Cleanup in CO #6!

Not only are there jars of pickles falling off the shelves throughout the network aisles, there are also expensive steaks being stolen, clerks missing items with the scanner, taggers mismarking the merchandise and baggers doubling up unnecessarily.

Do you ever wonder how much money grocery stores lose when clumsy people like me knock a couple jars of jam onto the floor or topple an endcap tower of pickles? Well, keep wondering, because I tried last week to find out and discovered the supermarket industry doesn't track the kind of loss attributable to clumsiness.

Anyway, I figure breakage and spillage must be up there with spoilage and… er, stealage when it comes to tallying supermarket loss — or, as it's known in the grocery game, shrinkage. And short of providing their customers with personal shoppers, encasing their goods behind plexiglass or offering coordination training classes, there's nothing grocery stores can do to stem that unique kind of loss.

Telecom service providers are in similar straits. According to a report published by Deloitte & Touche, revenue “leakage” costs telecom carriers $100 billion to $200 billion per year — 11% of gross earnings. That's significant any time, but it's especially significant in the current market environment.

The difference between grocery stores and telecom service providers is that the loss in telecom networks is not the fault of clumsy customers — in fact, in most cases it's not accidental at all. That means it's entirely preventable.

Connexⁿ Technologies, a developer of revenue assurance software and other OSS applications, says the money being dropped on the floor in the telecom carrier business takes the form of fraud, manual workarounds for processes that should and could be automated, underutilized network assets and incorrect or incomplete customer records. So not only are there jars of pickles falling off the shelves throughout the network aisles, there are also expensive steaks being stolen, clerks missing items with the scanner, taggers mismarking the merchandise and baggers doubling up unnecessarily.

“We can find 5% to 7% in underbillings when we go and do an audit,” said Brian Herbert, vice president of marketing for Connexⁿ. “It's hard not to get an executive's attention when you show them that. That's a really big bottom-line impact.”

Indeed it is: If Connexⁿ's audits are accurate, that means a service provider that currently counts its quarterly earnings at $5 billion could tack on an additional $250 million to $350 million by identifying and correcting the leakages in its network. Nothing to sneeze at, if you ask me — particularly in the midst of an industry-wide downturn when pressures from shareholders and Wall Street are as intense as they are.

OSS software like Connexⁿ's works in various ways: The system compares network element assignments to billing systems set up on a subscriber-by-subscriber basis to detect whether applications being carried over the network are also being billed for. It has automatic triggers that alert network technicians or telemarketing sales departments depending on the type of problem it identifies. And it has streamlined service provisioning and activation functions designed to prevent revenue leakage from occurring with new customers and applications.

I can speak to the necessity of the Connexⁿ system's billing detection function from personal experience: I have been a residential broadband service customer for close to three months now and I have yet to receive a bill. I'm no financial wizard, but I suspect one of the best ways to drum up revenues for services is to actually charge for them.

Herbert further noted that most of the carriers Connexⁿ approaches and audits have no idea they're dropping the kinds of revenue they're dropping. In the wake of that realization, I imagine the previously benign words “revenue assurance” suddenly take on a whole new meaning to service provider executives.

After all, who wants to stand by helplessly as your pickle jars smash on the floor all around you?

Contact Jason Meyers at jmeyers@primediabusiness.com