Report: revenue leaks continue

Telecommunications Americas, Dec, 2004 by Ken Wieland

Average revenue leakage this year for operators around the world is 10.7 percent of turnover. That was the headline finding of a survey commissioned by Azure, a revenue assurance specialist spun out from BT in April 2003. The resulting report--Global Operators Attitudes to Revenue Assurance--was compiled by the Analysys consultancy and involved the survey of 100 operators around the world.

Although the level of revenue leakage is down compared to the 13.7 percent recorded last year when Analysys conducted a similar survey via telephone interviews, the major sources of those losses have apparently not changed: poor internal processes and procedures; incorrect pricing for new products; incomplete or incorrect CDRs (call data records); and fraud.

However, the average global loss figure hides significant geographical differences. In North America, operators are the worst in the world when it comes to plugging revenue leaks with loss rates of over 14 percent in total revenue. In Western Europe, the rate is just under 5 percent and as low as 3 percent in Latin America.

When looking at different operator types, the survey also found--as in previous years--that incumbents suffered the least amount of losses due to greater management focus on revenue assurance. Moreover, alternative fixed operators continue to suffer more from process-related problems while mobile operators are the most vulnerable to fraud.

Despite the high levels of revenue leakage recorded by the report, operators' perceptions of the problem--at least for the purposes of the survey--were considerably lower. Their estimate of losses had fallen from an average of 2.4 percent last year to 1.87 percent this year. They also said, on average, that the acceptable level of revenue loss was under 1 percent. However, the report also found that operators were not optimistic about controlling revenue losses in the near-term with more that two-third of those surveyed saying that total losses will increase in the next 12 months. This coincided with the need to launch more products and the fact that operators are generally not confident that their revenue-assurance solutions are effective, particularly in relation to dealing with process, products and system integration issues.

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The report's findings also indicate that operators are beginning to take revenue assurance more seriously, with 68 percent saying that it was a more important issue than last year. In addition, more operators (over 60 percent of respondents) say they take a coordinated team approach to revenue assurance, although the report found that many of the managers allocated to those teams generally have other responsibilities (such as risk management, finance/accounting and network operations). Less than 25 percent of the companies surveyed in the survey had dedicated revenue assurance managers.