Billing for Mobile Data

The industry never tires of discussing 3G's possibilities and applications. Some carriers are doing everything they can to prepare their networks; others cringe at the challenge ahead. Unfortunately, there is no rest for the weary. Networks are not the only things that will require updates once digital data starts rolling. Billing systems, rating engines, switches, clearinghouses and roaming agreements, which currently measure calls by duration, also will change dramatically. Each of them will need to measure data connections in other types of units. However, nobody really knows what those units of measure will be.

Before you can begin to get your billing system ready to bill data, several things must fall into place. The industry has to find a way to differentiate voice calls from data calls, then decide how to measure data. Once some units of measure are established, they can begin to modify billing systems to accommodate them. Much of roaming's future depends on 3G, but no matter how far away these changes seem, you can take several steps now to prepare.

MEASURE FOR MEASUREAnn Holmes, GTE TSI manager of business development, said one challenge will be distinguishing data calls from voice calls, then separating them in the billing system. Today, carriers charge customers by the minute, and in some cases by the second, for voice calls. Right now, CDPD connections are handled the same way. When customers make a circuit-switched data connection, the switch sends out the same types of call-detail records (CDRs) as for voice.

Vivek Tulja, Arthur Anderson director and telecommunications specialist, said when carriers begin offering packet-switched data, however, customers will transmit information in bytes, not minutes, and carriers likely will bill customers by the number of bytes they transmit. The problem is, no billing system today measures packets, he said.

Tom Grant, Alltel Information Services senior functional architect, said three phases will occur before billing systems are ready. Today, calls are rated based on duration.

"Whenever I use a cellular modem, when the call records come back, you can't tell if the call is a voice call or a data call," he said. "They look the same. So all those messages coming out are rated the same as voice messages."

Phase II will come when switches start giving carriers more information. During this phase, Grant said, CDRs should distinguish voice calls from fax or data. Once you have that information, you can begin pricing those events differently. During this phase, duration-based pricing probably still will be the norm, he said, but instead of charging 15 cents a minute for a voice call, you could charge 35 cents for data connections.

In phase III, smarter switches not only will send information about call types, but they also will give those calls different attributes. For instance, in addition to how long a connection lasted, CDRs will tell you its number of characters, bytes, packets, or even a quality of service (QoS) indicator. QoS connections will guarantee a constant connection for important data transmissions, and customers likely will pay more for higher QoS.

"At this point you can introduce the concept of unit of measure (into billing)," he said. "All of your rating engines and the clearinghouse have to be able to send units of measure other than hours, minutes and seconds."

Erasmo Rojas, Ericsson Latin American business development manager, said before billing systems can recognize other units of measure, Cellular Intercarrier Billing Exchange Roamer (CIBER) records need to have a way to record the amount of data used.

"CIBERNET will decide if the philosophy of charging the end user for the amount of bandwidth instead of minutes can be applied today or not," he said.

FLAT DATA RATES: GOOD OR BAD?Changing so many parts of your system seems like a major hassle, and it is. "No problem," some say. "I will just charge a flat rate and be done with it." Not so fast. Flat-rate pricing might work for data when customers use it locally, but things will change when they need to roam. When high-usage customers with unlimited data plans roam into other carriers' markets and run up enormous roaming charges, who will pay the serving carrier? You will.

"People are snapping up flat-rate plans like hotcakes because they reduce charges and give them great flexibility," Tulja said. "But in a situation like this, the old-fashioned roaming settlements process could all but kill you. It is like collecting $100 and paying $97 to another carrier."

Tyler Proctor, Zsigo Wireless vice president, said because so many carriers now offer flat rates for voice, customers will demand similar rates for data. In fact, AT&T Wireless and Bell Atlantic Mobile already price CDPD at a flat rate, he said.

"The days of being able to bill per packet or per kilobyte and be successful at it are gone," he said. "The consumer is going to expect a flat-rate service of some kind and get what they need without having to worry about per-minute charges."

Proctor envisions carriers offering something between $30 and $50 a month for unlimited data services. Doing so would be easier on the carrier, since it can keep its overhead low by avoiding billing issues, and it is easy on the customer.

Tracy Frank, ITDS director, industry affairs, agreed that per-byte pricing is too expensive because the cost of counting packets and bytes exceeds their value. The problem might not be technical.

"No one has provided a solid business rule for billing data," she said. "(One carrier) said it can only bill a flat rate for data, and it made it look like a technical problem. I would challenge that it was probably a business decision. Everything always comes out to flat rate. I am sure that is going to change."

Of course, when it comes to roaming, flat-rate pricing could be a losing proposition.

"It is just like Digital One Rate," Proctor said. "Some customers you make money on because of their particular usage habits. There are other customers who use the system differently and go into markets where there are high roaming rates and don't pay that rate, so you might lose a little money on them."

Proctor suggested that carriers offer both flat-rate and per-minute pricing. Customers should be able to make a data call over a phone and pay the same per-minute charge that they would pay for voice. Conversely, if they need to be on-line more often or use a lot of data, they should be able to pay one price for unlimited data access.

Grant noted that billing customers in units of measure other than duration could have significant customer-care impacts if end users do not understand the units. For example, ISPs currently offer customers flat rates for unconditional usage because they don't want to confuse them. Wireless carriers could go the same way.

But Holmes argued that ISPs actually are moving away from flat rates because they see a need to discriminate between types of services. For example, if a customer wants higher QoS, he could reserve some bandwidth in a particular time frame.

"ISPs don't have it solved yet, but people who have Internet accounts will become used to being billed on something other than a flat rate," she said. "That will drive the ability to also bill wireless subscribers who use those types of services."

FUTURE SETTLEMENT ISSUESSo far the settlement process is pretty well-known. A customer from Carrier A roams into Carrier B's territory. Carrier B generates CDRs for the calls, which generate CDRs that go to Carrier A via a clearinghouse. Carrier B collects money from Carrier A, and Carrier A bills the customer. When customers begin to roam with data, it becomes more complicated. Serving carriers especially should make sure they are able to measure usage, Holmes said.

"You have people coming into your markets and sending and receiving data types of services," she said. "It is going to have an impact on the capacity of your network, and you are going to need a way to recover those costs."

Grant said you will need to update your roaming agreements with your partners once you begin differentiating data from voice.

"I might have different rates set up to do different services, and I might have different units of measure," he said. "For voice I will deal in hours, minutes and seconds. For fax it might be number of characters. For SMS it might be one rate."

Your billing system, your out-collect process and your in-collect process also will have to support multiple sets of rates and various units of measure. He envisions more line items at the carrier-to-carrier level, including summaries by voice, SMS, fax and other services.

Ericsson's Rojas said Latin American carriers have implemented a common intercarrier settlement charge for voice to avoid such confusion, and he said the same might happen with data.

"Whatever they charge to the end user is their business, but at least between carriers they charge a certain amount of money," he said. "One recommendation is to have a standard access charge for voice and also have access charges for data at a flat rate."

The challenges will not end there, Holmes said. When customers roam, the serving carrier must identify and authenticate a user, which points to the need for a clearinghouse service for authentication and validation, as well as tools in the network to intercept calls and perform those functions. Not only will carriers have to mediate between one another, but they also will have to create a settlement process with ISPs to allow customers to access the Web, and with value-added service providers to allow customers to receive services such as news, stock quotes and horoscopes. Everything points to the need for a gateway arrangement within the network to interface between the carrier and other service providers, which creates major billing-system implications.

Holmes acknowledged there are more questions than answers today, such as who will bill for data services -- the ISP or wireless carrier? Will there be billing arrangements?

"I don't think there are any answers today, but there are going to have to be gateway providers and clearinghouse providers that can assist in the actual usage accounting for these types of services," she said.

Tulja agreed.

"Once you incorporate data into the picture, the wrinkle will be incorporating portal fees into the settlements process and into fees and billing," he speculated.

Some carriers will try to bundle Internet access with their wireless service. For example, $50 a month might give customers unlimited Internet data access on their wireless devices. A carrier that offers both wireless and Internet services can give discounts on wireless if customers use its portal. However, when carriers do that, the picture becomes muddy, he warned. Out of a $50 flat rate, part will go to the portal, another part to the wireless carrier. From the wireless share, part will go to settlement for calls the customer makes whiles roaming.

"What makes it more complicated is if a Carrier A customer uses Carrier A's portal and goes into Carrier B's market," he said. Normally the customer will connect to some Carrier A portal somewhere. How does that roaming affect fees? Will Carrier B charge extra on top of things? How are things connected and routed?"

Carriers also will have to settle with value-added service providers. These services might be set up similar to cable channels. For instance, HBO might cost $10 a month, but if a customer wants HBO and Cinemax, a cable company packages it at a discount. Similarly, a wireless carrier might offer a news service for $10. When packaged with other services, it would be discounted the same way. These cases can get complicated when it comes to settlements. Renegotiating roaming agreements to prepare for these situations is crucial.

PREPARING FOR CHANGEMary Clark, CIBERNET vice president of operations, said packets currently delivered over the voice channel come out looking like a CDR.

"They are being handled in CIBER somewhat sloppily, in some respects," she said. "It is working, but it is not the best fix, and that is not what we need to have in the future."

AMPS, CDMA and TDMA clear through CIBER records. GSM carriers clear roaming using the TAP record. TAP III, due for release in March 2000, will address data, she said. CIBERNET's top priority is investigating how data will fit into the improvement and development of CIBER. The CIBER Executive Committee, which is made up of carriers, billing vendors, consultants and the four major clearinghouses, are involved in this development process.

"We are in the process of doing this investigation to make a change to the CIBER record in the next year," Clark said. "As we move forward, data events and having more data being available is something we need to be able to support from a roaming perspective. That is our big push in the short term."

Like carriers, the CIBER Executive Committee still is identifying all the questions. For instance, what will the CDR look like that would capture the event? What are the charging principles that are going to be placed on top of that?

"Billing all comes down to charging principles, so would the charging principles used to bill an event be size based?" Clark asked. "Potentially duration based? How is tax handled on this?"

Even if CIBERNET standards do not change in the next few years, Grant suggested that you begin renegotiating your roaming agreements to prepare. You should change your roamer definitions to support one to many different pricing schemes and services.

"If you really want to be on the ball, you will not only support multiple pricing definitions but introduce units of measure into pricing definitions," he said. "That measuring will support different types of rating based on hours, minutes and seconds, or based on bytes, characters, packets and cells."

Once you "genericize" your rating engine, design new roaming agreements, and modify your in-collect and out-collect processes to use these definitions, you will be ready when networks begin generating new CDRs and when CIBERNET standards introduce new units of measure, he said. When talking with your billing and rating vendors, ask them if their products support these various units of measure. Rules-based systems will be easier to modify than hard-coded systems, he added.

When thinking about 3G, it is important to consider the effect it will have on every part of your business. Without new ways to measure data and to bill customers at home and on the road, you could be leaving money on the table.

Three phases of billing for data while roaming:

Phase I: Currently, calls are rated based on duration (hours, minutes and seconds).

Phase II: CDRs distinguish voice calls from fax or data, and carriers price events differently.

Phase III: Switches send information about call types and give those calls different attributes. Carriers introduce new units of measure into billing.

* Renegotiate roaming agreements.

* Change roamer definitions to support different pricing schemes and services.

* Introduce units of measure into pricing definitions.

* Design new roaming agreements.

* Modify in-collect and out-collect processes.