Paperless Telecom: Verizon gets aggressive about electronic billing

Communications service providers are getting serious about reducing the amount of paper they consume. The drive to “go green” is part of the motivation behind paperless telecom, but increasingly telecom companies are seeing financial benefits as well. Verizon is just one telecom service provider—along with Cox Communications, AT&T and others--that has benefited itself and the environment by reducing paperwork through green initiatives such as online ordering and electronic billing and payment.

As Mike Coyne put it, “Doing the right thing is actually saving money.”

As director of finance operations for the services organization at Verizon, Coyne oversees billing for Verizon’s three main business units—consumer landline, business and wireless. Each unit generates about 25 million bills each month, and bills for all customers are available in a secure manner online. Increasingly customers are relying solely on the online option. For 2008, 8% of Verizon’s consumer landline customers, 18% of wireless customers and 32% of business customers chose to forego the option to receive a paper copy.

“Verizon has very aggressive goals to significantly increase that,” Coyne said. “The goal is to double the number every year for the next several years.”

To support its electronic-only billing initiatives, Verizon had to establish alternative payment options. These include credit cards and payment through an automated clearing house (ACH). With the second option, payment is deducted from the bill payer’s bank account. With either payment method, customers can choose to pay for one month at a time or can set up automatic bill payment.

The ACH option is the most economical for Verizon because the carrier avoids credit card transaction fees. For customers choosing automatic payment, the ACH option also can help customers optimize cash flow. “With direct debit, customers have the money taken out of their account on the last possible day that it’s due,” Coyne explained. “If you sign up for automatic credit card payment, the money is charged on the first day that it’s due.” Nevertheless, he said some people prefer that option because they get mileage in airline frequent flyer programs or other perks from paying by credit card.

Unlike some other types of payments, such as mortgages or health club payments, the amount owed on phone bills varies from month to month. Unfortunately, that reality causes the majority of customers to balk at the idea of automatic payment—even though Verizon will credit people back for any dispute resolved in their favor. Of those who pay by credit card or through an ACH, most opt to handle each month as a separate transaction.

For those people, Coyne explained, “The problem with turning off the paper bill is that it’s a mechanism to remind them to pay the bill.” Verizon is taking steps to address that issue, however. The company is looking at implementing a system that would send customers an email with a hot link to their online bill at the time the bill is issued.