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NEXT GENERATION BILLING - One-stop hybrid
As leading telecom operators take significant, albeit cautious, strides towards global 3G rollout, they are confronted by threats posed by innovative business models, increased customer demand and ever-intensifying competition. The emergence of niche players specialising in next generation service provision, and the entry of cross-sector operators into the communications arena has taken competition to dizzying heights. Amidst such a dynamic telecommunications environment, Siddharth Puri explains, customer care and billing (CCB) solutions have transformed from mere back-end support systems for service providers to strategic tools in customer retention and management
Over the past year, convergence across the telecommunication industry has become apparent. Carriers, cable operators and wireline service providers, increasingly competing for the same customers, are evolving to create a new breed of communications companies. Some will be pure-play voice or just data providers, while others will emerge as truly integrated communications companies offering varied combinations of mobile broadband voice, video, data and broadcast services. Service providers see the potential of generating new revenue streams by becoming a ‘one-stop-shop’ for all the communication needs of a customer, and are in the process of constantly refining their service offerings.
With operators migrating to an IP-based next generation network, the convergence of voice, video and data – termed as triple play – has received a major boost. In the early stages of deployment, triple play services were introduced purely as a mechanism to reduce customer churn. With a bundled service offering comprising voice, video and Internet services, the service provider's brand grew stronger as it became harder for the customers to switch between operators while maintaining all of their services. From the end-user's point of view, the benefits in availing all services through a single operator were twofold - overall convenience derived from such an arrangement and the price discounts that usually came along with such service bundles. Next generation triple/ quadruple play, however, refers to much more than just tying these basic services together.
The communications industry has graduated from a rather technology-centric ideology to a user-centric value creation model. Service providers recognise that migration to a convergent environment would not only help retain existing customers and defend their current revenue, but also generate additional revenues by introducing more sophisticated services. Moreover, operators can deliver innovative customer-focussed services by offering new functionality in the areas where all three components of voice, video and data converge.
Challenges for billing vendors
An important factor restricting the deployment of a truly convergent environment is the inability of legacy CCB systems to handle the entire gamut of services that possibly a single operator can now offer its customers. The in-house systems used by the erstwhile telecom operators providing simple voice services worked well for what they were designed for - charging customers a flat rate based on time and distance. In the context of next generation services, however, billing becomes far more complex. Three major challenges facing vendors today are:
• Multi-level convergence
• Evolving value chain
• Flexibility and scalability
Multi-level Convergence
Service providers have achieved convergence at the network, service, device and application levels. This allows them to strive for complete customer ownership, as a single operator can offer the whole spectrum of communication services to its customers. Now that operators possess the technology to provide such a multitude of services, the challenge is in attracting customers with the right service mix - therein lies the gap. Several operators still possess independent billing modules for the different sets of services that they offer. To tap the full potential of a truly convergent infrastructure, the need is for a unified customer care and billing platform, a system that can handle the complexities of a convergent environment and at the same time, provide the operator with dynamic rating and billing capabilities such as cross-service packaging and discounting. Moreover, the implementation and maintenance costs involved in deploying a unified billing platform would be considerably lower. In this context, the role of mediation and correlation engines has shifted from mere collation of usage records to a more strategic function of information gathering, validation and intelligence creation.
With prepaid-postpaid integration becoming a reality, operators are able to offer different payment options to customers on a service-by-service basis, rather than at the customer level. Service providers can realise an increased ARPU through service differentiation and service innovation strategies as they would be able to offer all services to all customers, irrespective of the payment method. In order to achieve prepaid-postpaid integration capability, some postpaid billing vendors have opted for alliances with established players in the prepaid arena, rather than developing a prepaid solution on their own. This strategy allows them to combinine their respective skill sets, and also saves on time and capital investments.
Evolving Value Chain
Emerging business models around a multi-level convergent environment have led to the introduction of numerous entities into the value chain, vis-à-vis, network operators, service providers, content developers and aggregators, and application providers. The value chain is extending in both horizontal and vertical directions, and the complexity of value chain management is also on the rise. Revenue realisation and settlement become issues of grave concern when multiple players stake their claim on the revenues generated from a customer. The number of leakage points to be monitored by the operator is also higher in such a scenario.
In an era where telecom service providers depend heavily on third-party content providers, multiple-party billing capability is critical to any service provider's business. Real-time revenue sharing coupled with cross-service discounting capability is becoming the de facto standard for billing vendors. Furthermore, as content services are catching on with consumers, the mounting revenue leakage issues are becoming even more pervasive. Next generation billing solutions should be able to identify, and thereafter enable the operator to successfully plug leakage points across the entire value chain.
Flexibility and Scalability
Service providers were stifled in their approach to global 3G adoption due to the inflexibility of existing infrastructure. Legacy billing systems could neither scale up technologically to manage the wide expanse of services that next generation networks promised, nor could they effectively match up to the growing customer base expected from a multi-service operator setup.
Service providers and billing vendors alike, realise that the CCB system needs to be as dynamic and interactive as the network that it is supporting. Estimates show that nearly fifty per cent of all billing systems become obsolete, on an average, every four to six years, primarily due to their inflexibility. It is quite obvious that solutions would need to possess the prerequisite of scalability ingrained deep into their development philosophy.
A strategic outlook
Service providers, who are in the process of rolling out triple play, 3G services and beyond, realise that as the technological divide between operators closes down rapidly, it will be service differentiation in terms of total customer experience that will hold the key to success in the long run. Operators understand that each customer is unique, and deserves to be treated differently. In order to achieve this level of differentiation, the marketing teams need to design innovative customer-specific service bundles, taking into account factors like services availed, prior usage patterns usage data and customer loyalty. There is a need for dynamic and interactive pricing solutions with the ability to analyse historic customer data, and come out with best value plans based on individual customer preferences.
From a vendor point of view, the evolution to a truly convergent communication environment presents a great opportunity. Billing systems of yesteryear clearly do not possess the capability to handle such a technologically rich and functionally dynamic setup. However, owing to financial constraints and existing license agreements with vendors, it is unlikely that operators would opt for a complete replacement of their billing infrastructure. Rather, an alternative approach being adopted is a gradual move to an integrated billing infrastructure - a phased replacement driven by the introduction of next generation services. The key for vendor success lies in developing a highly modular system that is flexible enough to incorporate an ever-evolving, complex and innovative service portfolio, and is future-proof in terms of its scalability.
Siddharth Puri is Product Manager, GTL Infrastructure Limited
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