BILLING CONTENT - Joint Efforts
As operators begin to position themselves as multimedia companies, Chris Yeadon 
examines the essential billing systems capabilities now required to support an effective content based strategy
Over the last few years many industry observers have stated the importance of mobile operators becoming media companies, if they are to avoid becoming merely ‘dumb bit pipes' as they approach the so called ‘IP Jungle'. Many operators have taken notice. An increasing number are now positioning themselves as multimedia companies, offering new fixed-line, DSL, IPTV and mobile TV services in addition to their core mobile offerings. Content is also playing an increasing role, especially in the mobile channel. Indeed, according to Portfolio Research, the mobile content market was already worth $24 billion in 2008 and is forecast to rise to $47 billion in 2013.
The challenge for many operators is how to support the new array of partners and especially content partners who will play an increasingly important role in the value chain of their offerings. In this regard the billing system will be pivotal in the support of next generation strategies.
Mobile content covers a huge area in terms of genre and format, ranging from stock price information to games and SMS alerts to mobile TV and advertising. Therefore, before we examine the billing system requirements for mobile content it is necessary to make some assumptions. For the purposes of this article mobile content is:
- Both produced and owned by a third party
- Obtained or consumed over the network
- Marketed and sold by the operator (‘on-deck')
- Always chargeable - but not necessarily to the end user.
Mobile content provides operators with the means to increase customer focus by targeting customer segments with relevant content. This could include offering financial news to the business segment or music downloads to the youth segment. Depending on the ambition of an operator's content strategy, they may develop a content partner ecosystem consisting of numerous companies each with different financial and contractual models to be supported. Therefore, in much the same way that an operator requires efficient access to contractual and product data to manage its relationship with its customers, it must have the ability to efficiently manage its partner relationships. This includes contract definition flexibility to support the different types of partner business models.
Unless the content partnership is based on a ‘buy-out' or ‘blanket fee' arrangement, the business terms of the partnership will typically be based on a percentage of revenue or rate per use royalty. Therefore by definition, the billing system will need to support multiple chargeable parties. Firstly, the subscriber usage charges (including any applicable offers or discounts) must be calculated and made available for subsequent billing. Then, in relation to each transaction, additional charges payable to the content partner must also be calculated by the billing system.
Whilst this may seem obvious, for certain types of content the reality can be much more complex. Music content is a good example. In some cases an operator's billing system may have to support three or more additional chargeable parties including a record company, music publishers and various copyright protection societies.
In order to support a rich content partner ecosystem, the billing system must have the flexibility to generate different types of invoices and statements for each type of transaction in addition to those produced for the subscriber. Taking the example of music content; a record company partner may have control of the content platform from which downloads are made and therefore is able to issue an invoice to the operator at the end of each billing period. The billing system may then need to produce a reconciliation statement in order to reach settlement with the partner. On the other hand a copyright society, with no connection to the content delivery process, will rely on the operator to provide a different kind of credit note or ‘negative invoice' at the end of the billing period.
For an operator's billing system, partner agreement flexibility is the ability to be able to support the business terms of all their partner agreements. In particular this means having the tariff flexibility to support the calculation of all the appropriate charges payable to a content provider or at the billing level, the application of bulk usage discounts and incentives that may also be written into the partner agreements.
The following example shows the schedule of royalties payable to the Mechanical Copyright Protection Society (MCPS) for full-track music downloads. MCPS is a copyright society in the UK, representing music publishers from which businesses who are recording music, must obtain a licence. Similar organisations exist in many countries across the world. It illustrates a potential complex charging scenario that must be supported.
No. tracks in bundle Royalty Rate Min. Royalty Per Track
1-7 8% gross revenue 4p
8-12 8% gross revenue 3.5p
13-17 8% gross revenue 3p
18-29 8% gross revenue 2.5p
30+ 8% gross revenue 2p
MCPS (UK) Royalty Schedule for Full Track Downloads
In this example the basic royalty charge payable by the operator is eight per cent of gross revenue from the download of the music file. However this is subject to a minimum royalty charge of four pence. Furthermore this minimum royalty is variable, depending of the number of tracks that are included in a bundle. Therefore, within the charging component of the billing system, an operator may have to set up a dependant tariff of eight per cent of gross revenue as well as a series of alternative tariffs based on the various potential bundle scenarios. During the rating process, the charges based on both the dependant tariff and the applicable alternative tariff would have to be calculated and then subsequently during the billing process, a ‘best option' rule applied, selecting the most favourable charge for the partner (MCPS).
The support of the above scenario also assumes the number of tracks contained in a bundle can be supported as a field in the content usage record, and that the rating engine can support the bundled track numbers as a unit of measurement.
Historically, mobile content involves higher levels of risk resulting from fraud and accidental overspending. The risk is heightened by the fact that operators are exposed to third party content charges that are usually dependant on usage or revenues due rather than revenues paid.
Therefore content services should be chargeable in real-time for both prepaid and post paid subscribers. This would enable operators to perform balance checks on the subscriber's account. In the case of a prepaid subscriber this is to ensure that sufficient credit remains to cover the transaction. For a postpaid subscriber this is to check against a threshold set by the operator, as a precaution against possible fraud or overspending or one set by the subscriber as a voluntary spending control measure. Such checks should result in an advice of charge message being sent to the subscriber in advance of the transaction.
The benefits of real-time charging to the operator are clear. It reduces the degree of credit risk, provides price transparency and a feeling of control to the subscriber and provides the possibility to offer the subscriber, in real-time, promotions and discounts.
One possible way to achieve this would be to utilise the real-time capabilities of a postpaid billing system to charge all content transactions for all subscribers, prepaid and postpaid. In addition to the important real-time controls, it would mean that all content services can be made available to all subscribers and that costly content tariff configuration duplication is reduced.
In the future as the telecommunications industry converges with the media and entertainment industries it is clear that content partnerships will play an increasingly significant role in an operator's success. It is therefore essential that an operator is equipped with a billing system that is designed to support content partner models, has the flexibility to sustain the varied financial models of a large partner ecosystem and, in addition, has the tariff and marketing features, including real-time charging, to satisfy increasingly demanding customers.
Chris Yeadon is Director, Product Marketing, LHS
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