While billing is usually associated with words such as slow, inflexible, fragile, complex, expensive, and even necessary evil, its importance is unquestioned. If you can't bill for a service, you can't offer it.
Yet the world of billing remains dominated by decades-old batch technologies. Even the simplest change seems to require an expensive project consuming much time and resources. But this has to change.
There are several reasons why the status quo must go.
First, we now live in an age of instant gratification and technology-savvy consumers. Exciting data services offer instant information, entertainment, communication, and purchases. It is no longer acceptable to wait hours, let alone days or weeks, to learn of service charges and account details.
Usage and spending information, like any other information, must be available at the time the service is incurred. This is a significant technical challenge since it requires the immediate and accurate update of customer accounts.
Second, promotions and discounts are becoming an increasingly popular tool for stimulating additional mobile usage. For example, end-users are sometimes told of a pending bonus threshold before it is even reached, as an incentive to continue or to place a new one. But that can only be done if the billing system is dynamic, flexible and able to react without delay.
Capitalizing on impulse buying
Another important reason for changing the status quo is to seize the exciting, yet largely untapped, opportunity of impulse buying.
Impulse buying depends on prompt action. If mobile users purchase a ring tone from artist X, there is a good chance they may buy a music video from artist X if they are immediately sent a brief trailer and offered a discount. The potential for additional revenues is substantial, but only if operators can seize the moment with real-time billing systems.
Right now, prepaid systems already offer real-time billing, although benefits have been brought only to a certain market segment. Real-time service authorization and monitoring, rating and charging, and posting of charges and updating of account information are bread-and-butter functions for most prepaid systems. Few companies, however, have adapted their prepaid system to address the needs of the broader market.
Also, few companies are prepared organizationally to introduce real-time billing principles into the mainstream. It is a huge paradigm shift to move network and IT level organizations to a converged billing infrastructure that offers real-time billing and strong customer relationships for all markets.
While moving to real-time billing may be a challenge for some operators, the accompanying revenue and profitability benefits clearly make such a move worthwhile.
Better revenues, less costs
Operators are not receiving the revenues they deserve for a number of reasons, one of which is bad debt. The problem is particularly acute when roaming and data services are considered, since third parties expect payment even if the operator cannot collect. But wireless operators continue to operate on trust and not by the principles of managed risk.
While the subject of revenue leakage is touchy, the truth remains that there is a sizable gap between the revenues that operators should receive and the revenues they actually collect.
There are holes in the billing process, and several companies operate in the billion-dollar industry that has emerged around plugging up these holes.
More money is actually lost from revenue leakage each year than is spent annually on billing systems. While not eliminating the problem, real-time billing reduces the extent of losses since circuitous CDR-based processes can be replaced by real-time equivalents.
Another important billing factor is flexibility. Today, very few billing systems allow tariff plans to be changed dynamically, offer creative value-based methods of billing for new data services, or support hundreds of emerging new content providers without a major upheaval.
Real-time billing and flexible billing go hand-in-hand. Significant revenues are left on the table today because of inflexible infrastructures that offer only flat rates or simple usage-based billing strategies.
Downloading an excerpt from a football game in real-time, for example, is worth more to a mobile user than downloading the same clip during the half-time break or on the following day.
Operators should be able to charge for services according to the perceived value of the service.
So real-time billing can drive profitability by offering opportunities for new revenues and by cutting costs. But another factor to be considered is churn, and service personalization is the solution.
If end-users can select their tariff plan, choose some preferred locations for discounted calls, or transfer credit between accounts, they are less likely to switch operators because of the hassle of having to completely redefine their mobile environment. They are even less likely to churn if the same personalization options are unavailable elsewhere.
But the ability of a system to process, in real time, millions of calls and data requests every hour is a major challenge.
Just imagine: data is written to a database for every single processed call. The new balance must be calculated and applied and history information must be updated immediately. The system must also be highly available.
It is not good enough to take the existing batch billing system and bolt a real-time module. The real-time capability must be part of the very fabric of the billing system.