Telecommunications Billing in the
Competitive Wireline Arena
Hong Kong, May 2007
Cliff Lui, Hui Ka Yu, Richard Shi, Jacky Pang
Billing in the Competitive Arena » Structure
Structure
“Billing is the life of our company.” – Nexus AG
This paper will begin with a review of the changing landscape of the Hong Kong
wireline telecommunications market. It will then discuss how competitive pressures
affected the billing and operational support systems of local telecom companies and
will conclude with thoughts on what the future bodes for billing operations support
systems, especially relating to developments in Next Generation Networks.
1.
FROM MONOPOLY TO COMPETITIVE BATTLEFIELD: THE EVOLVING
LANDSCAPE OF HONG KONG WIRELINE TELECOMMUNICATIONS .............1
2.
NEW ENTRANTS’ READINESS PREPARATION ................................................... 2
2.1. BUSINESS PROCESSES AND ORGANIZATIONAL STRUCTURE ............................2
2.2. BILLING AND OPERATIONS SUPPORT SYSTEM (BOSS) READINESS .................2
3.
SERVICE LAUNCHES IN THE COMPETITIVE WIRELINE ENVIRONMENT ... 3
3.1. TELECOM SERVICES MARKETING AND PROMOTION..........................................3
3.2. PRICING FOR PROFIT – THE BUSINESS IMPERATIVE .........................................4
3.3. COMPETITION FRENZY AND IMPLICATIONS FOR BOSS (IMPORTANT)........... 7
3.3.1.
BILLING SYSTEM COMPONENTS .........................................................................8
3.4. ANALYSIS OF BILLING-RELATED CUSTOMER INFORMATION ........................ 12
3.4.1.
CUSTOMER RELATIONSHIP MANAGEMENT (CRM) .......................................... 13
3.4.2.
DATA WAREHOUSING ...................................................................................... 15
4.
SIX YEARS INTO THE COMPETITION; ASSESSING OPTIONS OF AN
ENHANCED BILLING PLATFORM........................................................................16
5.
BILLING IN THE NEW MILLENNIUM................................................................. 18
5.1. NEXT GENERATION NETWORKS............................................................................ 18
5.2. IMPLICATIONS FOR BOSS ........................................................................................ 19
5.2.1.
SPECIFIC ENHANCEMENTS REQUIRED FOR BOSSS ..........................................20
6.
CONCLUSION ...........................................................................................................21
7.
REFERENCES .......................................................................................................... 23
Billing in the Competitive Arena » From Monopoly to Competitive Battlefield: The Evolving Landscape
of Hong Kong Wireline Telecommunications
1.
From Monopoly to Competitive Battlefield: The Evolving
Landscape of Hong Kong Wireline Telecommunications
The first telephone services were introduced to Hong Kong in 1882 by the Oriental
Telephone and Electric Company. It was taken over by the newly formed Hong Kong
Telephone Company Limited (HKTC) in 1925. The Hong Kong Government granted
HKTC the monopoly right to supply and operate telephone services in Hong Kong for
a period of 50 years commencing 1 July, 1925.
In 1968, the Government extended HKTC’s monopoly for a further 20 years with
effect from 1 July 1975, conditional upon HKTC modernising its management of the
company. In those years, local wireline services were in short supply, and both the
residential and business subscribers had to wait in long queues before getting the
most basic telecom services. With the introduction of new management, HKTC
developed into a well-respected utility company, progressing in line with the rapid
development of HK as a trading and financial services centre in the Asia Pacific
region.
In 1988, a merger between HKTC and Cable and Wireless (Hong Kong) Ltd. resulted
in Hong Kong Telecommunications Limited (HKT), which was subsequently
restructured in 1990 to form Hong Kong Telephone Company Limited, Hong Kong
Telecom International Limited (formerly Cable and Wireless (Hong Kong) Limited),
Hong Kong Telecom CSL Limited and Computasia Limited.
With the expiry of the Hong Kong Telephone Company’s (HKTC) monopoly licence in
1995, four new Fixed Telecommunications Network Services (FTNS) licences were
issued to HKTC, Wharf Holding’s New T&T (Hong Kong) Ltd, Hutchison
Communications Ltd. and New World Telephone Ltd. This marked the first time
competitors came into Hong Kong’s wireline telecom market.
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Billing in the Competitive Arena » New entrants’ readiness preparation
2.
New entrants’ readiness preparation
2.1.
Business processes and organizational structure
A telco takes years to progressively build up its network and deploy revenuegenerating services. For the incumbent operator (HKT), with an established market
and network infrastructure, the network division is usually the largest and most
influential organizational unit (the Chief Engineer is as important as the Financial
Controller). This is followed by the Customer Operations division, looking after
customer requests and their satisfaction. However, priorities are a little different for
new wireline entrants who tend to value the marketing division more and entrusts
many important regulatory issues to the legal division. Supporting the bottom line of
both the incumbent and new entrants, however, is the oft-overlooked but missioncritical billing and operations support systems (BOSS) in the Information Systems
(IS) division.
2.2.
Billing and Operations Support System (BOSS) Readiness
The incumbent, HKT, had been working with BOSSs since the late 60s, and had gone
through several generations of re-development: e.g. building its own billing, network
resources allocation, order processing, repair and maintenance application software
in the late 70s; acquired and adapted more sales and marketing-oriented BOSSs for
their mobile business unit in the mid-80s. In the late 80s, it acquired and enhanced a
new BOSS for their wireline business unit. HKT’s BOSS was then far more mature
than those of fledgling new entrants.
[One new wireline entrant] decided to acquire a BOSS package that had a clientele in
both the US and the competitive South Pacific region consisting of small-sized telcos
and one medium-sized telco. As part of the solution’s implementation, a complete set
of the key business procedures surrounding the billing functions was included as part
of the package, and an implementation team from IBM was stationed in Hong Kong
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
for software enhancement and adaptation. To ensure successful implementation by
the target launch date (1 year on), the new entrant recruited an IS director with
extensive telco applications experience to direct the project and set up an in-house IS
division to support its subsequent operations management. The system was
successfully implemented and deployed in less than 9 months, meeting the targeted
launch date.
3.
Service launches in the Competitive Wireline Environment
3.1.
Telecom services marketing and promotion
Initially (Oct 95 to Dec 96), new entrants focussed on the wireline business market
because business customers had higher demand for telecommunications services and
thus yielded better revenues as compared to non-business consumers. This was
further assisted by new number portability provisions, enforced by OFTA as part of
the licensing regime.
In March 1998, HKT’s monopoly licence in the international calls (IDD) market was
lifted, resulting in intense competition.
Promotion Examples
New Year Promotion from 27 Jan to 10 Feb
$0.28/min to USA & Canada
$0.38/min to Guangzhou, Shenzhen, Shanghai & Beijing
Valid from 10pm to 1:59am during the promotion period
Print ads, TV spots
Special Rate of $0.58 & $0.78
$0.58/min applicable to calls made to China
during Mon-Sun 12mid night to 3am
$0.78/min applicable to calls made to China during
Mon-Sun 7pm to 12 mid night
Other time slots: $2.09-$2.99/min
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
By September 1999, saturation in the business
market and the introduction of new interconnection
terms by OFTA drove new entrants to refocus on
($88 Home Telephone Service)
residential wireline services.
By 2001 January, fierce competition again erupted in the IDD market after
substantial reduction of IDD interconnection charges for the China market
(comprising over 50% of the total IDD traffic).
3.2.
Pricing for Profit – the Business Imperative
While each telco is competing with the ever-decreasing prices of each other,
management still need to be fully aware of the bottom-line. One crucial aspect of
developing a value-enhancing business is to sort out the process of product pricing
within the wider context of managing the company’s portfolio of products, i.e.
product portfolio management (PPM). This applies to both individual products and
services, as well as to bundles of products and services in package deals.
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
([•])
To assess each service from idea through to retirement, the PPM process needs data
on customer demands and requirements from the marketing and product planning
departments. Financial data on unit costs of services, sub-services and an indication
of the proportion of the network elements that contribute to the service is also
needed to form an initial price decisions.
This is an arduous task for both the incumbent and new wireline entrants. Direct
costs are easier to estimate: e.g. a new content service might require additional
servers, staff and IP routers. Variable costs, however, like network infrastructure
expenses and necessary improvements to the existing billing system are difficult to
estimate. Marginal costs can often be larger than often appreciated. These costs
cannot be obtained from normal accounting systems, and must be obtained from a
specialised cost and revenue allocation tool.
By linking different departments, PPM ensures coordinated decision-making. This
ensures that pricing is a holistic exercise, and results in value-creating prices.
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
How to price within PPM
At the heart of a pricing decision is access to data. Cost and profit data comes from a
specialised cost allocation tool that supplies information on all products, customers,
dealers, etc.
The cost allocation tool supplies the raw data for pricing tools and business case
evaluations of planned products in the PPM pipeline. A new product evaluation
combines costs from using existing network systems with the new elements.
Additional customer lifetime (churn) information is needed to give a lifetime cost
view and so combine one-off and on-going costs.
Cost allocations cannot be arbitrary – real cost drivers must be identified. Arbitrary
allocations result in products that are vulnerable to competitive pricing strategies.
Pricing needs to correctly combine data on the unit cost of basic products – this is
important since basic products, such as an ‘IDD call minute’, are often not sold as
such, but are bundled into packages. Package or bundled pricing requires the usage
profile of customer preferences that measures or estimates how customers use basic
products. Consumers might make an average of 100 minutes of calls a month, but a
few might use 1,000 minutes. These customers will also use other products. We can
use this information to build up a total cost of each customer type and their cost
distribution – profiling the entire spectrum of users.
A tariff plan can now be defined for a customer type that can be priced in any way
desired. Some basic products might be ‘free’, others per minute, others part of a fixed
price package. By using the cost and price-volume data we can see that, overall, the
price package will be profitable. A few customers might be allowed to be loss making
(typically very low volume users on a volume related package or high volume users on
a fixed price package). ‘Free calls’ can be profitable, so long as the overall usage of the
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
customer on all services is covered in the price deal and free calls are paid for in other
ways.
Bundling techniques also apply for business customers. With sound cost data and a
known overall corporate usage, operators can charge fixed amounts per month or
only bill for calls made, even if the services include leased lines and internet access.
Further flexibility for prices managers is supplied by knowledge of cost ranges.
Marginal costs, full incremental costs, full costs including some fixed overheads and
the stand-alone costs (including all of the fixed costs) are all available from a good
costing system, and provide upper and lower price bounds. So long as all products
are not priced at marginal cost, pricing managers can use this to target niches and to
retain customers with ‘sweetener deals’. Pricing of one customer or product clearly
cannot be conducted in isolation from others.
3.3.
Competition Frenzy and Implications for BOSS (important)
Competition in the IDD market came initially not from the three wireline new
entrants, but from HK City Telecom, which began its business via ‘call-back’
operations based in Canada and USA. Lower international call charges for weekends
and off-peaks hours for routes between HK and North America sparked competition.
Eventually, complex discounting schemes and spectacular marketing promotions
adding coverage for non-North American routes emerged, including: pricing bundles
for a number of cities, extremely low prices for a certain period of time (e.g. only
during Chinese new year), free calling for the first x minutes… IDD calls became so
cheap (from HK$9.5 in 1995 to HK$0.47 in 2003) that people were (and still are)
befuddled as to how telephone companies made money.
Indeed, the new entrants had a hard time making money, but revenue trickled in
from equally elaborate threshold and loyalty programs, e.g. bundling discounts for
multi-lines after a certain number of lines were installed, variable monthly charges
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
over the contract period, free monthly rentals for the beginning and ending of a
contract… In the residential and business wireline market, campaigns included
discounted or free installation charges, variable monthly rates and bundling fixedline discounts with IDD discounts.
The billing of systems promised by these promotions and marketing campaigns
needs to be addressed by the BOSS. Some special promotions can be handled
relatively easily by adjusting the existing parameters in the available rate plans and
parameter options in the billing system; others can be handled by semi-automated
manual adjustments and special programmed runs involving a number of other
related operations support systems. In some cases though, substantial manpower
costs needs to be incurred. Some require software enhancements, the substantial
costs of which need to be balanced against the business benefits achieved. Meetings
are held where the marketing division teams up with the IS division to present a
business case to be assessed by management. While many of the pricing changes
were successfully handled by the then BOSS, they were sometimes realized only
together with a lot of sweat and blood.
3.3.1. Billing System Components
Before studying the changes required due to competitive pressures, it is instructive to
see what elements a billing system incorporates:
Registration, product and service management
This element of the system handles the registration of customers and the products
and services they purchase or subscribe to. Some operators use the same system to
manage both corporate and residential customers. However, here are much greater
complexities associated with handling corporate accounts, which involve multiple
accounts and complex hierarchies. The billing system needs to offer corporate
customers flexible account structures and extensive reporting capabilities: e.g. a
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
corporate customer may want to have fixed rentals for voice and broadband services
billed to different departments, summary bills to their respective division and one bill
to the corporate finance to include the IDD charges. With the myriad services and
products being offered during promotion campaigns, one needs to be able to enter
promotional deals into the services and products rate tables quickly (sometimes
overnight) to match or beat a competitor’s offer. It is not surprising to see people use
a generic spreadsheet application to quickly set it up and then special programs to
upload the revised rates into the billing system’s rates table. Such workarounds can
ideally be handled via a more user-friendly GUI for services and product catalogues
entry, as ell as standard interfaces for external feeds.
Customer care
Most billing systems are sold as 'billing and customer care solutions', but customer
care often goes little further than the registration process described above. Customer
care management (CRM) includes, amongst other elements, complaint management,
trouble ticketing (logging and dealing with faults) and workforce management
(assigning staff to deal with connections, complaints or faults). There is a broad range
of specialized CRM products that can be used to handle elements of the relationship
between the operator and the customer, depending on the operator's needs. A good
billing system needs to have standard interfaces to accept external data from other
OSS systems.
Rating
At the heart of the billing system is the rating engine. This takes the call detail
records (CDRs) internet protocol detail records (IPDRs) from the network, and then
applies the appropriate rating plans to turn the information into a charge ready to be
associated with the customer. Rating engines vary in complexity in relation to both
the plans they are able to create and their use. Operators need to have rating engines
that enable them to offer the range of services their customers need, and enable them
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
to change rating plans swiftly. Vendors need to address this if they wish to compete in
the marketplace. While re-rating of usage for volume-sensitive plans, tapered pricing,
threshold-level pricing, application of price overrides, calculations according to
contract terms and monitoring against compliances, term commitment, volume
commitment, combination of terms and volumes are supported, some are patched
and partial, and needs re-modelling for a more structured approach.
For example, BOSS enhancements are needed to handle the following change
requests of [a new entrant]:
Billing
Once a CDR has been rated it is applied to the customer’s account where discounts
can be applied and a bill is created. Operators usually produce bills in cycles,
spreading the load over a month or quarter to even out cash flow.
The billing data is used to produce a bill image, whatever the format. Traditionally,
the bill images that can be produced within a billing system are somewhat limited.
Many operators therefore output the data to another system or an outsourced
company for bill production. A billing system that takes care of bill imaging is useful
since customer service staff handling billing enquiries are able to see the same
information their customers see.
Once the bill has been imaged, it is output for presentation to the customer.
Traditionally this has been in paper format, with electronic formats only for the
larger corporate customer. However, there is a move towards electronic invoicing for
all types of customers. Nowadays, customers demand more flexibility in the bills
presented to them. Some want a summary, some want more detail, some do not want
a hard copy and some even want to change the aesthetic style of the bill presented to
them… Billing is expensive; it is sometimes wasteful to bill a customer with very little
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
money. Such bills are best retained until the next billing cycle. Billing systems need to
be able to accommodate these requirements to assist the competitiveness of the firm.
Debt Management
Unfortunately, not all customers pay their bills on time and as a result the billing
system must be able to identify those in arrears and take action based on business
rules (dunning). Most systems have an adequate dunning process, but with the
advent of GPRS and the possibility of m-commerce transactions being debited to
traditional phone accounts the demands will be greater and so dunning systems may
need to be upgraded. The challenge facing operators in the future will be to develop
effective debt management programs for as new services are released.
IDD Tariffs
The advent of fierce competition in the IDD market has necessitated change to
rapidly amend rating tables and rules related to IDD charges so a firm can keep up
with its competition. Marketing promises mandate the billing system to incorporate
effectiveness periods and expiry dates at parameter level; whole minute charging and
partial minute charging in units of seconds; initial minutes/seconds charging; and
identification of destination dialling and promotion code prefixes using 12+ digits.
[One new entrant] even needed to link to a bottom-price table so it could match the
lowest prices of competitors at any time of the day.
Product packaging and pricing
Packaging and bundling services together are a compelling marketing tool, but adds
an additional layer of complexity to billing processes that need to link different
network elements, rating tables and rules together. Necessary improvements include:
auto reversal to standard tariff upon service changes not conforming to standard
package requirements and automatic switching from one plan to another based on
service and spending patterns.
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
3.4.
Analysis of billing-related customer information
Throughout the evolution of the telecom industry, it is clear that many companies are
aggressively moving, or have already moved from a business model based on a
product strategy to one based on a customer strategy. This environment is
characterized by customer relationships, product customization and profitability in
response to pressures transforming the business landscape throughout the industry.
Additional systems are needed by BOSSs to deliver best-of-breed business
intelligence and management information to enable companies to accomplish the
following:
•
understand the needs of their business (business intelligence)
•
manage actions based on those needs (business management)
•
run day-to-day operations effectively (business operations)
The following illustrates how specific capabilities align to each of these areas.
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
These capabilities enable companies to realize opportunities presented in a business
landscape characterized by customer relationships, customised product delivery, and
opportunity-driven profit.
3.4.1. Customer Relationship Management (CRM)
Corporate resources must be efficiently allocated to customer care depending on a
customer’s lifetime value. Those customers whose loyalty can be earned and whose
lifetime value to the company is high will receive a major share of the attention
compared with those whose lifetime value is low. Profits are optimised by nurturing
valued customer relationships. Essential to this strategy is the ability to leverage
evolving technologies to accomplish the following:
•
understand the customers’ needs and behaviours;
•
leverage this understanding to identify, develop, and deliver relevant products
and services;
•
align CRM operations support and management in line with the above.
With CRM operations support and management, the focus is on obtaining new
customers, up-selling and cross-selling to existing customers. Contacts are
transformed into qualified leads, which are tracked as prospects, then opportunities
and ultimately customers. Prospects’ needs are matched against product portfolios
and marketing literature is provided to facilitate understanding and sales closure.
The same process is applicable to the sales of new or enhanced services and products
to existing customers.
[One new entrant quickly] recognized the importance of the above, and working with
an IT-based CRM vendor with prior implementation experience with a competitive
telco in the Asia region, successfully deployed the system. The core of the application
system is a process and activity rules-based workflow engine with escalation
management capability; supported by a graphical script builder for structuring
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
customer interactions, and with problem resolution and product portfolio definition
knowledge-based capability.
(Marketing Campaign Support)
(Inbound Scripts Engine with Graphical User Interface)
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Billing in the Competitive Arena » Service launches in the Competitive Wireline Environment
The Lead and Campaign management, hotline support and marketing literature
fulfilment, and Verbal Order and Customer service requests were first implemented,
followed
by
Sales
Opportunities
and
Activities
management
as
well
as
Faults/complaints/dispute management. These systems enjoyed great popularity
because of its user-friendly graphical user interface and quick time-to-market. As a
result, many other workflow-based applications were subsequently implemented
using the CRM core technology-based application.
3.4.2. Data Warehousing
As telecom markets become increasingly competitive, the ability to react quickly to
market trends and to tailor products and services to individual customers is more
critical than ever. A data warehouse is a very effective means of organizing and
analyzing the complex barrage of information generated in one’s business and
generating a more effective business model for keeping one’s customer base happy
and profitable.
The following illustrates how the data warehouse, as an enabling technology, delivers
business intelligence capabilities to support business functions in the telecom
industry.
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Billing in the Competitive Arena » Six years into the competition; assessing options of an enhanced
billing platform
Data may be viewed and analyzed from the warehouse in a number of ways. One very
common retrieval paradigm involves the use of an on-line analytical processing
(OLAP) engine. OLAP products can offer a range of advanced analysis capabilities,
such as Top N, data pivoting for multidimensional analysis, statistical functions, the
ability to drill from high-level data to successive levels of detail for iterative analysis,
etc.
Data warehouses are used to support sophisticated operational analysis
functions such as customer scoring systems and fraud detection. All these facilities
may be used in concert with a separate process known as data mining. Data mining is
the practice of polling data for interesting elements or anomalies without actually
having to pose specific questions or queries.
4.
Six years into the competition; assessing options of an enhanced
billing platform
As a new entrant gains market share, both its network capacity and IT operations
support systems require upgrades to support the increasing number of subscribers,
complex marketing schemes and new products. Towards year 2000, alternative
suppliers of network and communication equipment emerged to compete with
traditional suppliers from North America or Europe such as Cisco. Huawei and
Chung Hing, both from the People’s Republic of China, were the two most promising
vendors at that time. Being relatively new to the telecom world, they were not at the
cutting edge of technology but their prices were irresistible to those needing to
handle burgeoning network growth. It is not surprising to see much of the hardware
purchased by new entrants sporting an alternative supplier’s label. While some
problems were encountered in the initial implementation, they were quickly resolved
and network quality is quickly stabilized.
While hardware can be purchased at low prices, the same cannot be said of
application software development costs. [One new entrant] paid out an estimated
HK$10M for its Y2K patch. Further, its billing software enhancements had to be
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Billing in the Competitive Arena » Six years into the competition; assessing options of an enhanced
billing platform
continually made because the ultra-competitive environment in Hong Kong
demanded ever more capabilities from the system. To contain CAPEX costs,
customer care manpower is sometimes used to handle some of the semi-automated
approaches; but end-users have not been satisfied with the result. Last but not least,
a licence would normally include support for a fixed number of lines but a substantial
fee would be required for another number beyond that.
Software costs are major issues and require top management attention. The problem
is how to justify them. One new entrant identified three fundamental points:
•
Local application enhancements, though always needed to address the fast
changing and fiercely competitive telecom market, must be justified and
supported by a feasible business case;
•
Lines-installed based licensing and major release upgrades are common
practices for the solution-vendor package business model and so is a necessary
evil;
•
World-class solution vendors come at a price, exceptions are uncommon.
Based on projected software operating costs (major release upgrades plus annual
maintenance) over 3 years, the MIS department of one new entrant proffered an
alternative approach. The department suggested sourcing a solution vendor with a
proven billing application solution delivery capability, but with 50% costs in annual
maintenance) to build a more flexible billing system to cope with the market-driven
competitive environment. In essence, together will low cost, the new entrant needed
an SI partner with a functional billing system, the ‘right’ telco billing experience as
well as a ‘willingness’ to facilitate in-house maintenance support capability building.
This was then followed through and subsequently implemented.
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Billing in the Competitive Arena » Billing in the New Millennium
5.
Billing in the New Millennium
5.1.
Next Generation Networks
The telecommunications industry in Hong Kong is undergoing a series of significant
changes: fixed voice is being replaced by mobile voice; non-communication based
operators are superseding communication operators; ICT is taking over from
traditional information integration and communication services; and value-added
services are taking the place of price services. Almost all of Hong Kong’s world’s top
operators are proposing transformation strategies that exhibit a directional shift
away from traditional telecommunication services towards integrated services.
The ‘Next Generation Network’ (NGN) is a broad term to describe some key
architectural evolutions in telecommunication core and access networks that will be
deployed over the next 5-10 years. The general idea behind NGN is to have one
network platform transport all information and services (voice, data, and all sorts of
media such as video) by encapsulating these into packets, like how it is on the
Internet. NGNs are commonly built around the Internet Protocol, and therefore the
term "all-IP" is also sometimes used to describe the transformation towards NGN.
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Billing in the Competitive Arena » Billing in the New Millennium
5.2.
Implications for BOSS
The plethora of new services such as VoIP, IPTV, broadband and mobile data have
brought about greater complexity with new multi-service offers and ever-increasing
competition. Business systems tomorrow must be highly reactive and inherently
flexible with service and marketing innovation as key priorities. In particular,
sophisticated pricing capabilities are becoming increasingly important with a
requirement for greater flexibility in the face of cross product mixes, multiple
payment mechanisms and more granular and targeted customer segmentation.
Next-generation billing products must be far more flexible and enable companies to
price data services according to new parameters. IP-based services carry data in
packets rather than across a circuit that is held open for a measurable duration. It is
preferable, therefore, to charge customers for each packet of information they
download, rather than for every minute they are connected to the network. Other
pricing parameters, based on factors such as time of day, services used, quality of
service levels and subscriber class, can complicate matters still further and need to be
taken into account.
In addition, consumers may demand different payment options for different services.
When a wireless customer signs up for a new data service, for example, they may be
wary of prices associated with using the new service and thus prefer a pre-paid
payment plan. They may, however, prefer a traditional post-paid plan for their voice
calls. Operators that are able to offer flexible payment options will improve
subscriber retention in a highly competitive market.
In a traditional voice model, only two constituents are usually involved. With data
services, the billing process needs to be re-engineered to reflect the fact that a
‘revenue web’ of both service delivery and content providers is involved in the
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Billing in the Competitive Arena » Billing in the New Millennium
provision of a specific service, whether they are based on commissions, sponsorship
or interconnect settlements.
5.2.1. Specific Enhancements Required for BOSSs
Traditional billing systems are not equipped to cope with the complexity of IP
networks and services. While operators cope with these changes, many still rely on
existing legacy billing systems to support NGN services. This has resulted in:
•
The costly, complicated and lengthy process of trying to adapt the existing
billing system to do the job;
•
Delays in the introduction of new services;
•
Revenue leakage and liability risks due to inaccurate charging;
•
System instability due to an unsuitable system architecture.
As changes become more profound, a substantial investment in specialist IP billing
technology is inevitable for most communications service providers (Giga Group
research). Following are but two (of many hundreds) significant BOSS requirements
in the NGN era:
One, Personalised Bill
In the new era, customers will no longer accept several bills for different services
from a service provider. Instead, ‘convergent bills’ will become commonplace with a
single bill listing all products with various business rules applied. Converging
telecommunications billing into a single system such that rating and charging is
organized around the subscriber rather than the network eliminates vertical rating
engines that fragment a subscriber’s record around different networks. A converged
system can also allow operators to manage all its products and services with
centralized real-time capabilities. Such a system evolves charging from hot billing to
event-based rating capable of processing against various appropriate measures, e.g.
streamed music purchases could be billed per transaction and a video-conferencing
session can be billed by duration.
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Billing in the Competitive Arena » Conclusion
Flexi-billing
One improvement would be a system that converges all provisioning, transaction,
charging, rating and billing for supported services (voice, data, SMS, mCommerce)
into a single application in the most comprehensive fashion and most importantly, in
real-time. Real time billing is essential from a competitive perspective because
subscribers have been found to be 73% more willing to pay more for pay-as-you-go
convenience versus annual contracts (Redknee).
6.
Conclusion
Throughout the evolving competitive landscape of Hong Kong’s telecommunications
market, telco billing systems have been pressured to change with the times to
accommodate more sophisticated products, services and marketing promises. The
changes have been traditionally brought forth by competition as telcos vie for a
relatively static market in a densely populated economy. So far, Hong Kong has led
the way for adopting and enhancing world-class billing and customer care systems
that can support high growth and dynamic firms in a fiercely competitive market.
Being technological in nature, the emergence of next generation networks provides
yet
another novel
pressure
on
billing
and
operational
support
systems.
Telecommunications service providers now have to weave their products into a single
billing platform in order to compete in terms of convenience, flexibility and cost.
Telcos have a number of options for creating the billing systems they need to tackle
the NGN future requirements: upgrade, rip and replace, integrate, or turn to an
application service provider or business process outsourcer. Each option has its
advantages and disadvantages and decisions must be based on individual customer’s
specific business requirements, existing systems, available budget and timescales.
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Billing in the Competitive Arena » Conclusion
Some big vendors of NGN-BOSSs including: Amdocs, CBIS (Cincinnati Bell
Information Systems), IBM, Oracle… and new entrants including: Redknee, Highdeal
and Huawei… will benefit from the extended requirements of NGN-BOSSs, but the
ultimate benefactor will be the consumer, who will be able to enjoy the richness and
diversity of a continuously widening array of voice, data and multimedia applications
and services, delivered seamlessly, irrespective of access technology or platform, and
a newfound convenience of flexible and personalised billing services.
__________
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Billing in the Competitive Arena » References
7.
References
1.
資訊 路 上的 契機 (Opportunities on the Path of Telecommunications)
Anthony S.K. Wong, former Director-General of Telecommunications
http://www.ofta.gov.hk/zh/dg_article/chi_dg_article_0313.htm
– accessed April 2007
2.
Telecommunications in Hong Kong
Dr John Ure, Director of the Telecommunications Research Project
Hong Kong University Press, May 1995
http://www.trp.hku.hk/papers/1995/TELEINT.DOC – accessed February 2007
3.
The Groundbreaking Decade, Major developments in the Hong Kong
telecom industry in the past 10 years
Anthony S.K. Wong, former Director-General of Telecommunications and
General Manager, OFTA Trading Fund
www.ofta.gov.hk/en/trade-fund-report/0203/html/eng/03.htm
– accessed May 2007
4.
Update on the HK Telecommunications Market
Presentation by Anthony S.K. Wong, former Director-General at IIC
Telecommunications Forum 20 April 1998
http://www.ofta.gov.hk/en/speech-presentation/main.html
– accessed April 2007
5.
Pricing for Profits
Roger Steele & Karl Wermig, Telecom World 03 Online News
http://itudaily.com/home.asp?articleid=3103091 – accessed March 2007
6.
The NGN Age has arrived
Gao Xianrui & Zhou Yanqing, Huawei
http://www.huawei.com/publications/view.do?id=325&cid=121&pid=61
– accessed March 2007
7.
NGN of HK Broadband Network
A CISCO Case Study
http://www.cisco.com/application/pdf/en/us/guest/products/ps5320/c1042/c
dccont_0900aecd801e6acc.pdf – accessed April 2007
8.
Pricing, billing and interconnection in an NGN environment
Dr Tim Kelly Head, Strategy and Policy Unit, International Telecommunication
Union LIRNEasia, Executive Course on Telecom Regulation, Singapore
9.
Redknee’s converged Rating and Charging Billing Solution
http://www.redknee.com//solutions/monetization/converged_charging/
– accessed March 2007
- 23 -
Billing in the Competitive Arena » References
10. OSS Essentials
K. Terplan, 2001 Wiley Computer Publishing
11. The Essential Guide to Telecommunications
A. Z. Dodd, 2002, 3rd ed. Prentice Hall
12. Telecom Management Crash Course
P.J. Louis, 2002 McGraw Hill
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