| The Flat-Rate Debate Easy-to-use services with transparent pricing can only be a good thing for consumers. By Dominic Smith, Cerillion As someone who has championed simplicity as being key to the success of telecom services, I find the debate about flat-rate pricing a very interesting one. The arguments for simplicity are clear – easy to use services with transparent pricing can only be a good thing for the consumers. Essentially you know what using a service will cost and don’t expect any surprises when your bill arrives. In this regard, flat-rate bundles are the most straightforward approach possible, and over the last 10 years, companies such as BSkyB (Sky TV) have prospered with their simple subscription-based model. However, the problem for the network operators remains the same – where is the value in flat-rate services, and do they then go down the slippery slope to being a provider of the access network and transport only? This commoditization is a prospect that sends a shiver down the spine of most operator shareholders, and it was all the more surprising that some of the keynote operator speakers at February’s Mobile World Congress in Barcelona dared to mention the dreaded “dumb-pipe”. Perhaps this was the kick up the backside that some operators need to re-focus on building value in the services they offer? Multi-play Bundles
Over the last 3 or 4 years, IPTV has been built up to be a new service that offers a wealth of premium content and interactivity that can be justifiably charged as “value-add” to the consumer. However, earlier this month I was surprised to see a news report from Screen Digest that indicated that as many as 40 percent of European IPTV subscribers receive their IPTV service free, when provided with a broadband or telephony service. This is a classic multi-play bundle, but where you may expect the broadband access to appear “free” in a bid to encourage use of chargeable IPTV services, it would seem the complete opposite is happening. Or at least that is what the customers perceive to be free. The other side of this equation sees a huge growth in bandwidth-intensive services, such as the BBC iPlayer. This was only officially launched last December, but its popularity has grown at a phenomenal rate, and now the broadband networks are straining under the increased load that this and other video-based services are imposing. And Ofcom, the UK regulator, is demanding that broadband providers must publish actual bit-rates achieved, rather than theoretical maximum rates. This business model has now been questioned to the extent that some UK broadband providers have suggested that the content provider (in this case the BBC) should contribute to the costs required to upgrade the broadband networks to support the increased load. Interestingly, we also now have a situation where BT has announced it will be starting to charge for iPlayer content provided as part of its BT Vision IPTV service. This is quite a move considering the iPlayer content will remain free when accessed via the “normal” Web interface. The only apparent difference is that BT Vision customers will be paying for the convenience of accessing the iPlayer content via their set-top box and television. Usage-based Billing
The flat-rate broadband packages are really where the trouble lies. Fierce competition for broadband customers has resulted in very low prices for essentially unlimited services. Having shied away from usage-based billing in the past, some providers are now starting to re-explore this area to find a sustainable model. In January, it was revealed that Time Warner Cable (TWC) in the U.S. was running a regional trial to see if its market would now accept usage-based billing models. The results of this pilot are not yet known, but the company has come under criticism amongst analysts for potentially alienating its customers and as a result losing out to competitors who stick with the “all-you-can-eat” model. There are of course other tools and methods available to control the use of bandwidth-intensive services. So called “throttling” of heavy users (not the people themselves, but the speed of their broadband connection!), or placing upper limits on the “free” service, above which usage-based tariffs apply. Unprofitable Customers In London, there used to be a nightclub that offered free drinks all night for a fixed price as part of the entry. A classic all-you-can-eat, or perhaps that should read all-you-can-drink, scheme. The trick here was, of course, to set the entry price at a point where you knew that the majority of customers will not consume as much alcohol as the entry was worth. Sure, there would be a few people who would drink more than their fair share, but it should still be a profitable business. The problem of course comes when the average customer is affected by the behavior of the minority who consume more than their money’s worth – to the detriment of the majority. The result is that the profitable customers drift away, only to be replaced by the less desirable customers who over-consume and are not profitable. Does this sound familiar? Broadband providers take note. Transparency
As the credit crunch continues to impact all areas of business, operators will have to do more than just offer all-you-can-eat bundles for fear of only attracting the sort of customers that will not be profitable. Usage- and event-based pricing will need to be deployed intelligently, and take advantage of the real-time interaction with the customer to provide a high quality customer experience. Transparent pricing, where the customer knows what the service will cost before it is used, or what it is costing as the service is consumed, will be a critical factor in building customer confidence in the services they are using, and with this comes a loyal and profitable customer base. In the future, flat-rate services will have their place, but with increasing investment required in the network access and transport layers, operators may need to find other ways to make a flat-rate only business model pay. Dominic Smith can be reached at Dominic.Smith@cerillion.com. Back to top
Light of the Charge Brigade! By Tony Poulos, Head of Revenue Management Sector, TM Forum Around the end of July, TM Forum Chairman and CEO, Keith Willetts, forwarded a press release stating that the hot topic at CommunicAsia in Singapore and at BIMS 2008 in Amsterdam was ‘charging’. He wanted to know if the Revenue Management Initiative was on top of this. I think he was relieved to hear that we were represented at both events and that it was the TM Forum RMI raising the charging issue! Charging is one of those terms that our industry comes up with when it can’t find another word that works. After all, we’ve survived on rating and billing as the staple words for anything that involves allocating a value to services, calls, products, events, you name it. I know that we used charging sometimes but mainly when we added something to the customer bill that wasn’t rateable or billable. But a couple of years back, those pesky content people started doing their thing, and because they were flogging stuff with basically one value they started talking about ‘apply a charge’ for the content when they could have easily said ‘price’. Apparently, the latter was not sexy enough, and their content sounded like stuff you buy at a supermarket, so ‘charging’ has stuck. You are also probably aware that we are in the process of mapping the old Billing Map, now Revenue Map, to the Business Process Framework (eTOM) but there is place for, you guessed it, ‘charging’! At Team Action Week in Lisbon earlier this year, a simple definition for charging was drawn up that extended to both on-line and off-line uses of the term. I’m not writing it down here, and I’ll tell you why shortly. We looked at how everybody else was defining charging, and we weren’t satisfied with what we saw. After all, we are the money people, aren’t we? Not satisfied with all that, it was decided to turn the matter over to the Revenue Management Initiative members and ask for their opinion. Well, you can imagine my surprise when response to the appeal came within minutes and the trickle soon became a torrent, even in the middle of vacation season. Charging had struck a raw nerve with just about everyone, and they were all quick to point out what was wrong with our original definition and then add some. Then the discussions started between protagonists of different theories, and it looked like World War III was about to begin. Who said billing people were boring; they were passionate! Of course, I did the sensible thing and pretended I was not alive. As you can imagine, my ploy was soon uncovered, and I’ve had to raise the white flag and request a truce while I got all the input down in one place, filter out the emotive and marketing blurbs, and get down to some clean choices that will form the basis of a final voting choice. This charging definition will be THE definition and will be submitted to the eTOM team for inclusion. Now don’t get any ideas and start adding more fuel to the fire by writing to me. If you want to have your say, you’ll just have to join the RMI by clicking here and signing yourself up. There’s always room for one more opinion! Back to top
BT’s Billing Transformation Experience By Jonathan Jensen, Billing Convergence Lead, BT BT's undertakings under the UK Telecoms Strategic Review require BT to treat all service providers, including BT Retail, on an equal basis. This has resulted in a structural systems separation within the business. In practice this meant that our core service provision, customer management & billing system – CSS – could not continue as a pan-BT system long term because it is used by all parts of the business, including Openreach and BT Wholesale. The impact on billing has been that BT Retail and BT Global Services must migrate all customers off CSS onto a new strategic billing platform. Rather than migrate customer accounts on a like-for-like basis, BT is taking the opportunity to rationalize the whole billing estate, reduce costs and improve the customer experience. Many customers have multiple accounts, and therefore bills, because BT historically managed customers on a product rather than a customer centric basis. This meant products were on different billing platforms and in some cases new products on the same platform had been provisioned on separate customer accounts, rather than the customer's existing account. Moving all customers and products to a single billing platform provides the opportunity for billing convergence - the move from a product centric to a customer centric world. Creating a single customer account creates new possibilities, including bundled product propositions with a single price point and seamless cross product discounts and incentives. The move from legacy service stacks to the new is being completed in a number of stages. Initially new customer provisions were switched to the new service stack and customers were billed from the new billing platform. This is being followed by the migration of existing customer accounts from old to new platforms. Where customers have accounts on both the old and new service stacks and the billing and payments methods align, then the accounts are merged to create a single customer account. Where they differ, the accounts are generally kept separate and the customer contacted at a future date to agree on alignment and then merged. A project of this nature requires strong teamwork from all parts of the business - the business unit who owns the end-to-end customer experience, the IT organization and the billing team - plus the support of the billing vendor. Back to top
Benchmarking, Management World and the Billers’ Club By Tony Poulos, Head of Revenue Management Sector, TM Forum At a recent BSS conference in Europe where attendees were polled and asked if they believed that KPIs were valuable in running an efficient BSS Operation, 88 percent responded yes. When asked if they currently utilized KPIs in their BSS operation, only 55 percent answered positively. When asked how their KPIs were established, 54 percent said internally, and 13 percent said from other sources, including TM Forum. These results highlight the need for KPIs but also that the lack of industry-wide KPIs means that operators had to resort to establishing their own. This actually erodes the value of the KPIs and does not help the operator in determining if its internal processes are in step with other operators and the industry as a whole worldwide. You can imagine my surprise to find that our own Billing Performance Benchmarking exercise has not exactly been inundated with responses. In fact, the response has been pretty dismal. I have quite a lot of egg on my face because I made such a song and dance about how responsive billing people were and how they would jump at the opportunity to get something so valuable for nothing. I was wrong, either we haven’t communicated the Benchmarking well or you’ve been away on summer holidays! But it’s not too late to participate. First, your own results will be compared anonymously with the industry as a whole, and you will get a detailed report to keep. Second, the more operators that participate, the more representative the KPIs become. It’s a win-win situation for very little effort. The best part is that it is a free service to all TM Forum operator members. Click here to find out how you can benefit. On another subject, I’ve just taken another look at the Revenue Management and Customer Experience Summit at Management World Orlando in November. It’s a very impressive program whichever way you look at it, and the importance of BSS in today’s operators is highlighted for the first time as a unique stream for TM Forum at a major event. We know the division between BSS and OSS has been blurring, and nobody is underestimating the importance these days of monetizing digital service and ensuring that revenues are maximized and potential leakage minimized. We have to be doing something right as we received over 280 submissions to present at this event, and it was a most difficult task thinning that list down to the final acceptances. Along the same vein, if you think you have a story a good story to tell in the Asian market, submissions are now open for Management World Asia to be held in Singapore in January 2009. Click here for more information. The Billers' Club is BACK! Exclusively for Communications Service Providers, and specifically for Billing and Revenue Assurance professionals, the Billers' Club provides a unique platform for the discussion and resolution of real billing issues. The Billers' Club operates by hosting 30 minute conference calls, once every six weeks, to discuss a topic chosen by members on the previous call. Topics that have been discussed in the past include training, systems integration, vendor selection and organizational structures. The benefit is that solutions can be found quickly and amongst your peers. Please note that no vendors are allowed on these calls. Join us for the next call on Sept. 23, 2008 at 14:00 UK time. Topics will include a discussion on the latest in e-billing and automated payments. Details will distributed to all members shortly. Back to top
Ask Dr. Bill  Dear Dr. Bill,
I have a query on the unified IN platform – unified prepaid billing system for both CDMA and GSM. Is it possible to have a unified IN platform for both CDMA and GSM? If yes, how is it possible technically, and is it feasible to have one operational?
Please elucidate the same for me.
Thanks & Regards,
Arun Hi Arun,
IN (Intelligent Network) is a platform where new services can be created easily and deployed quickly to existing telecom networks, such as PSTN, GSM, CDMA and the Internet. IN provides value-added services for existing telecom networks. In other words, IN is not independent of the existing telecom networks, therefore IN can be applied to all the telecom networks, such as PSTN, mobile network, Internet, PSPDN and ISDN - both N-ISDN and B-ISDN.
An Integrated Intelligent Network is a combination of IN and telecom networks (including PSTN, GSM and CDMA). By integrating separate fixed IN, mobile IN and wireless IN, an integrated IN can provide value-added services for a single telecom network and integrated services across multiple telecom networks. For the operators that own multiple telecom networks, integrated IN can help them streamline the management of the networks and increase profits based on the current equipment. On the other hand, the integrated services include many useful features and can be more convenient to the subscribers. Hope this answers your question. Dr. Bill If you would like Dr. Bill to help you with any billing-related problems, write to askdrbill@tmforum.org, and your question may be answered in a future column. Back to top |