Convergent charging first step towards 2020s

Convergent charging systems can create a drop in OPEX because operators are able to run a single charging platform instead of multiple ones, which can offer numerous products and services. These systems refer to an operator’s ability to unify and provide support for multiple services including voice, data, multimedia and content. It also refers to creating a single bill and statement for different services like fixed lines, mobile, broadband and television.
Operators need to take into account a few factors when considering the benefits of convergent charging. What are the issues affecting the market and subscribers, and how will the operator straddle these issues and increase revenue?
The Asia-Pacific region is a growing market for operators. Developing markets including China, India, Vietnam, Indonesia and the Philippines are a playground for operators looking for high-growth opportunities over the past five years. According to a recent report from Gartner, there are nearly 775 million mobile phone subscribers in India, with the country continuing to add nearly 19 million new mobile subscribers every month. Singapore on the other hand, has reached a mobile penetration rate of 143.6%, according to SingStat. Thus, markets that are saturated or have grown quickly across the region are now slowing. But technologies constantly change, and markets are at different stages of maturity. This makes the overall market growth increasingly challenging.
Operators in some markets like Singapore are already preparing to implement 4G technologies such as Wimax and LTE, but other markets have not yet even implemented the 3G network. China, with 633.8 million mobile phone users, issued 3G licenses in early 2010, while operators in India and Thailand have been involved in an aggressive bidding war for national 3G licenses. This will give rise to new business models, which will add another layer of complexity to an already fragmented market. This is an opportunity for operators to optimize revenues through multi-service offerings.
Operators are under huge pressure to increase their return on investment, but cost pressures combined with decreasing ARPU have combined to deliver negative investments last year. As subscribers become more demanding and technologies become obsolete at a faster pace, operators are forced to upgrade their networks before the technologies become fully established.
Competition amongst operators is very high and call costs get slashed to less than a cent a minute in some markets. The popularity of flat-rate data plans means that the increase in data usage has not been able to compensate for falling voice revenues, contributing to the decline of ARPU. Data from ITU Telecoms show that the average drop in ARPU across the Asia-Pacific region is 42% since 2006 compared to the global average which currently stands at 31%, with some emerging markets such as Bangladesh, India, Pakistan and Sri Lanka, reaching levels of over 50%.
Being able to unify multiple services is important especially for operators in mature markets like Singapore, as it helps them to cut down on resources spent on operating expenses. By running a single charging platform, rather than multiple ones, operators can maximize on existing services as well as differentiate and bill for new services offered to end-users without incurring further costs.
As for subscribers who are typicallycorporate customers and the residential or social users, there is often a huge amount of overlap involved. Some of the heaviest users of telco services are those who rely on voice, email, and access to corporate apps between 9 am and 6 pm, and switch to the buying, sharing, and accessing of web-based content in the evenings and at weekends. The youth market on the other hand, is a different customer group that uses very little voice, but is extremely hungry for data services on mobile.
For example, one household could have users with varying needs for voice, email and data usage. Convergent charging can simplify the process of changing subscriber plans, combining pre-paid and post-paid services and add value to a high-value subscriber’s rewards by letting the telco operator offer on-the-spot loyalty rewards or bonuses for family members based on real-time usage patterns. These convergent charging systems allow telco operators to offer competitive and customized service packages and promotions that can include both pre and post-paid services. This will help operators to attract new customers, increase ARPU and reduce churn among the current customer base.
Telco operators are not maximizing their current customer base or revenues, especially in the data arena. Frost & Sullivan says the Asia-Pacific region has seen a spike in adoption of smartphones, with overall sales of mobile phones expected to increase to 54% by 2015. If Asia continues to boast high adoption rates for smartphones, it would lead to a visible increase in usage of data services and operators will need to position themselves advantageously, and re-evaluate the current system of billing for multiple services by differentiating between high-value and low-value customers.
Successful convergent charging systems must be based on information about market dynamics and the correct identification of emerging subscriber trends. Telcos will have to use real-time customer intelligence to make informed decisions when it comes to creating new charging models. This implementation of intelligent, real-time, convergent charging is the first step that operators need to take to position themselves competitively moving into the 2020s.

Raj Thangiah is vice president and general manager for Asia Pacific at Convergys.