Bill or Bust

Internet protocol telephony is changing the world, but the world is changing IP telephony, too.

For what it's worth, flat-fee billing for Internet services seemed like a good idea at the time. Some years back, service providers were popping up all over, and competition was fierce. Service strategies were one-dimensional-Internet access was the only thing anyone needed, and offerings such as hosting garnered only minimal interest. No one expected to pay for quality, so no one sold it. Considering all this, it's no surprise that when somebody found the bottom of the price scale, everybody else followed.

The trouble is, $19.95 for unlimited usage is a bad idea when the parts suddenly seem to hold much more potential value than the whole. Those parts, in addition to hosting, include a wide range of IP telephony services that are rapidly gaining significance: IP voice, IP faxing, IP conferencing, IP video-on-demand.

For providers of these services, a blunt welcome to the world of traditional telephony billing is in order. In particular, offering telephony services means IP telephony carriers must adopt the same billing practices as other telephony carriers-billing by time, destination of call and, in some cases, the method of transport.

Coming into that fold may sound easy, but it's not. Usage-based, or metered, billing has never been applied to the Internet market. In addition, the ability to call around the world on a flat-fee basis is what lured many people to IP telephony in the first place.

How will these users respond if carriers change their world from macro to micro, with a fee for every call they make? "Carriers are feeling the pain [of trying to make money from flat-fee scenarios]. But they were scared that metering services would drive customers away," says Anil Uberoi, vice president of marketing at Xacct Technologies, developer of one of the first usage-based IP telephony billing systems.

No one wants to take the chance first. However, if IP telephony carriers are ever going to make money off the gateways and other facilities they have deployed, they need to place higher value on the calls that require more of their networks.

Likewise, if customers are ever to view IP telephony services as an alternative to traditional telephony, they must be able to get something more for their money than just a connection. They need guaranteed reliability, a definable grade of service, and discounts or special features that reflect their usage frequency and calling habits. These things are familiar to them as users of traditional telephony services.

Carriers must be able to bill for IP telephony service according to those specific parameters-overall quality as measured by users and the cost of providing the services as compiled by carriers, says Uberoi.

Again, doing this much has been difficult. A handful of billing vendors, especially those with convergent offerings, have been ready to meet the needs. A few IP telephony billing specialists have popped up, but other billing vendors have been playing a guessing game, trying to figure out when service providers will actually be ready to widely adopt usage-based billing.

An executive at one billing vendor said a few months ago: "The groundswell behind IP telephony isn't sufficient enough yet to support usage-based billing in a broad way. It needs to get more mature."

That vendor has since begun developing a usage-based capability for IP telephony, and other vendors have advanced their IP billing efforts. Some have even acquired IP expertise to quicken their projects-Billing Concepts, for instance, acquired Expansion Systems last fall.

However, most vendors agree that the deployment waiting game persists due to factors beyond billing system readiness.

Service mediation might be the main factor. In traditional telephony, call detail records (CDRs) collect important information about every call placed on a carrier's network, such as the destination of the call, whether it was a voice or data call, how long it lasted, the route it took to reach its destination and other items. Carriers use this information to bill calls and manage usage across their networks.

Throughout the industry, the CDR format and collection procedure is fairly standardized. However, no such CDR standard exists for IP telephony calling, and traditional switches are not well equipped to collect IP-based information. With interoperability and other network issues adding hurdles, industry forums may not get around to establishing a standard any time soon.

That has left many vendors to define their own CDR formats, in hopes of coming to a de facto industry standard. Xacct has developed and is promoting its XDR format as a system for other billing vendors to use (Figure 1). Other vendors that focus strictly on billing data presentation and delivery have left their systems open to support different CDR formats. However, the lack of a standard has made some service providers nervous, especially those from a traditional telephony world in which standards often define market ripeness.

In the long term, the industry must confront other technical issues, too, says Jeffrey Boozer, director of product marketing at Billing Concepts. For instance, IP telephony is viewed as one potential element of a gradually developing convergent service environment with many network operators.

The industry must decide on fair procedures and fees for terminating IP calls from ISP networks to traditional phone networks. "The access and egress across different carrier types is a big issue," says Boozer.

Another long-term consideration is the ongoing development of back office and service support systems and functions that surround the billing process. In truth, billing for an IP call is the most immediate of many functions that need to be addressed as network evolve to support IP telephony.

Generally speaking, Internet usage has evolved much faster than service providers' back office systems. Now, IP telephony services of all types are increasing in usage, despite the lack of back office standards. And service provisioning, activation and monitoring are not up to task either, says Dave Curley, vice president of Bridgewater Systems, a designer of service support software.

"IP services are more user-driven than traditional services. Users want choice and control over everything, so their preferences should vecome part of a billing profile," says Curley. "Some systems are too slow to activate and support services in the IP world."

Maybe everything about the Internet isn't as easy as it used to be, but supporting and billing for IP telephony services should be.