Jun 22, 1998 12:00 PM,

Internet billing

Frank Barbetta

Today's Internet flat-fee pricing structure gives Web surfers unlimited access. This unique circumstance results in uncomplicated bills that bear little resemblance to the monthly bills that local and long-distance carriers churn out like clockwork, specified down to pennies and fractions of minutes.

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The differences were initially sound in theory. Strategic considerations dictated that carriers launch on-line offerings as fast as possible without waiting for billing software to catch up. Complex billing was unable to handle "pay as you go" service introductions on the Internet.

The inadequacy was based partly on limited programming resources, namely money and people. Yet more significantly, the Internet protocol (IP) packet communications infrastructure did a poor job of tracking and generating the appropriate data to accurately measure usage for customer billing.

These limitations are slowly disappearing, giving way to usage-based billing. For more than a year, economists and some analysts have been predicting the change as an economic necessity.

This is because carriers, Internet service providers and those acting as both are increasingly using or talking about IP telephony for voice and fax. This interest is inspiring software and hardware suppliers to develop billing solutions.

IP-based telephony is a prime example of how the excitement behind usage-based service pricing can be generated at the same time as proper billing mechanisms-in this instance for call duration. Indeed, usage-based services and robust billing support are expected to continue as a trend trend in parallel.

Billing software is now handling-or is expected to handle-pricing for many services based on users' payment-method profiles or corporate-established preferences, priorities and privileges. Among those services are least-cost routing, time of day routing, dynamic bandwidth allocation, volume discount rates, callback, security enhancements, Web hosting, e-mail, chat lines, whiteboards, videoconferencing, work group collaboration and multimedia sessions, software applications distribution, applications rental and classes of service quality.

Ultimately, the sweet spot for many carriers-Web-enabled presentation and electronic payment of telephone bills-will also embrace one-to-one marketing of pay-per-use and subscription services, including on-the-spot discounts. Users may sign on for services via Internet sites already handling bill presentation and payment; system integration would allow links back to operations support systems (OSSs) for provisioning and subsequent billing.

Although such sophistication remains a long-term prospect, the head of CyberCash's PayNow secure electronic check service is among those who see Web-enabled bill presentation and payment leading to real time interaction marketing, provisioning and billing of other offerings and services.

"There is a vast cross-selling opportunity for carriers," says Richard Crone, vice president and general manager of CyberCash's PayNow secure electronic check service. "The bill is the brand. IP is like the pay phone of the future in terms of pay-per-use services, but it is not limited to voice calls."

Reality hits the Internet Some question whether such intricate billing is needed and note the irony that flat-rate billing is the driving force behind the explosion in IP-based services.

"If we start to meter every packet, do we lose something with respect to the Internet? Do we lose a little bit of the initial perks behind the Internet? Or can the new services support new markets that can cover costs and produce profit from a network's expensive delivery and trunking?" asks Larry Greenberg, vice president and chief information officer at Princeton TeleCom Corp., a transaction processing service provider and consultancy in Princeton, N.J.

Yet Greenberg acknowledges that flat-rate billing no longer works with large corporate users and telcos seem eager to use their billing standbys with a new medium.

"Do service providers want to provide telco-grade billing? I think the answer is 'Yes, we do.' In my view, telco-grade implies quality of service and its link to billing-the ability to monitor and charge premiums for quality," says Shoshana Loeb, executive director of Internet and information technologies research at Bellcore. "Yet it is an open issue whether people will demand this."

Many technical challenges must be tackled first. Foremost are extrapolating and scrubbing down traffic information from routers and switches and matching that against customer account data for bills. This involves tracking packet volumes, counting bits or bytes and logging origination and destination IP addresses.

The distributed architecture of the Internet's routing and switching infrastructure also presents a challenge.

"There is no one switch that knows about calls," says Loeb. "The information has to be assembled. In the future, more support will have to be given to the Internet end points to gather data." This will lead to more complicated issues and may change the general conception of billing. "Instead of back-office billing, this will have to be distributed up-front and associated with real-time customer interaction for per-use and subscription services. We will need more dynamic billing on the fly," she says.

Also to be tackled are systems integration and applications interface tasks that exchange information between incompatible and sometimes proprietary software in routers and switches, servers, gateways, security systems, billing systems platforms and computer databases.

Historically, carrier staffs have written their own instruction code for such OSS functions as operations, administration, maintenance and provisioning (OAM&P). Services such as voice, ISDN, frame relay and asynchronous transfer mode may already have distinct OSSs in place.

Further, most carriers have homegrown or third-party legacy billing systems, and workers from both camps don't know enough about resident code to incorporate or consider IP billing initiatives.

"At times, you have to go on bended knee to the glass iron house of mainframes to make changes, although it can be done rather swiftly and the carriers are now rushing to catch up," says Crone.

"In reality, almost all Internet service billing is currently done on homegrown systems. It's the Wild West out there, and few vendors have really established themselves," says Hilary Mine, service vice president at Probe Research. "The homegrown systems take advantage of router or [remote access server] operating system software to collect data and then manipulate it for billing purposes."

Players take different tacks Nevertheless, IP software and hardware vendors are working on billing support.

Early this year, Hypercom Network Systems started marketing high-density gateway products and a suite of related IP telephony features, including central office and point-of-presence solutions that stream call records to external systems for accounting and billing.

"IP billing may be complex itself, but no more than current systems," says Jon Young, vice president of product development at Hypercom. "Trunking distances are a bit of an issue regarding end points, bandwidth and routing, but quality of service and differentiators are the main factors here. Once the carriers decide what they want to do, that is the market driver, and the billing software will do what they want."

One company is already touting a new model based on the payload to be sent over the Internet.

Whether network use is light or heavy is the discerning factor, and counting bytes has a direct correlation, says John Stewart, director of systems engineering at Digital Island, a carrier and IP service provider with operations in Hawaii. "Use more, pay more, although customers can buy in bulk, too," he says.

Mine's sampling outlines a variety of solutions. She puts them in three categories: * Offerings specific to network equipment but evolving into end-to-end management.

* Outright billing, accounting and customer care.

* Bandwidth management-often hardware-based and some ostensibly able to differentiate usage by application.

Vendor support is needed to maintain complex billing, while systems integration is often recommended to link the various offerings.

Pre-packaged solutions fill the gap Many vendors believe about 75% of the cost for IP billing systems can be covered right out of the box, and the rest would be for systems integration. Some suppliers suggest that a middle ground exists by providing a set of core products to service providers while supporting applications program interfaces to their OAM&P legacies and other OSS installations. Service providers have been building their own solutions and, to a certain extent, may want to leverage that work, but they are now looking to buy pre-packaged solutions.

Delta Three, an RSL Communications subsidiary and an Internet telephony service provider, recently began deploying Ericsson's Internet Protocol Telephony Solution for Carriers, an NT platform for IP telephony with an operations and maintenance facility that can update and control multiple gateways for phone-to-phone, fax-to-fax and PC-to-phone services.

The platforms support real-time billing with fraud prevention and call-duration advice with integrated voice response software, as well as support for least cost routing and dynamic route allocation.

"We are integrating our call detail records with the Ericsson system and want to collect as much data as possible above what is normally associated with standard telephony," says Noam Bardine, Delta Three vice president of technology and operations. "In IP services, more information is expected to be needed in the future. We can define quality of service to customers; work out top-dollar, tollgrade terms, specific types of codecs and amount of bandwidth; track which network the traffic goes over; and match any of this to [call detail records] with billing."

Cisco Systems' effort to address new IP markets such as telephony and multimedia also underscores suppliers' aims to coordinate billing solutions. A late April agreement with Hewlett-Packard Co. debuted the Internet Usage Platform, which highlights billing and analysis solutions, with Cap Gemini acting as prime reseller and systems integrator.

MCI will be the first carrier to evaluate and test the platform. Although MCI has not elaborated, a company spokesman said the carrier plans to start testing usage-based billing.

"MCI is not certain of the production implications, but every carrier we have talked to recognizes that the ability to differentiate tiered services, based on a 'pay by the drink' model, is significant," says Cisco's John Moore, global alliance manager. Cisco sees usage billing as a key enabler behind rich portfolios of new service offerings.

In the Cisco/HP arrangements, NetFlow software resident in Cisco 7000 and Catalyst 5000 systems generates IP traffic details to FlowCollector servers (Figure 1). The data is then aggregated and correlated to user account information by HP's Smart Internet Usage systems-PA/RISC-based 9000s running HP's UX version of Unix-which are integrated with Cisco equipment and software. The subscriber usage data comes from across IP network operators' infrastructure.

"The greatest challenge in IP usage billing is metering every flow and looking for the billable value add in the flow. There is lots of information," says Moore. "How often the data is collected is up to the service provider to fine-tune. It can be every five minutes to every hour. Updates can be hourly or daily. That depends on the service provider."

These lag times are considered near real-time, but the more pertinent real-time rating and billing of subscribers' network resources and IP service usage is left to partners' external software. Information is structured into an extensible Internet Data Record, which Moore says the two companies have developed and proposed as an open standard for industry acceptance.The IDR-formatted information is fed into billing applications, starting with Cupertino, Calif.-based Portal Software's Infranet-designed specifically for the Internet and able to register, track, manage and bill subscribers (Figure 2). It runs on HP's UX, Sun's Solaris and Windows NT.

Because billing is a prime ingredient, Cisco and HP are also working out a similar deal with Kenan Systems, a Cambridge, Mass., supplier of Arbor Internet rating billing software for Unix-variation platforms such as Digital Equipment Corp., HP, IBM and Sun.

Separately, a few years ago Cisco made an equity investment in Solect Technology of Ottawa to support its Sun Solaris-based Internet Administration Frame rating and billing software. "Cisco takes many equity positions with the intention of developing markets," says Moore. "But in the big picture, we believe IP telephony is one of the key markets that will shape the future."

Portal's target markets include Internet access businesses, next generation IP-based services such as Internet telephony and virtual private networks, and other consumer and business services such as content management, Web hosting, on-line gaming and entertainment.

Portal's steps into Internet telephony include previous teamwork with Cisco on carrier-class voice systems, a research and development alliance with IP voice software and gateway supplier VocalTec Communications Ltd., and an OEM agreement with SkyWave Inc., a developer of gateways and network management solutions for Internet telephony service providers.

The company's billing software is deployed primarily in two modes over the Internet: First, it tracks log-ins, monitor infrastructure usage and match data to customer profiles to market discount offerings (such as U S West).

Second, it outright sells content, says Bassam Kahn, Infranet principal product manager.

The latter includes National Westminster Bank, VerSign and ICL GamesZone, which charge for financial reports, security authentication digital certificates and game time, respectively. Other customers include Grolier On-line, France Telecom and Australia's OzEmail.

Work with Cisco and HP is strategic for billing businesses for Internet usage such as bandwidth capacity and Web hosting by megabytes used. IP telephony is a new market opportunity represented by more than 40 gateway suppliers and emerging gatekeepers that authorize and authenticate users by personal identification numbers, translate phone numbers to IP addresses and keep call detail records.

Kenan added real-time usage rating (vs. the previous one- to 24-hour lag time), as well as Web tool kits and interfaces for customer access to billing records, to its core Arbor BP product to comprise the new Arbor/Internet version, introduced in late May, says Paul Varley, product manager.

This was part of a broad series of announcements, including a new Internet Business Unit under Director Tom Gramaglia and teaming relationships with American Internet Corp., NetCentric and Software.com on their network access management, IP fax, and carrier-class enhanced messaging server products.

In its announcements, Kenan pressed many of the market hot buttons for fee-based, usage-based and event-based pricing for emerging services, although officials said subscription-based pricing for standard services such as basic Internet access would remain. Among new services were IP telephony voice and fax, streaming audio/video and enhanced messaging. It touted customers' ability to bill for "complex product packages that combine rate plans, recurring and non-recurring charges with special discounts, credits and promotions for a single Internet service or across multiple services."

Kenan has more than 30 partners for its Arbor products, including Oracle, Sybase, Andersen Consulting, EDS, Ericsson, Price Waterhouse and Siemens, and the company lists common customers such as @Home Network, AT&T World.net, British Telecom, France Telecom, GTE Internetworking and WorldCom/UUNet.

>From complexity, simplicity Development efforts with Cisco as well as with Ascend's Cascade are aimed at refining and simplifying the IP data extraction from network equipment.

"The challenge for router and switching vendors is not necessarily one of compatibility with billing systems, but that their systems produce so much data that the level of granularity is too fine," says Kenan's Varley. "They log gigabytes of data on per-packet levels and it is often too fine to be useful for rating and billing."

Likewise, Felix Veski, vice president of marketing at Solect, outlines two issues in dealing with the mounds of data produced by network systems: * Matching the IP address received with a customer account.

* Dealing with the volume of information and aggregating it.

Solect also has relationships with the likes of Sun (including JavaSoft-related work), Netscape, Oracle, Nokia, Alcatel, Siemens and Software.com. Solect has about 50 installations, and the GlobalOne partnership among Sprint, Deutsche Telekom and France Telecom is a noteworthy reseller.

Veski sees Solect's billing market addressing IP connections, content and electronic commerce.

For Solect and possibly other similar custom contracts, Bellcore is planning an international carrier-class rating engine to securely deliver billing services over the Internet. To be integrated into Solect's IAF rating engine, it will support customized bundling and discounting of IP services.

"Analogous to experience with Java, a new next generation language deals with dynamic rules-based rating as opposed to hard-wired, table-driven code," says Veski. "That gives service providers flexibility with rate plans."

At the same time, Bellcore is preparing to unveil IP voice software products later this year for carrier class quality of service. Written with Java applets and CORBA middleware, the Intelligent Gateway Call Server will run under distributed Unix and NT platform environments, says Jac Simensen, vice president and general manager of Bellcore's Soliant Internet Systems Unit.

The IGCS product is expected to handle automated message accounting, management of call setup/state/tear-down functions, open API software development and bridging the public switched network and Internet via SS7 and Class 4/5 switch emulation.

Elements of the product may appear as components in Sprint's recently unveiled Integrated On-Demand Network.

Configuration, fault, performance, security, subscriptions, content and/or accounting management * Hewlett-Packard's OpenView Smart Internet Suite

* Cisco Systems' Netsys and IOS Management Services

* Bay Networks' Optivity, Ascend's Navis, 3Com's Total Control Manager & Related Servers (associated with Total Control Access Platform only)

* 3Com's TranscendWare (end-to-end network management solutions targeted at enterprise but can be used by ISPs)

Billing, accounting and customer care * CrossKeys Systems' Network Ware KeyBill

* Portal Software's Infranet

* Boardtown's Platypus

* DigiDyne's TIPS

* GreenSoft's Internet Back Office Billing

* Kenan Systems' Arbor Billing Platform

* HURLnET's ISP Administration and ISP Register