Convergent Carriers

If your current billing system doesn't fit your strategy for providing the best service and customer care, you should consider adopting a converged billing system. Often a monthly bill is your only communication with your customers, so it is important that you communicate in the most efficient, understandable billing language possible.

According to Todd Ihrig, CFW Communications vice president of information technology services, convergent billing offers benefits for carriers and customers. CFW research found that about 50% of subscribers want one bill. Pat Gewecke, US West director of ordering & billing, said 80% to 90% of its subscribers would like a single bill that offers the convenience of viewing all charges on one bill and returning only one envelope.

Carriers can save postage costs by sending only one bill to an address. In addition, a single system can cut personnel and operational costs because you won't have to train personnel on several different systems, and you'll only be running one system on one hardware platform.

A converged billing system also can provide more freedom for promotions and discounting. By integrating data from different platforms onto one, you can gain a competitive cross-selling and cross-promoting advantage by promoting products.

IMPLEMENTATION CHALLENGES According to Doug Brueckner, Convergys vice president of Precendent 2000 development, the biggest challenge with convergent billing systems is interfacing with existing legacy systems to provide a single view of the customer. Usually, information is scattered throughout several billing systems.

Janice Huxley Jens, Kenan Systems mobile system marketing manager, said carriers generally implement one service into a converged billing system at a time. It is more practical to strategically pick the service most important to you.

Carriers with entrenched legacy systems and a large customer base have a lot of work ahead.

"It involves their systems, people and processes -- it's a complex situation," Huxley Jens said. "Nonetheless, they're all anxious to move off of the legacy systems, and they're even more anxious to be able to offer new services quickly."

A robust converged billing system should be able to work with the legacy system short term. Over time, carriers can migrate off legacy systems and use the converged platform as the main billing system.

Michelle Teofan, KPMG senior telecommunications manager, warned that installing an entirely new system and then transferring the data from your existing legacy systems can slow down new-product and service implementation time.

"Whenever you change your billing system, it causes a disruption in all of your revenue-stream operations and all of the operations that go on around that," she said. "(You) could offer new products and services all on the new system and then move the old products and services over later."

CONVERGENCE CONFESSIONS CFW plans to provide a single bill by the end of first quarter 2000, but today subscribers receive as many as four separate bills.

"We've either inherited billing systems through acquisition or through start-up when converged systems were not available to us," Ihrig said. "We had to make do with specific, targeted non-converged systems."

Currently, CFW has one converged system for local, long distance, paging, Internet and cable -- five services on one bill. A second system handles PCS primarily, and can converge billing for PCS, Internet and long distance. When CFW started in the cellular business about nine years ago, it implemented a third system for analog cellular that combines cellular and paging on one bill. When CFW bought a wireless cable company, it acquired a fourth billing system for cable services.

Ihrig said the worst-case scenario would be a customer using wireline, PCS, cellular and wireless cable services. He would get four bills.

"It gets confusing to our customers, which is exactly why (there's a drive toward) converged billing," Ihrig said.

CFW's legacy systems weren't capable of converged billing, so the carrier purchased software based on its business requirements. Key factors included the ability to market and promote across product lines, and provide volume-based discounts, which it couldn't offer with several systems. For example, if customers signed up for Internet one month, they would get a free pay-per-view event. If customers spend more than $200 with CFW, they receive a 20% discount.

CFW also wanted a system that would allow CSRs to view the entire customer account in one place, so they can deal with that individual as a single customer and not as four. It also was important for finance to be able to track the carrier's most profitable customers, which it can't do today because data is strewn across four separate systems.

"(We looked for) a system that would allow for generic billing feeds that would allow us to load billing data into the system from some third-party source," Ihrig said. "For example, if we wanted to partner with the local power company to combine the power bill with our telecom products, all we need is a data feed in a certain format."

After two years of planning, the first phase of CFW's converged billing system will begin in June. The company will convert its base-level telephony system to the convergent system. The goal is to combine its four strategic products -- wireline (LEC and CLEC), Internet, long distance and wireless -- on a single bill first. Phase two will bring PCS into the converged system, which means a combined wireline/wireless/long-distance/Internet bill. Phase three will bring analog/cellular business over, and phase four will include wireless cable.

Soon CFW's customers will choose whether they want one bill or six separate ones.

Ihrig hopes such service enhancements will reduce churn.

"If we have some volume-level discounts thrown in there, it makes it costly for them to leave," he said.

CONVERGING LEGACY SYSTEMS US West operates three billing systems based on three territories, the former Mountain Bell, Northwestern Bell and Pacific Northwest Bell.

"As long as our customer is in one of those regions, we can do a combined bill for them, but it costs us a lot to maintain three sets of interfaces," Gewecke said.

US West is building a fourth platform for a converged billing system, a process that Gewecke calls "a major undertaking." The carrier purchased systems for wireless rating and modified software, which interface with existing billing systems. Converged billing will give the carrier more options.

"What we're not doing yet and which is another phase is to be able to say, 'If you spent a total of this much, we're going to discount all your services by 10%,'" Gewecke said. "We want to do discounting across product lines in a way that is very easy for the customer to understand their bill."

Once implemented, converged billing systems make life easier for carriers. According to Russ Akins, BellSouth Mobile Systems Group CIO & vice president, the carrier operated nine separate systems 10 years ago, but today it has one. In three years, BellSouth completely converted a new billing system with more than 5 million customers and is operating its billing system off of the mainframe.

Through market research, customer input and a cross-enterprise effort that included wire-line, wireless, paging, Internet and entertainment (digital cable) groups, the carrier offers one bill with an incentive package called Complete Choice.

"Nobody just wants one bill for the sake of having one bill. There has to be some perceived value," Akins said. "We offer things like Complete Choice, which means you can get a bundle of services."

In initial planning stages, the wireless and wireline billing teams sat down with a customer-service team and came up with requirements and selected trials.

Today, the carrier can combine wireline, wireless, Internet and paging charges on a single bill. To allow for such convergence, BellSouth built interfaces between systems, exchanged data real-time, and from cellular provided billing feeds into the wireline billing system.

"The hardest thing was the adjustment in the business process and provisioning for (changes)," Akins said. "We have a real-time activation system ... start-ups are slow. If you have existing services, it's quick and not an issue."

BellSouth implemented the system in phases and trials, and integrated platforms and systems. There were legacy systems to contend with on the wireline side, and it took three months of preliminary organizational and training work to get things running.

Customers now can choose to receive one to five bills. With Complete Choice, BellSouth customers can get 15 features and a discount, multiple product options, packages, and wireless cross-promotions.

Akins sees customer loyalty as the greatest advantage of convergence.

"One bill is another value-added option for customers," he said. "It's not a money-maker, but it could be a money-losing preventative."

CONVERGENCE CHALLENGES But not all customers want this option. CFW's Ihrig said sticker shock is a problem for some customers.

"(A) cellular bill might be $50 a month, cable might be $50, local might be $30 or $40, long distance might be $50, and Internet might be $30," he said. "All of a sudden, you've got a car payment."

Sending a monthly communications bill with a sum of several hundred dollars is a big risk for many carriers.

"If (a customer) needs to cut their budget a little bit, they're going to look at the big-ticket items," Ihrig explained. "If CFW's name is next to that $300 bill, it's likely they'll reduce those dollars, and the average revenue per customer starts to trend down."

Gewecke said US West still has concerns about combined billing but has found ways to make it more customer-friendly. For example, she suggested billing the more costly upfront expenses such as phones and accessories separately and after the initial service bill. This plan helps mitigate the issue with customers, she said.

Akins said BellSouth is committed to convergence despite the challenges of charging one lump sum because of the benefits of providing one point of service, one point of contact and one bill.

"Our customers are very savvy. Most people already know what they're spending," he said. "I don't think people are just waking up and suddenly realizing how much they're spending."

In addition to the challenges of sticker shock, you will face operational challenges and business-rule adjustments. According to Ihrig, retraining representatives and restructuring internal processes around the concept of converged billing is almost as important as implementation. For example, you must decide how to handle partial payments and disconnection rules.

No matter what the challenges, the market is becoming more customer-centric, and converged billing will be an important advantage.

"Just the internal cost savings alone of not running four different billing systems on four different hardware platforms and training our reps on four different systems would be worth it, let alone the benefit we provide to our customer," Ihrig said.