The Case for Dynamic Billing

There's an ongoing debate about how much sophistication is needed in billing infrastructure to get the job done in today's marketplace. A host of new entrants are coming into the market touting cloud-based, subscription-oriented billing. They call into question billing's history of heavily engineered platforms. As the industry has shifted to inclusive, bundled pricing, an argument for simpler billing has, at times, made great sense. But with more varieties of services on offer, and more effort to personalize, to offer on-demand services, and to up-sell related products, the case for delivering sophisticated billing in a more flexible and less costly footprint is clear.

Subscriptions Represent Long-Term Relationships
Subscription-based pricing is increasingly common in communications and across a range of Internet-based services. With more cloud services coming online, everything is available by subscription from on-demand movies to billing itself. In communications, pre- and post-paid subscription models have dominated the mobile, Internet, and pay-TV landscapes for years. But the industry is moving away from pure bundles and all-you-can-eat pricing into hybrid models that aim to combine the best of both subscription-based and pay-per-use models.

The most powerful concept of a subscription is that it manifests a long-term relationship with a customer. It's a straightforward model—the customer will pay an agreed price every month for the operator to deliver a specific set of services. If the services never change, and the pricing hardly varies, then simple, subscription-based billing can make sense. The only problem is that there's not much room for growth other than in trying to move all customers to the highest subscription tier.

Subscriptions and Hybrid Charging
In an environment where dozens or hundreds of digital services are delivered over networks, there's a need for more flexibility. A subscription bundle may cover a customer's access to services like broadband connectivity—mobile voice, text, and data—and pay TV, but other services can be available in conjunction with them. A broadband subscription could tie in on-demand video rental and purchase. A post-paid mobile subscription could include pre-paid, debit-based international voice minutes at a discount. And a pay-TV service could provide access to a pre-paid gaming account in which customers are offered upgrades to skills, equipment, or new levels each for a small charge. 

All of these models are prevalent in the marketplace today and service providers are working to pull them together into cohesive offerings. At the end of the day, they require a combination of pre- and post-paid subscription capabilities together with on-demand, real-time charging and payment. Simplification of billing capabilities with the wise and practical intent of reducing operational expense should not translate into an elimination of the ability to offer on-demand purchases, tiered pricing or value-added services within the scope of a long-term subscription.

Service providers need to find ways to create positive experiences that also monetize customer relationships optimally. One need look no further than the app store concept to find an example where third parties created a whole economy of pay-per services on the back of mobile subscriptions. But mobile operators have similarly created revenue with third-party services, such as roadside assistance, which represent subscriptions that exist within the primary customer subscription. With mobile money now coming into the picture, a whole host of related services can break through from personal security on the mobile device to international micro-transfers.

The bottom line is that customers are actively seeking more services via mobile devices, set-top boxes, connected TVs, gaming platforms, and broadband connected PCs and have an increasing variety of ways to pay for them. Keeping simple the primary subscriptions that govern access may make sense to encourage positive, long-term relationships. But eliminating more sophisticated billing capabilities that enable hybrid pre/post models and pay-per/on-demand offerings is likely short sighted.