Killer Billing

Profitable billing looks easier than it is.

Creativity in the back office can pay off big company-wide. Just look at NTT DoCoMo with its non-traditional billing and settlement methods for the i-mode service. The Japanese carrier is making a killing.

If you'd like to replicate DoCoMo's success, there's a catch. Your 2.5G or 3G billing system needs to accommodate future billing models. Unfortunately, no one knows which ones will catch on during the next five years.

Glimpses of the Future

Many North American vendors are taking cues from nascent rating and settlement models in Europe and Asia, where carriers are abandoning time-based pricing for volume-based pricing, value-based pricing or some hybrid thereof.

Also, settlement is moving beyond 2-way payments between roaming partners and becoming a way of dividing money between carriers and several content providers.

“When you're talking about mobile Internet services, it really boils down to two things that the mobile operator is going to charge for,” said Darren McKinney, Amdocs mobile segment market development manager. “One is for access to mobile Internet services, and the second is content or applications for m-commerce.”

McKinney cited volume-based rating as a popular way of pricing wireless access in Europe.

“We are seeing companies like BT Cellnet offer a monthly service subscription,” he said. “Within that monthly service subscription charge, there's an amount of data volume that you are allowed to consume. If you go beyond that preset limit, there's an overage charge.”

The carrier must monitor and rate packet usage, which will be no small feat in the IP environment where usage information can emanate from various servers, application layers and wireless networks.

“Rating systems have to be able to support rating on volume, whether it's kilobytes, megabytes or packets,” McKinney said. “Other parameters that people talk about on the access side of rating include quality of service (QoS), and the ability to discriminate depending on late fees, depending on data loss or packet loss.”

To complicate matters, settlements between carriers and content providers are handled differently depending on the revenue-sharing deals. Carriers might find themselves taking assorted percentages of hundreds of differently priced services and collecting commissions on products sold through their networks by a slew of content providers and m-commerce merchants.

Sponsored services also may become common. Carriers could sponsor games or other services and gain revenue from advertising.

“Billing systems have to be able to accept revenue and split it out across multiple parties as well as being able to accept revenue from multiple sources for a single service,” McKinney said.

Vendor Zone

Representatives from ADC, Geneva Technology, Portal, Protek and Sema reported observations similar to McKinney's. These companies also are updating their billing software to meet the demands of next-generation billing.

“We know that 3G and future services are not well-defined yet,” said Idar Voldnes, Geneva Technology president. “The systems that we provide our customers give them the ability to be innovative in the services that they currently deal with as well as the things that are coming.”

Geneva's 4.2 software includes updates intended to allow carriers to rate services in real time and create a method for customers to predetermine and pre-approve charges.

Geneva's 5.0 software, nick-named Convergence Prepay, is scheduled to be released this fall. According to Voldnes, carriers will be able to use the product to debit a customer's prepaid account in real time for convergent services that might include wireless Internet use and wireline and wireless calls.

Amdocs currently offers a partner-relationship-management suite that includes revenue-sharing and sponsorship functions.

Portal's Infranet software supports real-time billing, which means that carriers can extend their prepaid services to include wireless Internet use.

At Sema Telecoms, giving carriers the ability to configure the software as their needs change is a major focus, said Damon Turnbull, Sema Telecoms director of product strategy.

According to Turnbull, Sema's software can be configured to set up numerous kinds of partner and customer relationships using different business models.

ADC released its Singl.eView software this past year. In addition to billing functions, the software includes functions such as computer-telephony integration, and trouble ticketing and Web self-service, said Chris DeBord, ADC senior applications consultant.

For example, an end user might find the carrier's Web site and decide to become a subscriber. According to DeBord, ADC's software allows the end user to register for service via the Web. The registration information would then be sent to the carrier. Once signed up, the customer could completely manage his account from the Web site.

Protek offers a suite of software that includes order management, service activation, billing, rating and mediation. In preparation for future billing applications, the company is testing a QoS rating function.

According to Geoff Butcher, Protek CEO, the company also is developing an automated system for partner settlement and reconciliation.

Hip or Hype?

While vendors plug their new and emerging capabilities, industry consultants are warning carriers to beware of hype.

“There are still major issues on gathering data,” said Jim Marsh, TMNG senior consultant and the company's risk-management practice leader. “Everybody's saying they can do it all, but if you look underneath the covers, there are probably some issues as to how to do the revenue assurance for data records, because it's real tough.”

Marsh said the biggest hype out there involves vendors' claims about customizable software.

“You talk to any biller and they'll say, ‘Tell me your requirements. We'll make it work for you,’” he said. “Carriers probably need to take a good look behind the scenes. Do they have the bandwidth to do customization, if necessary? That's killed a lot of billing-system vendors, the integration of their system with everything else in the company and not having the bandwidth to make those changes.”

Whether working with “legacy” vendors or new vendors, a certain degree of homework is required. Duane Rusten, KMPG Consulting managing director, OSS/BSS solution group, said that the company's carrier clients will be talking to their legacy billing and care-system vendors to learn about new products.

“At the same time, they're going to look outside to any potential new vendors or existing vendors that have new products that might have leap-frogged their legacy product and figure out what gives them the best bang for the buck,” Rusten said.

As far as hype goes, Rusten and his colleague, Joseph Sims, KPMG Consulting managing director, m-commerce, agree that claims about the ability to integrate with legacy systems is perhaps the worst hype they've heard.

“Carriers have to be very aware of features and functionality and make sure they do their homework in due diligence and really understand what they're getting when they're going into their first implementation,” said Sims. “They don't always understand that.”