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Fraud
In the networked services world, billing systems may come tattooed and musclebound in their efforts to eliminate fraud, says Doug Zone
Where once network engineers in lab coats and accountants in business suits designed architectures and crunched numbers at the heart of the enterprise formerly known as a telco, these days all manners of functions are emerging as part of the reinvented business.
This is not least due to the fact that willingly or not, telecommunications operators are increasingly waking up to the reality that they are becoming retailers. These days, forget base stations and infrastructure build-outs; service providers are engaged in the business of selling goods – originally supplied by either large producers (aka content providers) or intermediary distributors (aka content aggregators).
This being the case, it should come as no surprise that, as with the retailers of hard goods, revenue leakage ought to be a key concern. Shopkeepers worry about spoilage. Operators worry about systemic leakage. In the shopkeeper's case, the fruit goes off when their equivalent to BSS and OSS systems doesn't properly integrate! But an equal or even bigger worry for hard goods retailers is theft.
This is increasingly true for operators, not least because the networked services world adds a layer (or more) of complexity to the challenge. Where the retailer can solve a certain amount of his problems with brute force and muscle (if not a security camera), who will emerge as the telco policeman? Because, when an individual finds mechanisms to download his favourite film for free at the same time that operators are attempting to sell it, then let's not beat about the bush; theft is what we're talking about and some form of security will be needed.
To further complicate the situation, in such a case as the one above, the 'thief' is also likely to be a high value customer – using his or her broadband or 3G access to download the file from illegal sources. While the shopkeeper confronts a thief who's generally in his shop only to steal, the operator may be facing a situation in which the transgressor is also an important customer. In addition to the one illegal activity, the likelihood is that he transacts hundreds of other legitimate ones.
This could make for an even bigger problem than it seems, if you argue that the operator is actually complicit since the crime happens over the network. The only certainty, in fact, is this; in the ethereal world, putting a large, security guard on the door (metaphorical or otherwise) wouldn't seem to be an option when it comes to addressing the situation. Or, as we'll see, perhaps it is.
The first thing telcos have to do, though, is acknowledge the problem. It is worthwhile noting how hard retailers work to effectively combat theft with more obvious mechanisms, including cameras and electronic tagging. But, in the world of content, both the thief and the goods he steals are 'invisible'. This creates a unique challenge, and one where traditional muscle as a means of discouraging criminals doesn't work.
In retail, the Point of Sale has always been a key theft prevention opportunity and mechanism. Stolen goods have to pass by the cashier first: not a 100 per cent effective barrier but sufficient to prevent all but the most determined of shop lifters. And, in some cases, even after the cashier they still need to get beyond the security staff and out of the door. Telecommunications providers have an analogy in real-time charging systems that don't allow consumption without payment.
To take a page from hard retailers, half the battle of preventing theft is a matter of making it more convenient not to steal in the first place. In essence, to do this, retailers take a lesson from economists. Each consumer makes a cost/benefit determination: do the savings from stealing outweigh the risk and moral discomfort of theft? In other words, if it is easier to buy than to steal – ninety nine times out of a hundred – buying will win out.
How do hard retailers make it easier to buy?
1. By making sure prices and promotions reflect local conditions.
2. By being careful to avoid the hidden costs that can make consumers nervous.
3. By minimising the time spent in checkout.
4. By allowing some customers to remain anonymous with self-check out.
Operators must start thinking in the same, creative ways. If the process of buying and paying for content is sufficiently convenient, user-friendly, and reasonable then for most people most of the time buying will win out. Given the choice, most people don't feel comfortable with theft. The job of billing software suddenly becomes a means to enable operators to create innovative buying and paying models that maximise this convenience. The default model may be the standard 'detect - guide - rate - invoice - pay', but as we are seeing in e-commerce, often times it will not be enough.
As a result, billing vendors and billing operations must step out of the box and see their job as much more than 'detect - guide - rate - invoice - pay'. They must lead, not lag, in creating innovative business models; models that are convenient, open, time efficient and, at a minimum, better than file sharing (aka stealing.) If this happens, the content industries inclination to draconian over reactions will be headed off at the pass.
Doug Zone is Chief Technology Officer of Metratech www.metratech.com
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