Building a better billing model: real-time service controls are key for wireless service providers - Wireless

Telecommunications, June, 2002 by Mark Denton

Data services represent a potentially vast new wireless market, one that could grow fivefold to one billion users worldwide by 2004. Both consumer and business users want access to their favorite wireless applications, games and data services, and they are worth keeping satisfied.

Recent studies from Japan show that users of i-mode wireless data services spend 15 percent more on voice calls than do nonsubscribers and generate 25 percent to 30 percent more revenue. Yet lack of a single killer application means choice and variety of services is a critical requirement.

The carrier that deploys a superior array of wireless data services is positioned to reap tremendous rewards, yet offering these services is only part of the equation. To maximize profitability, carriers must track and measure usage carefully, develop flexible service offerings that truly meet customer needs, and create and enforce fair, value-based billing models quickly and cost effectively.

"IP providers require a business infrastructure that lets them deliver on the changing value of IP services," according to the High Tech Research Consulting Group. "To price services, IP providers must measure and track those services: If you can't measure it, you can't bill for it."

Two potential solutions to this challenge are agent-based billing software and real-time service control systems. Agent-based billing software uses a decentralized architecture, with content providers establishing separate data links to the service provider's central billing system. The carrier must manage all links separately. These systems receive access requests, validate access, then bill for services in a sequential order: They are not real time. They also require software developers to integrate applications and content services into the billing software using APIs (advanced programming interfaces).

Real-time service control systems unify system policies, customer access profiles and billing information on a centralized carrier-managed server (see Figure 1). These solutions provide a single point of control among the carrier network, content providers and end user. They are designed and developed expressly to enable carriers to maintain control over services, customer relationships and billing, while providing users the widest possible service offering.

Early Adoption and Freedom to Choose

Savvy carriers aren't waiting for 3G or even 2.5G networks to roll our before diving into the services arena. Revenue can be made now. Carriers will capitalize on three key differences between fixed Internet and wireless data services:

* Mobile devices (e.g., cell phones, PDAs) are far more personal than desktop and laptop computers.

* Network service providers can control the menus and content that are offered to wireless data users.

* Cell phone users are accustomed to paying for voice communications and will willingly buy the data services they desire.

SMS (short message service) has found a market niche for simple, text-only content containing alerts or snippets of information. Other wireless data applications, such as corporate intranet access, lifestyle content, driving directions, and weather, sports and business updates have been rolled out to early adopters. No single killer app has emerged from this early adoption period, and it appears a number of market-driving applications may appear, depending on the audience and wireless access device.

Early consumer studies from Japan and Europe show that e-mail messaging (in some cases combined with the ability to click on a hyperlink to initiate a voice conversation) may be the most promising application for wireless data services, with access to location-sensitive information and lifestyle content playing supporting roles. The highestvalue, business wireless data applications appear to be those that extend the enterprise IT system: intranets, extranets, e-mail, ERP (enterprise resource planning) and CRM (customer relationship management) applications.

As the quantity of wireless devices proliferate, so will the demand and requirement for different applications for the appropriate device. Consider a news story that can be presented in text form (for a standard user) or as a video and audio clip (for premium users). Or consider standard, textbased e-mail services vs. premium unified messaging services delivered as email or voice mail.

Convergence of voice and data demands that wireless carriers deploy a single system that delivers applications and manages, controls and measures this usage. The uniquely personal nature of mobile handheld devices, coupled with the control that service providers can exert over menus and offerings, indicates that personalization will be an extremely important asset for wireless data services. The desire to customize devices, maintain control, and shape the device to particular needs and lifestyles means that users will select applications, content, and pricing and usage models that best suit their requirements.

Carriers that can provide and control flexibility in service delivery and billing models will keep their business. Carriers require a robust, scalable realtime solution that will allow them to unlock the true value of the wireless mass market, generate substantial revenues, and achieve customer retention and brand awareness.