Personalization, real-time billing drive profitability

26 May 2006

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.

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