The point of convergence - Industry Trend or Event

Telecommunications, March, 2001 by Paul Hunter

Billing should be simple and efficient -- one bill for fixed line, mobile and internet services is an obvious choice. However, providing convergent billing is not as easy as it seems.

The onset of convergence and IP Is transforming the way service providers bill their customers. A few years back it was all so easy. As a service provider, you either sold fixed telephone minutes, mobile minutes or internet time. The customer would then receive one bill for the time spent using one product. The communications industry has rarely enjoyed an easy relationship with customer service but in the simplified, regimented world of five years ago - where you were either a voice, mobile or internet company - billing issues were usually manageable.

About five years later, with deregulation well advanced in most countries across Europe, the communications landscape has become fiercely competitive to a degree that few of us could have imagined. Service providers, new and old, have had to respond. Unsafe in the confines of one core product, service providers have tried to tie up customer loyalty by offering bundled packages, with integrated pricing structures across different media: voice, mobile, internet and increasingly content delivery.

Energis is one of the best examples. Originally a fixed carrier, it has now moved into the data/internet area and most recently struck a deal with Orange to become a virtual mobile operator. The result is that businesses of any size and a growing number of consumers now expect to receive everything they need to communicate - be it fixed voice, mobile, internet or content - from a single source. According to research by European cable company ntl, over 75 per cent of small businesses now expect a single supplier to be able to provide all their communications.

Ideal of one bill

Being a converged communications supplier may work in terms of product delivery but in many companies, the billing side hasn't caught up. Convergent service providers can rely on multiple network operators to carry their customers' traffic for example: BT for voice, Vodafone for mobile and ntl for internet. To bill customers, service providers need to pool together usage information from multiple channels - routers, access servers, web servers and applications or entertainment servers. This data must then be filtered, collated and condensed into one easy-to-understand bill that covers every service used by the customer.

Issuing a single bill is vital for the service provider's vision of bundled services to work. The attraction of a product bundle for the customer is its simplicity. But if the single bill side of the equation falls over, product bundles lose their appeal for the end-user.

Many of today's cross-service bundles are extremely sophisticated and reliant on billing in one product stream to trigger activity on another. The classic example is when a customer spends over a certain amount on monthly phone calls and then qualifies for free internet access. In this instance, the single bill is paramount for the customer to understand the way he or she is being charged.

Infrastructure problems

If service providers don't have the systems in place to handle these complex processes efficiently, costly inefficiencies creep into play Bills go out late or not at all; customers are overcharged or the service provider fails to bill for every service t provides. While many smaller players naturally struggle with the scale of the billing issue, the problem affects ever the largest telcos.

Europe's second largest cable company, UPC, has a triple-play' strategy of pro viding telephone, TV and internet services to customers. Matching consumer demand and billing efficiently has proved problematic and three Dutch consumer rights groups called on customers to stop paying UPC. Ultimately, the cable group was forced to refund many disgruntled subscribers.

If convergence has created problems with billing processes, the outlook does not at first look positive for service providers. The major issue is the pace of technical development. Service providers have to make sure that the transition from narrowband to broadband service provision - DSL in internet, GPRS in mobile, and video-on-demand in entertainment - does not affect the speed and accuracy of their billing.

But the billing structures for many of these new services are far from dear. At last month's meeting of the GSM association, the hot topic was mobile data services. But when the debate moved to billing across borders for mobile data traffic, the operators were reticent to comment. Charging for IP services is another key issue. Value-added IP services and applications are coming into the network thick and fast but operators and service providers are a long way from being able to bill each other for them.

ASP impact

However, just as the pace of new technology complicates billing issues, the number of potential service providers balloons. The traditional telephony and internet markets are seeing activity from a number of new entrants. The billing chain now extends beyond traditional telcos and service providers to portals, financial institutions and high-street retailers. Local loop unbundling is giving rise to a whole new market for resellers looking to bundle value-added services together.