Through the Eyes of the CFO

In the hyper-competitive world of wireless, industry executives have arrived at a simple truth about the complex issue of billing: It's not just for collecting money anymore. Once a mundane and often uniform channel used to ensure that customers lived up to their part of the bargain, billing swiftly is changing into a crucial component that carriers use to promote themselves in an industry racked with churn. Aerial, Airadigm and US West's CFOs offer a revealing glimpse of how this once uncredited component of wireless service has turned into a big player.

CUSTOMERS BY THE SECONDWhen Aerial broke from the pack with True Per-Second Billing, users cheered the notion of a seemingly true billing rate -- one that reflected actual airtime used, not rounded to the next minute.

The industry, however, was skeptical and remains so. All the better, said Aerial CFO Clarke Smith.

"(True Per-Second Billing) is the highest recognition we receive from potential customers," Smith said. "It's the product feature that they point out the most."

Aerial's strategy showcased billing as more than just a piece of mail. It used billing as a marketing engine to lure customers, who filled up the network knowing they were charged by the second, not the minute.

"Many of our ads have featured that strategy, and it's an integral part of our proposition," Smith said.

Customers expect a timely, accurate bill that provides enough detail to easily understand their bills.

But per-second billing has its costs. Industry experts, including Aerial's Smith, said per-second billing can mean up to a 20% drop in revenues against per-minute billing. Aerial makes up for that loss through customer volume -- a more-the-merrier philosophy that keeps Aerial going while the industry's per-minute blue chips cast a critical eye on its chances for profitability.

Because an existing carrier would notice about a 20% loss if it switched to per-second billing, Aerial knew it was a feature competitors would not match, Smith said.

Aerial also has focused heavily on bundled-minute plans. By offering large bundles of minutes, the revenue differential becomes small. For example, somebody on a 500-minute plan may use only 350 minutes on a per-second basis. If billed by the minute, few customers would end up using more than the bundle.

Beyond the rate strategies, billing affects nearly all parts of the overall wireless strategy. And it's costly: Aerial must measure all new promotions' effects on the network's ability to handle increased traffic.

What's more, employees in all sales channels must understand the new plans so they can convey the advantages to would-be users. This fact of life applies to all companies offering multilevel or tailored plans to fit different budgets and lifestyles.

Last year, Aerial actively promoted its service plans, which were competitive in its various markets, Smith said. It found that the promotions drove customers, but there were down points.

"You were hitting customer-service and sales folks with peaks and valleys," he said. "So we went with everyday pricing this year. We put together price plans that address the market that could be sold day-in and day-out. We think that'll be attractive to the customers and at the same time simplify our operations."

ONE-TO-ONE BILLINGFor Airadigm, which concentrates primarily on business users, a flexible billing system is key. With solutions oriented toward high-end corporate users, carriers such as Airadigm have eschewed many of the traditional bundled plans.

"We are a small digital carrier," said Tom Lehr, Airadigm vice president of finance. "We realized from day one that we'll never be in a position to compete head-to-head with the Sprints and the AT&Ts. If you're going to market to all types of business, from manufacturers ... to the small mom-and-pops, you're going to have to have a variety of options and be willing to adapt to their needs."

All of which create a special set of billing problems associated with crafting tailor-made solutions. As soon as finance thinks it is on the same page as marketing, a salesperson has sold another slight variation.

"That keeps us on our toes," he said.

For instance, a small office with three or four people may bundle all their minutes into one invoice. One worker may use 50 minutes a month, another 300, others somewhere in between. They want a plan that combines minutes into a pooled-minute plan.

Then there's the example -- a real one in Airadigm's case -- of a large company with several hundred employees. The company now uses 400 wireless units, with another 600 expected on-line by year's end. The company does not want to be billed by the second or by the minute, but by the call. Here, the billing issues become even more complex.

"The billing systems are very automated, and the technology behind it and methodology of handling is key," Lehr said. "The difficulty is the marketing end of it. You're not marketing to the masses. You're customizing everything."

ONE-STOP BILLINGAlthough it is not a flat-rate biller like AT&T or a per-second biller like Aerial, US West uses billing to differentiate itself, as well. Its all-in-one billing combines wireless, wireline, Internet and other charges on one sheet.

"One-stop shopping is easier," US West CFO Mike Felicissimo said.

>From a wireless-plan standpoint, US West keeps with the industry, offering >tiered plans and more sophisticated business solutions. But don't look for >US West to move in the direction of either AT&T's or Aerial's billing >strategies.

"Keeping the books on One Rate, on the face of it, would be easier," Felicissimo said. "The challenge with One Rate comes when they try to understand whether they're making money at it. They have to figure if the additional volume is off-setting the additional costs they're incurring."

Felicissimo suggested that AT&T's profitability with One Rate is complicated by the plan's simplicity.

"Chances are, they're going to lose," Felicissimo said. "It could be a wireless minute, a roaming minute, a long-distance minute. The cost of the minute to the user is 10 cents, but to AT&T it's a lot more than 10 cents. If the cost is 60 cents, and they're charging 10 cents, they are losing a bundle."

Felicissimo said one billing issue looming for all companies is wireless fraud. As crooks become more sophisticated, they are forcing companies to spend more on firewalls. But fraudsters aren't the only ones responsible for putting unbilled minutes on the system. New, sophisticated plans often attract honest customers, who create traffic on a network that can't handle the added business. From the time a customer signs up until he receives a bill, leakage can occur in a number of areas.

"Having a real robust assurance process means you're always checking for a leak," he said. "If one of my switches screws up, I lose that billing. We're testing that constantly."

The industry is just beginning to understand what these three CFOs have known for years: Billing is much more than an easy-to-read summary of calls. It is a philosophy, a model around which you can build an identity that will put minutes on the network.

Cellular One-San Francisco now offers e-billing, which allows customers to view and pay bills from the company's corporate Web site. Customers who sign up for e-billing, a free service in certain area codes, receive a monthly e-mail informing them that their bills are ready. Customers go to the Web site, view their bills, and pay them directly from their savings or checking accounts.