E-billing: The Most Powerful Handshake - Internet/Web/Online Service Information

Telecommunications, August, 2000 by Anthony Mestres

With EBPP telcos can save money and exploit one of the most powerful marketing platforms available.

EBPP (electronic bill presentment and payment) has become one of the most important Internet applications for service providers across most industries, but for telecom companies, the stakes are even higher. Billing has always been an important differentiator for phone companies. The complexity of telecom bills, the revenue implications of their accuracy, and ease of payment are critical considerations for consumers and providers.

With the rapid growth of Internet billing, predicted by Forrester Research to reach 21 million households paying 1.9 billion bills by 2004, those telcos equipped with broad, capable services stand to benefit in big ways. EBPP will be the application through which telcos will most frequently interact with their customers over the Internet and will become one of the most powerful marketing platforms available, allowing service providers to promote additional services while increasing brand loyalty and customer retention.

The time when carriers could dictate how e-billing affects their business and is deployed has passed. Distribution channels, including on-line portals and banks that offer consumers a way to pay any bill over the Internet, now have the upper hand. Telcos have two choices: either establish the relationships required to make this rapidly emerging payment method a positive event or adopt the traditional reluctance to change and suffer the consequences.

The advantages of taking a proactive stance are tremendous. Carriers will adopt a powerful new marketing tool and a flagship productivity application for their customers. And with the explosion of "wireless Internet," few savvy telcos can envision a better wireless productivity application than one that actually facilitates payment. For companies that haven't prepared for this new era in billing, the downside will include operational inefficiency and lost customers.

There are a multitude of players in the EBPP business and a wide range of distribution channels. Understanding the EBPP industry is no small task for telco managers and executives trying to make smart decisions for their companies and customers.

While a complicated industry, EBPP can be broken down into four commonly understood business categories:

* End users

* Distributors

* Consolidators

* Billers (carriers)

Supporting the relationships among these primary players are myriad technology and process contributors such as financial processors and systems integrators, which facilitate both transactional and technical activity.

Today and in the near future, end users are primarily consumers, although the industry is taking significant steps to prepare for business-to-business transactions. From a distribution standpoint, popular Internet destination sites and banking Web sites currently represent the most prominent channels consumers use to view and pay their bills.

Value to Carriers

The telecom industry has been at the forefront of EBPP growth and adoption and will continue to be. Americans receive numerous phone bills, and telcos are at the top of the list of service industries that can benefit from Internet billing. In addition, EBPP service providers have dedicated attention to large regional and national telephone companies, fully appreciating the amount of business they represent.

The intrinsic compatibility of the telco customer and EBPP may be less obvious. A combination of influences, including the complexity of telephone bills, telco customers' willingness to adopt new technology, and the marketing opportunities for carriers have contributed to making the telecom industry the flagship business for EBPP. According to Electronic Bill Presentment and Payment Systems in Telecommunications, a market research study released in April by TRI, nearly 50 percent of U.S. telecom accounts will use EBPP as their primary method for paying bills by 2004.

The momentum of on-line payment services is building rapidly, and the business implications are broad. Consumers cite convenience, especially any-time, any-place accessibility, as the overwhelming motivator for using on-line payment and banking services. Companies offering EBPP find benefits fall in four areas:

* Marketing, selling and customer loyally. The opportunity to cross-sell and up-sell on-line may be the greatest value EBPP has to offer telcos and could change the entire definition of e-commerce in the telecom industry From a marketing. standpoint, making payments on-line encourages customers to visit the company's Web site. Hyperlink relationships throughout the customer process can enable and encourage a broad range of cross-selling and up-selling opportunities that make current bill inserts and telemarketing to the existing customer base pale in comparison. By targeting individual customers, providers can offer different rate plans, calling plans, over-the-air activation of new cellular and PCS services, second lines, ISDN, ADSL, ASP (application service provider) and ISP services.