Billing: converging headaches

Billing: Converging Headaches

Billing is often treated as something of an after thought by mobile strategists. But with each new network development or service offering comes a whole range of new headaches for the people in charge of making it all pay.

Recently, Hugh Bradlow, CTO of Australian carrier Telstra made the observation that, when operators begin to move en masse to a new generation of technology, it is generally the radio access network that grabs all of the headlines. Often overlooked, he said, is the ecosystem of back-end infrastructure, including billing and OSS kit, that has been deployed over time and forms a key part of carrier operations.

“All those things are carried forward from generation to generation,” he said, “And those are the things that make network deployment difficult.”

No doubt Bradlow is right. But within his observation lies one of the biggest headaches that operators have to deal with in the back office-and that is the sheer number of legacy billing and OSS systems they have to manage. These systems have indeed been carried forward from generation to generation, with individual systems historically often deployed for single applications. The number of applications and services offered by operators today compared to the early years of GSM is enormous. And, say the billing specialists, the number of support systems is comparable.

“If you look at established operators in Europe, North America and Asia,” says Gary Bunnie, chief operating officer of billing outfit Intec, “they typically have tens of billing systems and a lot more OSS. All of which are application-specific. So there’s a lot of cost tied up in trying to manage these systems.”

Cellular service provision is a fast-paced business-one that gets increasingly competitive with each passing month. And time to catch up is a luxury that eludes all carriers. They have to keep introducing new services and they have to bill for these services. With a multitude of legacy systems, some of which are ageing, this can prove trying.

“What we’re typically seeing is that a lot of operators have highly manual processes,” says Prue Canham, alliances manager, Channel & Business Development for Convergys. “There isn’t much integration between their product development group and their marketing teams. So marketing offers are being made that are not necessarily consistent with what is in the product repository,” she says.

When the mouth promises what the brain can’t deliver, problems arise. Customer satisfaction rates can be adversely affected and call centre costs can increase. “Most operators don’t have an infrastructure that is designed to cope with the rate of change they’re working to at the moment,” says Canham’s colleague Alastair Hanlon, director, Industry Solutions.

The architectural goal of most operators is to install a single billing system able to cover all of the services they offer, all of the billing models they offer (prepaid, postpaid and various combinations of the two) and anything they might plan to offer in the future. It is a goal, however, that is unlikely to be achieved by many.

“I think having a single, cohesive system is what everyone would want, certainly what all the technical people in operators would want. But it’s just not possible to replace all of that infrastructure in one go,” says Hanlon.

The trick facing operators in this situation is to prioritise the modernisation of their billing environment so that everything they do represents a smaller step towards the ideal of a single, convergent billing eco-system. Polish operator Polkomtel is one of Gary Bunnie’s customers at Intec. The vendor won the contract two years ago, with the carrier launching its first set of new mobile services on the convergent billing system a year later. Polkomtel is now, says Bunnie, in the process of migrating all of its customers to the new billing system as it launches new services, and gradually removing the old system.

“It has to be a phased process,” says Bunnie. “Operators will launch one new set of services on a billing system to begin with. Then, six months later, they’ll put a few more of their applications onto that billing system as well. Clearly this needs to be phased because we’re talking about large operators here.”

As with every area of life at the moment, the global economic situation is playing a key role. Once upon a time, says Alastair Hanlon, carriers used to base their equipment purchases on value propositions; assigning a worth to the functional benefits that a system could bring. Cost was less important. In billing now, he says, cost is king. “What we’re seeing is competing priorities,” he says. “People are saying they want to provide the best customer experience at the lowest cost. That’s the real balancing act that they’re embarked on at the moment.

“As cost pressures become more evident, our clients are looking for solutions which provide value much quicker. We’re often being asked to create ROI calculations to say how quickly the project will deliver,” he says.

He argues that the best approach for an operator looking to prioritise the improvement of its billing system is to start with the customer experience. If customer interactions are as efficient and successful as possible the retention capabilities of a carrier will be improved. Citing a report by McKinsey which stated that the heaviest impact on the customer experience is now the bill-not coverage, dropped call rates, call centre interactions-he suggests that competition for the consumer dollar is now so intense that effective billing can make the difference between winning (and keeping) and losing customers.

Prue Canham picks up the thread: “It’s also important to think about the customer experience from end to end. And that’s only just beginning to become more prevalent in the telecommunications industry,” she says. “Operators are now recognising the need to manage the customer experience right from the bill data coming through into the system that creates the bills and translating that all the way through to the customer experience, in the call centre or in web self care. That’s where this integrated end to end customer communication management becomes so important to give the operators advantage,” she says.

Convergent billing itself can offer tremendous cost savings, say the system vendors. And so as carriers are beginning to update their billing equipment they are acutely conscious of the need to avoid replicating the current problems that they have with multiple legacy systems. But this creates a problem all of its own. How can carriers and vendors design billing systems for future environments when there is limited visibility as to how those environments will look? To get a feel for how tricky this could be, you only have to imagine yourself designing a billing system in 2000 that would be expected to cope with the range of services on offer today.

“The one thing we’re never going to be sure of,” says Gary Bunnie, “is what’s going to be needed in five years’ time. And nobody is. We have to make sure that the system is flexible enough to be able to cope with the unexpected.”

That’s a pretty tall order. And because Bunnie is quite right-because nobody really knows what carriers will be billing for and how they will be billing for it in the future-discussions of how this order can be met are vague in nature. ‘Flexibility’ and ‘openness’ are the two most frequently occurring words as vendors talk of designing systems that are built simply to bill for anything, rather than to bill for something specific. It could be monthly WiMAX usage, or it could be streamed music.

“This kind of openness can empower the carriers’ marketing departments,” says Gordon Rawlings, senior marketing director for Oracle Communications. “It will give them the ability to flex and change offers themselves without going through the historical time-to-market difficulties which were forced on organisations because of the rigidity of the IT systems. It will give them options as they move forwards.”

It is an industry trend that operators in developing markets are benefiting from the pioneering work done by their opposite numbers in more mature territories-a phenomenon that has been illustrated repeatedly throughout history since the industrial revolution in Great Britain. In cellular billing this is offering emerging market carriers some significant advantages.

With shorter histories and, in many cases, less highly advanced service offerings, they have not had the opportunity to accumulate such complex, labyrinthine billing environments. “They might be able to miss out the stage of putting down discrete billing systems that just manage specific services and go straight to a converging billing system,” says Gary Bunnie.

Gordon Rawlings sees evidence of large international players taking advantage of developing market dynamics to explore the opportunities afforded by convergent billing. “What we’re seeing increasingly is that these global group structures are working out their IT landscapes and target environments as a whole, building that out in the eastern properties and taking the knowledge back into the more mature markets. So that group interplay is an interesting thing with people trying things in different territories. If it’s successful they can pull it back into other territories.”

Emerging territories come with their own issues, of course, principally the remarkable rates of growth by which many are characterised. Intec’s Bunnie works with Indian operator Reliance as a customer, which expects to grow from around 30 million customers today to as much as 100 million within the next three years.

“We have to have the capability with these guys to scale our systems to a level that we haven’t had to achieve before. That keeps us on our toes as we make sure our systems can scale without our customers having any great hardship when that happens. But that has benefits for customers across the world. Our developing customers are pushing us hard and the guys in developed markets feel very comfortable with that because they know they’re going to reap the benefits.”

Billing system vendors are indeed being pushed hard. Research from Informa Telecoms & Media’s OSS/BSS Analyst service found that total contract announcements in the sector for the year ending June 2008 fell to 743-a drop of almost ten per cent on the previous year-and only two per cent up on the number for the year to June 2002.

The result in the sector-as in the wider infrastructure environment-is that vendors are looking to managed services as a new revenue stream; one that offers greater predictability and longevity, if not such attractive margins. In many cases, the billing specialists have their managed service bundled in by larger vendors like Ericsson, or big systems integrators.

Billing has always suffered from a comparative lack of glamour in the world of cellular operations. But as the range of services and pricing models on offer continues to grow with no signs of abatement, billing becomes even more crucial to the competitive success of the carriers.

“I think the OSS and BSS environments remain incredibly important parts of the service provider’s business,” says Rawlings. “At the end of the day we control the mission critical applications. Increasingly there’s a focus on us helping [carriers] understand how these investments help them both on their top line as well as their bottom line. And you need to help them understand that we’re going to be with them as we go through this environment.”

As the industry moves towards the fourth generation there should be an increased drive to update billing systems in preparation for yet another new phase of the industry’s life. But in reality only the lucky few carriers will be able to implement the kind of fully converged billing systems that they would truly like to have.