App stores, 'bill shock' drive billing evolution

Jessica Scarpati
25 May 2010
Wireless carriers lament that they don't want their networks to be dumb pipes anymore. But a recent case involving a Boston-area teen and his $18,000 bill from Verizon Wireless -- racked up by tethering his cell phone to his laptop -- may foreshadow what awaits carriers if they lack intelligent real-time billing systems.
More billing embarrassments are inevitable as carriers continue to deliver third-party apps hawking goods and services.
"We need policy management for service decisions while the service is being invoked," said telecom consultant Tom Nolle, president of CIMI Corp. "Where we're heading would make it possible for Little Johnny to buy a car and bill it to his cell phone … [but] Little Johnny can't be allowed to buy a car and get a do-over. We can solve the problems of today just by forgiving the debt. We can't do that for the problems of tomorrow."
When wireless carriers had to support only voice calls and text messages, their existing operations support systems (OSS) and billing support systems (BSS) had been sufficient, Nolle said. Those systems automatically capture and catalogue account activity after it occurs but only spit out reports as needed for monthly statements or customer Web portals that don't promise real-time usage stats.
As the industry becomes increasingly application- and service-driven, a careless attitude toward revamping the wireless OSS/BSS model for next-generation networks will cost carriers, Nolle said.
"If we don't tie fulfillment, billing and service management more tightly together, what could happen is we have a choice of forcing unreasonable bills on unwilling consumers or shutting down services," he said. "We may compromise hundreds of billions of dollars of revenue opportunity and a tremendous amount of utility to customers."
The rise of app stores is changing the market dynamics -- wedging wireless carriers in among consumers, retailers and application developers -- and driving the need for more real-time billing systems, Nolle said.
"The trouble with the new services developing is that the stuff you have to pay for can get buried in the experience," he said. This set-up creates a service-layer problem because the overall experience where the pay services are embedded doesn't typically carry a service charge.
If carriers can't untangle this dilemma, it could easily stifle mobile application development and upend the "ecosystem" of carriers, developers and retailers selling goods and services through these platforms, according to Sara Kaufman, mobile strategies analyst at Ovum.
"The complexity of the relationship … is actually hampering, to some extent, the development of more sophisticated third-party apps," Kaufman said. "Most of the third-party app vendors … I have talked to will go on and on about how difficult it is to navigate the operator's payment and billing systems."


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