Location, Location, Location

Although wireless telephony has shifted from a premium service to a mass-market service, usage patterns still vary sharply. Only a small percentage of high-end users are displacing landline minutes of use (MoU) with wireless MoU. The remaining subscribers still view wireless as a mobility service too expensive to use on a regular basis. Medium- and low-end users, who say price is the main deterrent for not using a mobile phone more often, pay five times more than high-end users. Carriers need to move beyond the one-size-fits-all philosophy represented by bucket plans and establish customized rate plans for different user segments.

"In order to capture, retain and earn a profit on the next 20% of the population, operators and vendors must develop customized products for distinct sub-segments of demand," said David Kerr, Strategy Analytics director of wireless communications.

Location-sensitive billing is one pricing strategy that can help increase usage across several segments. According to The Strategis Group, 32% of current wireless users would definitely or probably switch wireless providers to get a location-sensitive billing plan. Location-sensitive rate plans base tariffs on individual subscriber locations. When the subscriber is in or near his home, for example, you adjust his rates to compete with landline rates. When in a car, at the airport or at a shopping mall, he pays higher rates that reflect the added benefits of mobility. This strategy allows you to offer subscribers preferential rates when users are in a limited number of geographic locations.

These services appeal to subscribers who are looking for alternative second lines for their homes or who are dissatisfied with their current landline providers. Medium- and low-end users find value in plans that offer low rates at home or in the office with the flexibility of using their phones for safety or out of necessity when they are mobile.

These plans do not cannibalize the high-end revenue base, which already receives landline comparable rates anywhere on the network. High-end users still pay a monthly premium to receive the best rates in all locations. Meanwhile, you can develop a portfolio of location-based products that appeal to subscriber groups ranging from business users to residential customers.

The underlying power of location-based rate plans is that they create a behavior shift. People start using wireless phones as their primary voice communications devices. Medium- and low-end users who sign up for location-based rate plans give their numbers out more freely, leave their phones turned on, carry phones with them more often and increase mobile usage.

TRIALSSome carriers already have moved forward with early implementations and trials. AT&T Wireless is offering a Home Phone Option service in Plano, TX. The service allows subscribers to pay a monthly fee of either $39.99 or $59.99 to receive unlimited calling in Plano and a bucket of either 30 or 300 MoU within the Dallas metropolitan area. Unlike the Digital One Rate plan, this offering does not include free roaming and long distance.

AT&T Wireless associated Plano cell sites with a private system identifier (PSID). This association is maintained on the MSC. When a subscriber makes a call, the MSC determines whether a cell site that is associated with the PSID is serving the subscriber. The MSC then formats the PSID value into the call detail record (CDR) that is sent to the billing system. Rating tables in the billing system are configured to rate a call based on the PSID value.

Sonofon offers a slightly different package in Denmark. For a flat monthly fee of approximately $5, subscribers create bargain zones around their homes that provide approximately 10 cents-per-minute rates in their home zones. According to Sonofon's 1999 GSM World Congress presentation, subscribers with home-based rating have approximately 150% greater MoU than subscribers without the service.

Sonofon implemented an IN-based architecture to support its plan. Each subscriber's zone is mapped to a cell ID during provisioning. During call processing, the MSC sends an SS7 message to the SCP, which determines whether the serving cell is associated with the subscriber's home zone. The result is returned to the MSC, which sends the billing information on to the billing system in the CDR. This solution simplifies data-maintenance issues by eliminating the need to maintain a table on the MSC and simplifying therating tables in the billing system. However, during provisioning the carrier needs a tool that generates a list of cell IDs automatically, based on a subscriber address.

Both solutions are packaged in a way that is easy for a subscriber to understand. Unlimited calling from Plano or reduced rates when you are at home demonstrate the usefulness of incorporating subscriber location into a rate plan.

IMPLEMENTATIONThese early implementations are prime examples of the possibilities location-based billing can offer. When location-based billing services were first tested a few years ago, both cost and customer care were barriers to deploying the service successfully. Today, however, there are several possible architectures for supporting a location-based rating service.

When evaluating implementation approaches, you should consider provisioning and call processing. If it is difficult to provision and manage billing zones for millions of subscribers, the service will struggle for success, no matter how robust the call-processing capabilities. A flexible provisioning architecture could use geographic-information-system (GIS)-based technology, which allows a CSR to simply type in a subscriber's address and click OK. Other systems require manual updates to tables that attempt to match subscriber addresses with cell/sector tables.

Another problem is that some solutions force the billing system to manage the customer-zone information. Some solutions do not require excessive change in the billing system. A successful location-based billing service should only require the billing system to interpret a distinct parameter in the CDR from the switch. It should not require the billing system to maintain separate tariffs for thousands of zone identifiers.

The call-processing architecture also is important. The solution must allow you to spread capital costs across the entire population. For example, there are many approaches to offering wireless office service. You can enhance in-building coverage via additional antennas, customers can implement an unlicensed system, or you can implement a wireless PBX adjunct system. Keep in mind the ultimate solution must use resources in the macrocellular network, which allows you to offer location-based service at a price point that is comparable to the customer's equivalent landline service. This is true for the business and residential markets.

You also need to consider the solution's growth path. Although table-based solutions offer a straightforward approach for performing zone determination today, they do not offer a growth path for taking advantage of improved location information that soon will be available. GIS-based solutions can offer a means for not only simplifying the provisioning process, but also the ability to take advantage of future location technologies such as global positioning system and triangulation techniques.

The key, however, is to structure pricing strategies that not only take aim at landline minutes, but also maximize the value of each market segment. Offering each group a location-based rate plan will change its behavior. As customers discover the convenience of mobile communications, low-end users will choose wireless over landline for more than just mobile emergencies. Potential customers who are given attractive, reduced rate plans will finally find reasons to subscribe. Meanwhile, valuable high-end user groups will continue to generate high activity. The result: Increased revenues from your entire subscriber base.

If you want to leverage the same solution across multiple switches from different vendors you should focus on solutions that reside on the WIN. A WIN strategy for supporting location-based billing allows the software application to support multiple switches from a single computing platform. Another advantage of WIN is that you can integrate the location-based rating capability with other enhanced services such as prepaid or virtual private network services. You also can incorporate location in 911, fleet tracking or location-based data information services. Incorporating a WIN and GIS technology combination can provide a powerful weapon for offering location-based services.