Out with the old, in with the new: Mobile operators moving into the 2.5/3G space will not survive if they simply tinker with their legacy billing systems — a radical overhaul is required - Billing Systems

Telecommunications International, Feb, 2002 by Richard Brand

A customer-centric billing system is essential if mobile operators are to prosper. As everyone knows, the mobile marketplace has changed markedly over the last few years. Cellular penetration is now at saturation point in most developed markets and operators are now frantically looking around for new services and revenue streams that will increase ARPU. But it's no use developing a range of value-added services if they can't be billed in a way that the customer understands and finds convenient.

This task is made more difficult as operators move gradually away from circuit-switched 2G networks to 2.5G and 3G packet networks. The supply chain has also become more complicated with the proliferation of third-party content providers and new business models. And as this network business model evolution takes place, the customer is becoming less tolerant of poor service. Mobile operators, more than ever, need to fully take on board the concept that the customer -- like it or not -- is king.

Simple billing lessons

The importance of billing as a way to reduce churn should be self-evident. After all, sending out the monthly bill is usually the only time that the operator has contact with the customer after the initial sale. That being the case, operators can make important steps toward keeping their customers happy by making the bill clear and concise.

Take the way international and roaming calls are presented. In many cases, customers will not get a breakdown of these charges but just see one lump sum figure. There's nothing to stop an operator, however, from labeling and pricing each call made. It could be stated on the bill, for example, 'international call to Germany'. Or, if the user roamed on to another network abroad, that too could be recorded on the bill in a more explicit manner -- 'call to the UK made through the Itineris network', for example, when the UK-based user roams onto one of the mobile networks in France. Even those exorbitantly costly calls received while roaming abroad could be marked up clearly - 'call received on the Dl [Germany] network' is just one example.

Given that mobile networks have all this information on their CDRs (call data records), it makes no sense not to use them. They can help to reduce the need for expensive customer care simply because customers -- once they see an accurate breakdown of their call charges -- will be less likely to ring up the call centre to query the bill.

Other simple measures undertaken by the operator can make the billing operation a more user-friendly experience. For example, don't send out paper bills when they can be sent by e-mail. The cost of customer care can also be reduced by setting up a web page where bills can be paid, services added or changed, and even targeted marketing messages sent. Not only does this improve customer care, but such a mechanism could provide a valuable new revenue source. It's very easy and appealing for the user to simply click a box and add a new service for, say, 'only [euro]3 per month'. The problem will always be, of course, finding those extra services which customers will be willing to pay for.

Working with partners

In the 'good old days' the subscriber used the network and then paid the network operator for the privilege. In some countries, however, this process was complicated by the presence of service providers. The subscriber paid the service provider and the service provider then paid the network operator.

With the advent of the content provider, there are -- or will -- be much more complex revenue transfers. The network operator cannot possibly provide all the content services itself. In Japan, where there are literally thousands of content providers to NTT DoCoMo's i-mode services, the operator works in partnership with third parties. The question that the operator must consider, however, is what the optimal financial relationship will be between itself and the content provider.

There are many types of business model, but the two most common are:

* the network operator bills the subscriber directly and then gives the revenue, minus commission, to the content provider (the NTT DoCoMo approach); and

* the content provider bills the subscriber directly but pays a fee to the network operator for use of its 'pipe'.

But even within these two scenarios, there can be many variations and added complexity. For example, in the second scenario, volume discounts may be offered by the operator to content providers that generate large amounts of network usage. On the other hand, the network operator may want to identify the content providers that generate low network usage. Content providers that are under performing can then be removed from the operator's portal.

From the content provider's point of view, they may well demand certain service level guarantees. And if these are not achieved, rebates will need to be awarded. It will also have to be borne in mind by the operator that content providers come in all shapes and sizes. From household names through to 'two students in an attic', operators will need to treat them appropriately. For example, if the 'students' are to pay monies to the network operator, then the debt needs to be treated a bit like that of a customer. By contrast, the larger partners will demand some kind of 'care' similar to that received by large corporate customers -- account teams, web-based analysis of usage and so on.