Moving beyond voice

The days of voice-only service for the mobile phone are over. Subscribers are snapping up whatever new content comes their way. While this has opened new revenue streams for operators, they are also hard pressed to create a new business model that takes full advantage of this ever-changing reality: the traditional model of a single service - voice calls - at a single price no longer works. What operators need is a rating and billing mechanism that determines, in real time, the value of each piece of content in the eyes of the subscriber.

After several years of rapid subscriber growth, operators have watched the market plateau. So carriers are introducing new services. And subscribers are thirstier than ever for multimedia and data-centric content.

The arrival of next-generation technologies, sophisticated handsets and downloadable clients such as BREW and J2ME has created a whole new world of content, going well beyond voice to data, music and video. The mobile phone has moved from being a single-product voice storefront to a department store.

With non-voice content on a boom, the need for an appropriate billing solution is more urgent than ever. While non-voice services accounted for only about 12% of total revenues among mobile operators in 2003, that percentage is expected to reach over 35% in 2008, according to Booz Allen Hamilton.

The wireless games market alone, for example, is predicted to reach $7 billion by 2008, according to Strategy Analytics.

These changes, however, don't come without risks for operators. Take the case of ringtones, one of today's leading non-voice content revenue generators. Record labels are demanding operators to pay a steep royalty for "sample" ringtones, making their price almost four times higher than that of a typical download.

These high-priced ringtones are also locking the price of older ringtones, prohibiting carriers from offering less expensive, more competitive content. With no way to spread that risk to subscribers, operators' hands are tied.

While the "one price for all" charging mechanism was suitable for the voice-only mobile phone store, today's wide-ranging mobile department store demands a new value-based rating and charging method.

Subscribers also benefit from this retail model by being able to access multiple accounts, gaining more awareness over account activity, and capitalizing on promotions offered by real-time marketing.

Real-time billing, however, represents a tremendous opportunity for operators. With this mechanism in place, operators can significantly increase revenues in various ways.

With personalized marketing, operators can target promotions for specific segments based on usage to reward loyalty and strengthen the bond with the subscriber.

Operators can also better manage their risks by imposing credit limits based on the subscriber's ability to pay, thus reducing bad debt. Operators can also execute real-time authorization and charging of all services to facilitate fraud reduction.

Real-time billing also enables network capacity optimization, where operators can employ spoilage programs by discounting content during idle time, thereby increasing system efficiency.

With the ability to converge current billing systems with real-time billing, operators can offer a uniform solution that reduces operating expenses while increasing service usage, giving them the tools to stay competitive in what is now a mature mobile phone market.

Howard Woolf, president, Real-Time Billing Division, Comverse

 

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