"Bill shock" prompts shift on price plans

It is almost autumn again, and for many of us this means paying the bills for our summer holiday. Unfortunately in many cases it also means dreading the mobile bills from that very same holiday. Mobile subscribers in markets with flat-rate models have grown used to consuming data and not worrying about the bill. But as more operators implement tiered and usage-based price plans, it is likely we will see more of the now familiar press stories about mobile subscribers suffering from a condition widely known as 'bill shock' after receiving an extraordinarily high bill. Transparent and real-time communication between mobile operators and their customers are of paramount importance in the changing paradigm from flat-rate price plans to usage-based plans.
Bill shock is not just bad publicity waiting to happen; it will soon be widely regulated against. Authorities in the EU already insist that operators warn customers of approaching and impending bill shock when they reach 80 percent of their data allowance. Meanwhile, U.S. regulator, the Federal Communications Commission, has opened a public consultation paper on how it should protect wireless consumers from bill shock, and it is expected that many more regulatory authorities will follow suit in the near future.
Providing subscribers with greater transparency about their usage and implementing tiered plans and alerts should not be viewed as merely a compliance issue; operators should take this opportunity to reconnect with their subscribers while they are at home and abroad. While usage control notifications are a first step towards bridging the gap, the value of real-time communication lies in its ability to underpin an operator's data monetization strategy to not only deepen relationships with their subscribers but to grow them into profitable ones.
It is clear that these regulations, along with rising data traffic and mobile broadband growth, are creating a serious revenue opportunity for service providers. The challenge is to capture this potential without scaring off existing customers with newly priced packages, particularly for data. Through real-time communication and empowering customer interaction, service providers can achieve the next level of innovation by creating a two-way relationship with their subscribers to not only get a better understanding of their needs, but also to provide subscribers with more control.
From a customer's perspective, this enables them to make informed decisions about modifying price plans, bill payments, third-party applications and service payments. However, in order for operators to achieve this, their own processes and systems must be able to manage the lifecycle of the subscriber in a more cohesive way.
Currently, the majority of the network elements in a service provider's environment still manage the lifecycle of a service as an entity. These systems can handle batch billing, but not rating or analysis of consumed services, nor can they intelligently analyze subscriber habits.
This creates a challenge as the fulfillment, billing and service delivery channels are not interconnected to provide a holistic view of the subscriber and therefore cannot prevent the bill shock phenomenon from occurring, which creates an unwanted experience and drives churn.
Operators are looking to create a successful business model that helps enhance the customer experience, drives data services adoption and monetizes third-party applications and services. To achieve this, it is imperative to create an environment of real-time systems for subscriber and service management.
There is huge value in disseminating this real-time data and having true transparency of the subscriber's behavior. The value is driven through real-time convergent charging and billing solutions that provide an instant view of user communication, behavior and spending. These systems enable real-time IP traffic management to provide detailed views of an individual subscriber's web and data service usage patterns.
In addition, it provides real-time user profile management, which enables knowledge of user status, presence and location. Leveraging a multitude of these attributes, service providers can deliver a contextually relevant service to their subscribers and create opportunities to upsell and cross sell services.
Underscoring this new business model must be a real-time rating, charging and policy management solution for mobile data services that enables operators to rate and charge for all their data services, including on-demand offerings such as mobile broadband and mobile TV. This in turn helps them to monetize these new services and drive ARPU growth. It must provide service providers with the flexibility to charge for these services in ways that work best for their subscribers, whether prepaid, postpaid or a hybrid of both - and based on time or bandwidth consumed.
The attention by regulatory bodies across the globe to protect from bill shock and empower consumers means that service providers will have to ensure access to relevant information about their communications services. This transparency and real-time subscriber-centric controls are opening up the way to monetizing all content that flows through the operator's pipe.
By being able to analyze the service usage and subscriber behavior in real time, service providers are able to retain value against the network services, rather than relying on handset manufacturers to deliver value. This leads to the creation of targeted and segmented services for their subscribers and the provision of a far more personalized service experience. The end result is happy mobile customers, customers who are prepared to pay for services and content because it has been presented to them in a relevant and friendly manner. Of course, in turn, this leads to increased revenue and deepened customer relationships for the operator, so everyone is happy.
Humera Malik is director of global marketing at Redknee

This article originally published in TM Forum’s Revenue Management newsletter