms can keep up with user activity in real-time - Billing

Telecom Asia, May, 2002 by John C. Tanner

One of the major attractions of 2.5G and 3G wireless data services for cellcos is the potential to create new revenue streams. Voice and SMS may be the big money earners today, but as the markets become increasingly competitive, cellcos have been caught in price wars mainly because there's little else to differentiate them from their rivals, service-wise.

Wireless data is widely expected to change that because, unlike voice and messaging, the term "data service" can actually mean a number of separate billable services, from sending email and messages with attached photos and video clips to mobile gaming and MP3 downloads, to name but a few.

The trick, of course, is how to charge for such services. And finding a solution has necessitated a shift in billing paradigms from batch-based fiat-rate billing to usage-based billing in real time.

The concept of usage-based billing has been fueled largely by the rise of IP services on the Internet, where users no longer have to necessarily pay by the minute. With usage-based billing, the possibilities are much more vast, says Craig Ginsburg, product manager for CSG.

"You can bill by the duration of a session, the volume of data, per event, or per transaction," he says. "You could bill a flat rate, you could charge for content. And any of those can be varied by the location of either the user or the origin, distance, jurisdiction, time of day, day of the week, or quality of service. If you bundle services, you could charge differently than if the customer uses the service a'la carte."

"This kind of pricing flexibility, not only allows operators to bill customers based on their usage patterns," says Lex Haket, manager of telecom solutions at SchlumbergerSema Asia. "It also lets them offer personalized cost control plans, and gives them better control over fraud and bad debt."

Lessons from prepaid

The key to all of this is the ability to rate, manage and authenticate services as they happen, which old-school batch billing systems can't do.

Batch billing, for the uninitiated, works like this. After the subscriber completes a network transaction--a voice call, say--a CDR (call detail record) is generated and forwarded to a rating server, which stores all CDRs. At the end of the billing cycle (or when the number of CDRs reaches a certain volume), the server rates all the CDRs based on billing criteria such as per-minute charges based on the destination, and sends them to the billing system, which posts the resulting data to the customer's account.

The most common problem with this process is called "revenue leakage", where money is lost because of the system's inability to report billing errors and fraud until days or even weeks after the fact.

Another limitation of the batch billing system is a lack of awareness of what the customer is doing at the time of the transaction, which keeps the service provider--and the customer, for that matter--from knowing in real time things like when a subscriber reaches his credit limit.

Prakash Sadagopan, senior consultant for Convergys Asia Pacific, says that prepaid voice is a prime example of the usefulness of real-time account monitoring, since prepaid has been doing it for years.

"If I have a prepaid IDD card and I make a call to the US," says Sadagopan, "I'll get a message telling me how many minutes of talk time I have based on the value left on my card. With postpaid batch billing, the customer doesn't know how much the call costs until the bill arrives and they get a shock when they see the price. The things we can do today with prepaid voice, we need to be able to do the same with postpaid data."

Indeed, the prepaid model, which has already proven popular with cellcos as both a market grower and a way to keep fraud under control, is already being considered for data services--or at least its features are.

Haket of SchlumbergerSema says the growth of pre-paid in most markets is resulting in a larger part of operator revenue coming from anonymous subscribers that have a tendency to churn. "2.5G and 3G systems also create a need for real-time cost control for both pre and post paid markets. Prepaid subscribers are expecting services like WAP, SMS, voice mail, roaming, content, self care and the push for these new services will call for real-time billing structure to be quickly implemented."

Managed complexity

Whether prepaid or postpaid, the flexibility of real-time billing does come at the cost of complexity. Real-time billing gives service providers many more criteria by which to price their services--distance, QoS, CoS, peak hours, bytes transferred, and so on.

Moreover, says CSG's Ginsburg, try applying this to NTT DoCoMo's i-mode model of revenue sharing with third party content providers. "If an operator sets up a revenue-sharing deal with a cinema to sell movie tickets online or with a bank to provide online banking, they have to do rating, billing and settlements with their partners as well as their end-users," Ginsburg says. "And there's a variety of different ways to do that. Revenues could be shared via flat fees or a percentage of subscription fees. It could be some usage-based criteria like class of service--speed, or the age of the content--or it could be based on traffic generation."