Revenue assurance goes proactive

Revenue assurance (RA) as a concept has been widespread in the telecom market since the early 1990s. However, it's only in recent years that telcos have exerted a concerted effort to integrate RA throughout their whole business function. 


According to the "Operators Attitudes to Revenue Assurance 2006" survey that telecom analyst Analysys conducted on behalf of Subex Azure, in the past year, revenue leakage has increased for telcos in Asia Pacific, but has gone down in all other regions. In 2005, revenue leakage for Asia-Pacific stood at 11.9%, but rose to 13.8% in 2006 - higher than the global average of 12.1%.


But it's dangerous to make any kind of assumptions about the Asia-Pacific telecom market. In some cases, operators are playing catch-up with the rest of the world, while some operators are leading the way.


The market is also rapidly evolving. The need to be both a software provider and a knowledge enterprise is gaining importance across the region - operators want the whole package.  


Much of the knowledge surrounding RA in the region is quite advanced and progressive, but also very theoretical. These theories need to be put into practice and implemented, partnering with vendors who know what they are doing.


Another element to be considered is the increasing and intricate relationships between service and content providers. Next-generation content and services (e.g. IP and 3G technologies) continue to grow in number, popularity and complexity. This not only presents a higher number of expected risks, but also generates a new assortment of potential risks, which haven't been fully realized yet.


Operators need to be proactive and re-evaluate how they have integrated products and services in the past. Lessons can be learned and applied to the new challenges being set by new and incoming next-generation services and products. 


It's important for operators to get ahead of the curve and use their understanding from past experience to stay ahead. The problems and issues they have to face from next-generation services are very similar, but just in a different format with assorted products, services and data types at the core. In many cases, if lessons learned from past experience were applied to these new technologies, a more seamless and less eventful transition would occur. 


The need to smartly automate billing and revenue maximization systems is also crucial.


Some Asia-Pacific operators tend to be more cautious when it comes to the move towards automation. However, many operators acknowledge that they are not fraud and revenue leakage experts and have started seeking external expertise. 


Some operators in Australia and New Zealand, for example, have accepted the benefits of RA and now have a slightly more sophisticated approach than some of their counterparts in the region. 


RA functions tend to evolve towards a combination of live feeds and audit-based approaches to keep the rate of return on the incline. Intelligently developing the live feeds from a base of essential data sources, instead of the more common "big-bang" approach where all the systems are scheduled for rapid connection to the monitoring tools, is a highly effective method for telcos to stay ahead of the game within their allocated resources.


Some differences between the Asia-Pacific and the European/North American markets are notable. Economic growth rates are flatter in the developed economies of Europe/North America, the rate of penetration of mobile communications service is slowing and ARPU is stagnating. 


Although ARPU in some Asia-Pacific countries is very low, the volumes and increasing penetration rates make for a great overall business model. But strict adherence to good RA practice is necessary to ensure profitability. Operators are increasingly seeking managed services from leading vendors to get that "all-in-one" packaged solution.


Operators in Europe and North America who have experienced more competitive markets have gone through a learning curve before. Lessons that they have learned are increasingly being applied to their current business situations and it stands them in good stead, especially with the need to drive more value from existing infrastructure investment, as voice revenues continue to decline. 


Asia-Pacific operators that do well will reflect on the issues they and others have been through and become highly proactive in the deployment of new and emerging technologies and services.


As focus on RA increases, more businesses also look to the benefits of integrating functions like RA and fraud management to leverage data value and business efficiencies. There will likely be even greater focus on revenue operations and, therefore, more integration of business functions that are aligned to maximize revenues, reduce costs and assure business as we move forward. "Business assurance" could become the next buzzword. 


Another important theme to be considered is measurement and reporting.


Accountability and the drive for performance are paramount, but inside the telcos, RA is battling for resources and competing against other departments for funding. 


RA needs to demonstrate its value so it can obtain the support and resources it needs to continue being implemented and make a difference to the top and bottom line. Such value is relatively easy to demonstrate with a structured approach.


Findings from research help increase recognition and understanding of the issues emerging in Asia Pacific. The key to understanding the region is to not expect to find a uniform circumstance - the revenue leakage figures may be higher for the region as a whole, but there are pockets of excellence.


Moving towards a whole new digital, IP-based, high-speed world where consumers want everything now, it's even more important to realize that operators need to learn from the past and be proactive in establishing RA within the new revenue streams. As growth rates and profitability in many developing markets will inevitably follow a similar route to developed markets at some point, aiming for profitable growth now will certainly reap significant rewards.    


Dean Smith is a VP at Subex Azure Asia-Pacific