Bookof Billing Telecoms 1

The Book of Billing for Telecommunications
Jonathan Hart - PBI Media Ltd 2002
- A Billing Primer
A Tarifica Study published by: PBI Media Ltd 3rd Floor 19 Thomas More Street London E1W 1YS United Kingdom Tel: +44 (0) 207 423 4500
Fax: +44 (0) 207 423 4501 Email: billingconsult@the-phillips-group.com Web: http://www.billing.co.uk
Researched and written by Jonathan Hart ISBN: 1- 903733-23-5
All rights reserved. No part of this publication may be reproduced in any material form (including photocopying) or stored in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication without the written prior permission of the copyright owner. Application for the copyright owners permission to reproduce any part of this publication should be addressed to PBI Media Ltd, 3rd Floor, 19 Thomas More Street, London E1W 1YS, UK. Every effort has been taken to ensure the accuracy and completeness of information presented in this report. However, PBI Media Ltd cannot accept liability for the consequences of action taken based on the information provided.
ContentsThe Book of Billing for Telecommunications 1

1.1 1.2 1.3
1.3.1 1.3.2
Introduction
11
About this Book ................................................................................................................ 11 What is so-o-o-o Interesting About Billing? ...................................................................... 12 The Telecommunications Business.................................................................................. 12
Deregulation and Competition.................................................................................................... 12 Massive Rate of Change............................................................................................................ 13 Mergers, Disposals and Acquisitions................................................................................. 13 New Technology, Products and Services .......................................................................... 13 Growth............................................................................................................................... 13
1.3.2.1 1.3.2.2 1.3.2.3 1.3.3 1.3.4 1.3.5 1.3.6
Customer Service Focus............................................................................................................ 14 Interconnect Agreements ........................................................................................................... 15 Convergence.............................................................................................................................. 15 Internet....................................................................................................................................... 16
1.4
1.4.1 1.4.2
Challenges for New Entrants............................................................................................ 17

New Technology Licence Costs ................................................................................................. 17 Choice of Platform, Products and Services................................................................................ 17 Forecasting........................................................................................................................ 18 Technology changing faster than plans allowed................................................................ 18
1.4.2.1 1.4.2.2 1.4.3
Customer Acquisition ................................................................................................................. 18 Creditworthiness vs. volumes............................................................................................ 18 Customer Service Considerations ..................................................................................... 18
1.4.3.1 1.4.3.2 1.4.4
System Selection and Implementation ....................................................................................... 19 Requirements Definition .................................................................................................... 19 Flexibility and Scalability.................................................................................................... 19
1.4.4.1 1.4.4.2 1.4.5
Resources and Expertise ........................................................................................................... 19
2
2.1
The Business Processes of Billing
21
Why Talk About Processes? ............................................................................................ 21

Strategy and Process Definition ................................................................................................. 21 Process Maps Provide Information ............................................................................................ 22 The Need for Business Rules .................................................................................................... 23
2.1.1 2.1.2 2.1.3
2.2
2.2.1 2.2.2 2.2.3 2.2.4
Setting Up Customers & Managing Orders...................................................................... 23

Order Management .................................................................................................................... 25 Service Activation....................................................................................................................... 25 Fulfilment ................................................................................................................................... 25 Billing Accounts.......................................................................................................................... 26
2.3
2.3.1 2.3.2
Billing ................................................................................................................................ 26
Recurring Subscription, Access Fee or Rental........................................................................... 26 Billable Events or Usage Charges.............................................................................................. 27 Making a Call..................................................................................................................... 27
2.3.2.1 2.3.3
Credits........................................................................................................................................ 31
2.4
Retail Billing...................................................................................................................... 31
4
2.4.1 2.4.2 2.4.3
Historical Billing Methods ........................................................................................................... 31 Cycle Billing ............................................................................................................................... 31 Bill Production ............................................................................................................................ 32
2.5
2.5.1
Interconnect Billing and Settlements ................................................................................ 33

Interconnect Rating .................................................................................................................... 34 Interconnect Rating Factors .............................................................................................. 34 Least Cost Routing............................................................................................................ 35 2.5.1.1 2.5.1.2
2.5.2
Direct and Cascade Settlement.................................................................................................. 35 Cascade Incoming or Incoming Transit .......................................................................... 36 Cascade Outgoing.......................................................................................................... 36 Direct Settlement - Outgoing ............................................................................................. 36
2.5.2.1 2.5.2.2 2.5.2.3
2.6
2.6.1 2.6.2 2.6.3 2.6.4 2.6.5 2.6.6 2.6.7
Wholesale Billing .............................................................................................................. 36

Indirect Access to Our Network.................................................................................................. 37 Indirect Access and Calling Cards ............................................................................................. 38 Resellers and Virtual Carriers .................................................................................................... 38 Basis for Billing Wholesale......................................................................................................... 38 Wholesalers Retail Billing.......................................................................................................... 39 Quality of Service Billing ............................................................................................................ 39 Interconnect for Wholesalers ..................................................................................................... 39
2.7
2.7.1 2.7.2
Accounts Receivable and Collections .............................................................................. 40

Accounts Receivable.................................................................................................................. 40 Collections ................................................................................................................................. 40 The Cheque Was In the Post ............................................................................................ 40 Automated Collection ........................................................................................................ 41
2.7.2.1 2.7.2.2 2.7.3
Restricting Access...................................................................................................................... 41
2.8
2.8.1 2.8.2 2.8.3 2.8.4
Revenue Assurance ......................................................................................................... 41

The Causes of Revenue Loss .................................................................................................... 42 The Objectives of Revenue Assurance ...................................................................................... 42 Validating Accuracy.................................................................................................................... 43 Fraud.......................................................................................................................................... 43 Subscription Fraud ............................................................................................................ 44 Premium Rate Services Fraud .......................................................................................... 44
2.8.4.1 2.8.4.2 2.8.5 2.8.6
File Controls ............................................................................................................................... 45 Process Controls........................................................................................................................ 45
3
3.1 3.2
Billing Systems and Billing Data
47
System Components ........................................................................................................ 47 Billing Data Sources ......................................................................................................... 49

Customer Account Data ............................................................................................................. 49 Product Pricing Reference Data................................................................................................. 50 CDR Generation......................................................................................................................... 50 CDR Stacking and Collection ..................................................................................................... 51 Recurring Charges ..................................................................................................................... 52
3.2.1 3.2.2 3.2.3 3.2.4 3.2.5
3.2.6
One-Time Charges and Credits ................................................................................................. 52
3.3
3.3.1 3.3.2 3.3.3
Mediation .......................................................................................................................... 53
Selection and File Controls ........................................................................................................ 53 Validation and Re-formatting...................................................................................................... 53 Consolidation and Duplication: Mediation Rules ....................................................................... 53
3.4
3.4.1 3.4.2
Rating and Pricing ............................................................................................................ 54

Guiding and Account Identification............................................................................................. 54 Rating......................................................................................................................................... 55 Data................................................................................................................................... 56 Other Usage Events .......................................................................................................... 56 Applying Rating Factors .................................................................................................... 57 Rating Table Dimensions .................................................................................................. 58 Split Rating ........................................................................................................................ 58
3.4.2.1 3.4.2.2 3.4.2.3 3.4.2.4 3.4.2.5 3.4.3 3.4.4 3.4.5
Rating Discounts ........................................................................................................................ 58 Pre-Paid Service Rating............................................................................................................. 58 Regulatory Issues ...................................................................................................................... 59
3.5
3.5.1 3.5.2 3.5.3
Billing and Invoicing Operations ....................................................................................... 59

Controls...................................................................................................................................... 59 Billing Cycles.............................................................................................................................. 60 Bill Production ............................................................................................................................ 60
3.6
3.6.1 3.6.2
Retail Billing...................................................................................................................... 60
Aggregation and the Bill Pool..................................................................................................... 60 Billing Discounts......................................................................................................................... 61 Tiered Discounts ............................................................................................................... 62 Tapered Discounts ............................................................................................................ 62 Free Usage........................................................................................................................ 62 Friends and Family ......................................................................................................... 62 Other Discounts................................................................................................................. 62
3.6.2.1 3.6.2.2 3.6.2.3 3.6.2.4 3.6.2.5 3.6.3 3.6.4
Bill Formats & Messages ........................................................................................................... 63 Billing as the Differentiator ......................................................................................................... 63
3.7
3.7.1
Wholesale and Interconnect Billing System ..................................................................... 63

Interconnect ............................................................................................................................... 63 Reconciliation Estimates ................................................................................................... 64 Interconnect- Incoming and Transit ................................................................................... 64 Interconnect- Outgoing ...................................................................................................... 64 3.7.1.1 3.7.1.2 3.7.1.3
3.7.2
Wholesale .................................................................................................................................. 64
3.8
3.8.1 3.8.2 3.8.3 3.8.4 3.8.5
Accounting and Collections .............................................................................................. 65

Accounts Receivable and Remittance Processing ..................................................................... 65 Exceptions ................................................................................................................................. 66 The Cheque Is In The Post...................................................................................................... 66 Bad Debts .................................................................................................................................. 66 Pre-Paid Services ...................................................................................................................... 66
3.8.6
General Ledger .......................................................................................................................... 67
4
4.1
Other Systems That Interact With Billing
68
Customer Care and the Call Centre ................................................................................. 68

Billing and Accounts Enquiries ................................................................................................... 68 Order Management .................................................................................................................... 69 Contact History........................................................................................................................... 69 Complaints and Fault Management ........................................................................................... 70 Problem Resolution.................................................................................................................... 70 Customer Changes .................................................................................................................... 71
4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6
4.2 4.3 4.4 4.5

4.5.1 4.5.2 4.5.3
Call Centre Systems......................................................................................................... 71 Product Management ....................................................................................................... 72 Service Activation ............................................................................................................. 74 Reporting and Management Information.......................................................................... 75
Operational Reporting ................................................................................................................ 75 Data Warehouses and Data Mining ........................................................................................... 75 Churn ......................................................................................................................................... 76
5
5.1 5.2 5.3
Choosing and Implementing a Billing System
78
Billing Only, or Something Wider?.................................................................................... 78 Requirements Definition ................................................................................................... 79 Buy, Build or Outsource? ................................................................................................. 80
Buy............................................................................................................................................. 80 Advantages ....................................................................................................................... 80 Disadvantages................................................................................................................... 81 5.3.1.1 5.3.1.2
5.3.1
5.3.2
Build ........................................................................................................................................... 81 Advantages ....................................................................................................................... 81 Disadvantages................................................................................................................... 81
5.3.2.1 5.3.2.2 5.3.3
Outsource .................................................................................................................................. 82 Advantages ....................................................................................................................... 82 Disadvantages................................................................................................................... 83
5.3.3.1 5.3.3.2
5.4 5.5 5.6 5.7

5.7.1
Planning............................................................................................................................ 83 Testing.............................................................................................................................. 84 Acceptance Criteria .......................................................................................................... 85 Migration Projects............................................................................................................. 86

Data Challenges......................................................................................................................... 86
5.8
5.8.1 5.8.2 5.8.3
Resourcing ....................................................................................................................... 87
Permanent Staff ......................................................................................................................... 88 Contractors ................................................................................................................................ 88 Consultancies............................................................................................................................. 88
6
6.1 6.2
Recent and Emerging Changes in Billing Practice
90
Electronic Bill Presentment and Payment (EBPP) ........................................................... 90 Customer Self-Care.......................................................................................................... 91
6.3
6.3.1 6.3.2
Hot Billing and Real-Time Billing ...................................................................................... 91

Hot Billing................................................................................................................................... 92 (Near-) Real-Time Billing............................................................................................................ 92
6.4 6.5 6.6 6.7 6.8 6.9
Billing Convergence and Integration ................................................................................ 93 Billing for Internet Services............................................................................................... 93 3G and UMTS: Charging for Content ............................................................................... 94 Quality of Service Pricing ................................................................................................. 96 The Impact of Commoditisation........................................................................................ 97 Reducing the Cost of Billing ............................................................................................. 97
Appendix: Glossary of terms Billing and CRM Reports, White Papers and New Services
List of Figures
Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10 Figure 11 Figure 12 Figure 13 Figure 14 Figure 15 Figure 16 Figure 17 Figure 18 Figure 19 Figure 20 Figure 21 Figure 22 Figure 23 Figure 24 Figure 25 Figure 26 Figure 27 Figure 28 Figure 29 Billings boundaries New partnerships Primary business processes Interfaces with billing The order management process The billing process Making a call 1 Making a call 2 Making a call 3 Making a call 4 EBPP thick consolidator model EBPP thin consolidator model Interconnect settlements Wholesale connection scenarios The role and scope of revenue assurance Example premium rate call fraud Components Architecture Customer hierarchy Rating voice and data Simplest rating example Discount schemes The collection process Product management process Principle of the Selection Process Outline implementation programme Programme plan Basic Internet charging UMTS role model
Foreword
Lets face it - a book about Billing is not something you would expect to see in the Bestseller List at airports. If it was, you have to wonder who the hero would be. When Jonathan Hart, the author, asked me if I would consider writing a foreword for a book he was writing about Billing for Telecoms, I agreed in principle - largely because I have known Jonathan for a very long time in Billing Years - six or seven in real years and I was fairly sure that he would do a good job. When he emailed me the final proof, together with a gentle reminder about my promise to consider writing a foreword, my heart sank, for two reasons: 1) I would have to read the book 2) I would have to be honest about a book on Billing I made some time. I read the book. I will be honest. It is very easy to read. It explains complex issues very well, and very clearly. It is comprehensive, in that it covers issues from wholesale billing to billing for content, from interconnect agreements to CDR stacks, from customer service issues to EBPP, from specifying a system to revenue assurance. In his introduction Jonathan says: This book is aimed at readers who are perhaps new to telecoms, who have some business knowledge (maybe from another industry), some understanding of information systems (but not necessarily programming)........The book is intended to help the reader understand the process of Billing, the components of Billing and how they fit together, and to be a primer to the training course in billing fundamentals......... He is right. I would recommend this book wholeheartedly to those who want to understand the processes and systems that lie at the heart of the world of Telecoms Billing, or as a great starting point for newcomers who need to be trained in this complex subject. If there is ever a bestseller list for Billing books, this may well be at the top. Alex Leslie Executive Director Global Billing Association
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1
1.1
Introduction
About this Book
This book is about Billing, how Billing works, what happens at each stage in the end-toend billing process and why. It describes what is needed in the way of processes, systems and data to make Billing work correctly. This book is aimed at readers who are perhaps new to telecoms, who have some business knowledge (maybe from another industry), some understanding of information systems (but not necessarily programming). Alternatively, the reader might be familiar with billing in other businesses and seeks to understand the differences in billing for telecommunications services. The book is intended to help the reader understand the process of Billing, the components of Billing and how they fit together, and to be a primer to the training course in billing fundamentals developed and delivered by the author. It is not about accounting (except where billing interfaces with accounting), nor is it about telecommunications (except where use of telecoms services generates a primary input to Billing). Fig. 1 Billings Boundaries
Product Management Promotions
Customer Service Billing Preferences
Network Usage
Accounts Billing Events
Billing
Collections
Fault Management Fraud Management Interconnect Data Warehouse Marketing
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1.2
What is so-o-o Interesting About Billing?
Primarily, the purpose of Billing is to enable an enterprise to invoice customers correctly for the products and services they choose to use. If one acknowledges that the colossal global turnover of all telecoms companies has to be processed through some form of Billing, then what might otherwise have appeared to be a dry subject is put in perspective. If one then applies all the variations in product and service pricing and discount schemes, the range of platforms used, extended by the billions of telephone connections made hourly, Billing can be seen as more challenging and multi-faceted. The telecommunications marketplace is tremendously competitive and dynamic, constantly changing products and services as each operator or service provider seeks to offer more benefits to prospective customers than its competitors. Hence telecoms billing is in a constant state of change to keep up. Billing is always expected to be able to send a correct invoice for the latest product variation to the customers using it. As a result of the massive growth in the global telecommunications marketplace, Billing has become an industry in itself. It receives enormous attention and investment, it employs hundreds of thousands of billing professionals within thousands of specialist companies, stages a plethora of conferences on esoteric topics, several times yearly and across the world, and has its own professional associations. Not a dry, back-office industry.
1.2
The Telecommunications Business
Many of the daily challenges faced in Billing arise from the telecoms business environment that billing is trying to serve. The typical telecoms enterprise is incredibly dynamic and fast-moving, requiring many and frequent changes to products and services in order to remain competitive. There are a number of reasons for this, some of which are discussed below, but the net effect is one of constant change. Billing has to cope with all of those changes, in one form or another, and often with little or no advance warning. 1.2.1 Deregulation and Competition
Over the last decade or so there has been a near universal move to privatise nationalised telecoms services, opening up each market for private investment and competition. This usually involves the sale of at least a part of the incumbent operator and the establishment of an independent regulator to ensure that new entrants are entitled to fair competition against the incumbent. Thus in most countries the situation has changed from a state-owned monopoly telecoms operator to competing privately-owned operators and service providers. It would be politically incorrect to suggest that the situation simply benefited the government concerned, gaining the large injections of cash from sale of the PTT and obviating the need to provide massive investment capital to bring telecoms infrastructure up to an appropriate standard. In practice, it provided an opportunity to establish competitive high quality digital networks to service and enhance commerce and industry, at the same time creating the profession of Billing.
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1.2.2 1.3.1
Massive Rate of Change Mergers, Disposals and Acquisitions
The scramble for market share and revenue leads to a host of inter-corporate activity, whereby companies seek to gain some form of extra advantage. For the resulting new corporation, a merger implies a combination of rationalisation of products and services, interconnection of networks, consolidation of the workforce and a bigger customer base as well as eliminating at least one potential competitor. For Billing, the same merger usually triggers the migration of billing systems, consolidation of whole customer databases and the revision of processes and operations. In the telecoms marketplace, corporate activity is frequent, so Billing is always kept busy. 1.2.2.1 New Technology, Products and Services
It didnt take much arithmetic to calculate the potential revenues from a deregulated telecoms market: all businesses and half the population would need or want to subscribe. New customers were attracted to the new mobile services, only to find the handset was heavy, the batteries didnt last long enough and reception was patchy. Competitors developed new technology to attract customers to a better transmission network, wider coverage, smaller and more dependable handsets, and so on. All that development was designed to entice the customer to change service provider, and it involved massive advances in technology, production and delivery techniques, until the playing field became more levelled and there was less perceived difference between service technologies. Then the service differentiator was likely to become more creative pricing, product bundling or attractive discount schemes all of which depend entirely on facilities provided from Billing. 1.2.2.2 Growth
From an incumbents viewpoint, opening up their monopoly market to competition could only lead to a loss of market share, to having a slice instead of the whole pie. Hence, to prevent a loss of revenues, the wise strategy was to increase the range of products and services on offer, to expand the market and attract new customers in short, to increase the size of the pie. This meant Growth.
13
Growth meant adding whole new ranges of customers, and stimulating additional usage by existing customers. How many of us had a mobile phone 10 years ago? 5 years ago? Now, few do not, and many have several. Growth came from those customers by adding whole new networks for mobile telephony, new products and new features to older products such as call forwarding and voicemail, video conferencing, private voice and data network services, and small business and domestic data services such as ISDN and the emerging high-speed xDSL connections. That is growth - and Billing has to be able to send correct invoices to all these new customers for the new service usage. Growth in the global market implied a need for the players to forge new business relationships not just with the banks and financiers, but new partnerships. These have to be negotiated to enable service delivery over wider geographic areas and provide a fuller menu of product features to attract the customers. Fig. 2 New Partnerships
Fraud Prevention Pool Interconnect Partner
Credit Bureaux Independent Service Provider Reseller Telecom Operator Corporate Customers Residential Customers
Roaming Partner
Content Partner
Banks
Credit Card Organisations
1.2.3
Customer Service Focus
The ferociously competitive environment means a real need for high-quality attention to the customer instead of indifference. Gone are the days when customer service meant the subscriber can wait until it is convenient for us, because customers now expect timely and accurate delivery as promised, appointments kept, services available to the standard advertised, and so on. Spurned or ignored customers are ready and willing to move their allegiance to your competitors, along with any number of others who experience the same or hear of problems. For Billing, a customer service focus means that invoices must be complete and accurate, and the Customer Service Representatives (CSRs) can respond to enquiries promptly, courteously and informatively. It also means that if the CSR needs to grant a credit to a customers account it can be achieved promptly and will be presented on the next bill. At the very least, all ordered services must be billed on time and at the agreed price.
14
1.2.4
Interconnect Agreements
Many connections or calls originate on one network and terminate on another, such as international calls or calls from one carriers fixed line to anothers mobile. Whenever a telecoms connection is made from a customer of one company to a customer of another company, there is a cross-charge raised from the receiving company to the sending company for making the connection possible. After all, the sending company charges their customer, and the receiving company quite reasonably demands a part of that charge for the use of their network, for carrying or terminating the call1. Naturally, the charge applies in reverse if the connection is made in the other direction. Since no single company owns all of the networks, this raises the need for commercial agreements between network operators to cover interconnection service levels and charges. In the past, when carriers were mostly government-owned PTTs, there was only a need for a few high-level interconnect agreements. The PTT would arrange 10 or 20 or so, mostly at a national level with country neighbours. Interconnect settlement was an almost informal procedure, and certainly imprecise, since few billing systems paid any attention to it. The volume of traffic passing in either direction was estimated, agreed and settled, usually annually, and almost on a gentlemanly basis but those were days when settlement was as much a diplomatic event as commercial. In many cases, the interconnect charge rate between a given pair of locations was fixed for long periods. This was enshrined in the accounting rate, fixed and inflexible, published and rarely changed. With the increase in private ownership and in the number of carriers, came the need for many more agreements. Many agreements were set up as part of a strategy to provide controlled-cost international pathways between high usage and high recipient markets. As a result, carriers whether established companies or new entrants have to organise typically over 100 agreements from the start of operations. It is now accepted that interconnect charges can amount to as much as 40% of controllable operating costs, and that justifies better precision and information quality. Operators now demand auditable accuracy in accounting for interconnection charges and revenues. Smaller carriers owning segments of a strategic high-traffic route could find they receive good revenues from transiting or terminating calls as well as from their own customers. This means they might become targets for acquisition after all, owning the whole route means the owner gets to keep all the revenue and at their competitors loss. What makes interconnect even more challenging is that an operators greatest competitor may turn out to be their best customer. 1.2.5 Convergence
Until a common billing platform is established, mergers or acquisitions can lead to customers receiving several invoices from the one provider for each of the different types of telecoms service that the customer used. Invoices might be for mobile, fixed line, calling cards and various types of data services. Consolidating the billing of these different services from different billing systems is known as convergence, the art of combining the detail into a single invoice per customer per billing period. Convergence can be achieved by collating the outputs from the different billing systems before the final invoice production stage (so-called electronic stapling), or by enabling one billing system
See also: Interconnect Q & A in Billing Magazine 2002 editions at www.billing.co.uk
15
to cope with the different product types. This can be quite a complex operation, particularly if the customer is entitled to cross-product discounts. As customers increase the number and variety of services purchased from the carrier, the need arises to merge billing for all services on to a single bill. Originally, convergence encompassed all types of telephony services, such as fixed-line and mobile, billing for access and usage of data, voice and added-value services (conferencing, messaging, etc). When the provider offers other non-telephony services as well, such as television, power, gas or water, then convergence has wider implications than just billing. There are issues of CRM, access to customer database and cross-product marketing and support.2 Convergence is still a major discussion topic in the industry. This is partly because of the effect of a converged bill on the customer when they receive a combined invoice for different services, aptly known as bill shock. The market is still unsure whether to converge billing for widely differing product types, for example, electricity or water with telephony, even where there is only one company acting as provider. The discussion is more intense when converging bills for telephony with content, the published material such as music or movies delivered over the same telephony connection. This is an area the industry is currently developing, and is discussed later in this volume. Raising many invoices might be inefficient for the provider and inconvenient to the customer, but it might also be simpler for the customers internal processes for invoice approval and payment. The situation is never purely black or white. 1.2.6 Internet
One of the latest billing challenges and as yet not fully resolved comes from the Internet. The vast demand for internet access is fuelled by a frenzy, mandating every business to have a marketing website and an e-product, by the consumers desire for instant information and convenient e-services, to communicate from home, to have cheap messaging by email, cheap long-distance voice calls, thoughts of video streaming, vast amounts of information, chat lines and newsgroups, as well as todays horoscopes or recipes. One must not ignore the burgeoning pornography industry, although not many people are willing to admit it to be a driving force. The real value to the customer of the internet call comes from the content, from the material accessed, purchased or downloaded from a vendors website. Hence from the billing point of view, most of the value of an internet transaction is billed by the content provider or website owner, and the lesser value part is billed by the telecoms carrier or service provider for access by the customer to that content 3. The content billing usually amounts to a standard external credit card charge, facilitated by secure transfer of the purchasers card details. Whether the content material is for example a music or video clip download, or an item purchased from a catalogue, the chances are high that the vendors (and the credit card company) will receive more revenue than the carrier or the ISP from the call. From the carriers billing viewpoint, internet usage represents a long-duration local or shared-cost call, on a simple connection to the ISPs point of presence. Some ISPs absorb the call charge and refund the carrier, making the call free to the customer, offset by advertising revenues. What remains unresolved is how to identify customer transactions with sufficient accuracy, since the download of free material cannot easily be distinguished from purchased files. What is sought is a reliable identification method that
See: PBI Reports 2001: CRM to CMR a paradigm shift in customer care; Marketing and Billing New Products a winning combination. See: PBI Report 2001: Re-engineering Billing for IP Content.
16
will entitle the carrier to increased revenues from some form of commission, in return for providing the connection that enabled the sale.
1.3
Challenges for New Entrants
The biggest challenges face the new entrants. With limited time and by definition no current revenue stream, the entire enterprise infrastructure has to be put in place. Often only a few months are available in order to complete the tasks needed to gear the operation up to launch the first products and services. Hence all the challenges have to be faced up front, but at least they can proceed without the baggage and old-established ways of the incumbent. The operation cannot proceed without network infrastructure, whether built or bought, but there will be no revenues without Billing, not even for prepaid service providers 1.3.1 New Technology Licence Costs
In order to operate as a carrier or service provider, a licence is required, in order to maintain governmental control over the proliferation of competing services. A new operator has to buy a licence, if available, or acquire a company that holds one, if not. Setting up a cable-based network, whilst a major capital investment, does not involve as scarce a resource as the radio broadcast spectrum available for transmission of wirelessbased services. Hence, except in a few countries, governments tended to conduct an auction for wireless operating licences to ensure the best price was achieved for the bandwidth needed. Competition for the newest licences (for third generation mobile known as 3G or UMTS services) in Europe and Asia was so intense that huge amounts were invested in the licences alone even before any transmission network infrastructure was developed. The effect of this investment was doubtless one contributor to the recent fall from grace of telecoms stocks on world stock markets, as investors question whether future revenues from 3G will yield the returns they desire in a reasonable time4. 1.3.2 Choice of Platform, Products and Services
The new entrant has to set the strategy for their business. What kind of services, for what type of customer and in what numbers? What pricing model would be competitive given the corresponding development and delivery costs? Are they to create their own network or purchase and resell capacity on an existing network? Mobile, satellite or fixed line? Data or voice? And should the customers be residential, small businesses or larger corporate clients? These choices have a major impact on the choice of operational methods and billing platform. In practice, most providers end up offering a combination of services to a range of customer types. Higher performance data networks may imply a team of sales people targeting bigger customers paying higher-value invoices, but these are more expensive to establish and the competition is intense. Targeting smaller customers implies a retail operation, with larger numbers of customers paying smaller invoices for simpler services, supported through a larger call centre. Billing has to be able to match the needs of the business, to have the capacity to cope with the volumes needed and the products offered.
See: PBI Media/Siticom 2001 Report: The UMTS Technology and Billing Challenge.
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1.3.2.1
Forecasting
One of the key factors required for successful Billing is an understanding of the way data volumes are planned to grow over time. The business strategy may set out to achieve growth from zero to X over the first three years, in terms of customers and revenues, but this is not always met. One Italian operator had a famous market entry that took their market by storm customers dissatisfied with the available services moved en masse to the new provider, resulting in a growth that achieved five years business plans in under three years and the growth did not stop there. The Billing department was kept exceedingly busy upgrading their IT systems capability two or three times a year to keep pace something normal operators need to achieve much more rarely. Forecasting that sort of growth is not easy. 1.3.2.2 Technology changing faster than plans allowed
Another challenge is the rate of change of both fixed and wireless technologies. Customer-driven changes such as the massive improvement in usability of mobile handsets implied a rate of change of inventory as well as cellular transmission capability. These were investments originally planned to be spread over years, that now had to be revised into periods measured in months. Operator-driven changes such as new delivery services meant that customers found themselves investing in facilities that were rapidly outmoded rather like the explosion in personal computer price/performance that rendered equipment obsolete as soon as it was acquired. This situation tended to have a greater impact on the operators financial plans than on Billing except where the billing system or its components had to be upgraded. 1.3.3 Customer Acquisition
The enterprise needs revenue, so that means acquiring customers. Investors seek growth and profits, so that means continually increasing the number of customers and the services they use. 1.3.3.1 Creditworthiness vs. volumes
The enterprise has a conflicting choice between accepting as many customers as possible and accepting a higher level of risk of bad debt and fraud. Normally this means that new customers are put through some kind of creditworthiness checking, to ensure (as far as possible) that they will probably pay their bill. This is done either using a credit agency (on a reference service) or by some credit scoring based on information gathered during the acceptance process. Easier criteria or lower thresholds for entry mean that more customers will be accepted with possibly a higher bad debt rate, and harder criteria means less customers and perhaps only lower revenues. Management of the new customer entry process is critical to limit the opportunity for subscription fraud, whereby the customer gives false details, never intending to pay. But investors are rarely satisfied, so the entry criteria have to be relaxed to get more customers, more revenue and risk of more bad debt. 1.3.3.2 Customer Service Considerations
A new product or service needs some level of support from your business. If it is successful, then it will need more supporting personnel if only for the engineering installation service. If exceedingly successful, then the business will require larger numbers of CSRs and installation engineers, in order to meet delivery promises. A nice problem to have, perhaps, but not if you risk cancellations and disgruntled customers. One way round this is to start out with web-based customer self-care and promote the
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approach as an asset at least as the business grows there will be a lesser need for CSRs. For Billing, customer service means having enough capacity in the CRM systems to accept orders fast enough to pass details through to the billing system to set up billing accounts before billing is needed. It also means having enough fulfilment and provisioning capacity to provide and enable the service before the customer becomes impatient. Ultimately it means having enough billing capacity to process a days work in something less than a day, so that when the customer phones up to ask something about his billing account the data is available in the database, fully processed, ready for the CSR to view. 1.3.4 System Selection and Implementation
Which systems should the enterprise invest in? Estimating the needs of the business for the forthcoming few months has to be a trade-off between over-investing before revenues are there to demand (and fund) the facilities or sophistication, and under-investing that potentially gives overloaded system capacity and unsatisfactory performance, at the same time adding to the workload. There are three main types of approach to providing IT systems capability: the choice to build, buy or outsource5. Each may be used for all or any of the system components, according to the preferred IT strategy, financial and human resources available, and the expected lifetime of the systems. 1.3.4.1 Requirements Definition
The new enterprise has to make some progress in deciding what they expect IT systems to support. It means thinking about operational strategy, the business requirements for products and services, pricing and discounting, how the customer base is to be serviced and so on. Knowing these requirements predicates successful systems decisions, before any technical or esoteric IT demands have to be evaluated. It is an important stage in developing the definition of corporate infrastructure and some of the various considerations are presented in a later chapter. 1.3.4.2 Flexibility and Scalability
If the new enterprise does not have a clear picture of the first months of operation, then there inevitably has to be an increased level of flexibility in the systems that are installed. Provided that new products and prices can readily be introduced, then there is flexibility. If the systems can accommodate a number of customers and billable events way above or way below expectations, then there is scalability. Ideally, have both until the situation stabilises, if ever it will. 1.3.5 Resources and Expertise
At the time of writing, there was a global shortage of skilled telecoms and IT-literate human resources6, and the only prospect of the situation changing emerges from the downturn in telecoms stock prices. This led to another sudden set of changes a drop in funding for new projects, pressure to reduce costs and downsize IT departments and billing operations headcounts. In some areas, large numbers of competent personnel became available, but overall the demand remains high.
5 6
See: PBI Media Report 1999: Buy, Develop or Outsource.
See: PBI Media Report: Telecoms IT, Billing & Customer Care Skills and Salaries Survey 2000. Also the sequel survey in 2001 at www.globalbilling.org (within the GBAs Knowledge Bank section)
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The new entrant has three choices: to try to successfully attract high-quality permanent employees, to rely on external resources from consultancies or vendors, or to manage independent contractors. Not straightforward, because the resource shortage meant that candidates were not always as qualified as they claimed. Further, the enterprise was often not prepared to invest enough money and effort in attracting, selecting and retaining key people from whichever source. The result has been a history of greatly delayed implementations, launches plagued with problems, appalling customer service and regrettably often, no bills for months.
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2
2.1
The Business Processes of Billing

Why Talk About Processes?
The whole point of having a process defined is so that management can clearly set out just how they want the business to be run. A number of key decisions will depend on the quality of the process definition not on its level of detail, but on the amount of highquality thought that went into its preparation. Fig.3 Primary Business Processes
Marketing Product Management Change Management Network Management Order Management Resource Management
Quality & Revenue Assurance
Supply
Retail Billing
Legal & Secretarial
Interconnect Billing Accounting Wholesale Billing Collection
2.1.1
Strategy and Process Definition
One has to assume that the Directorate of a new enterprise has a clear picture of the way the company is to operate, and this strategy has to lead the statement of what has to be done to operate the company that way. The process definition states the tasks that have to be performed at each step along the way, recognising as many business situations as can reasonably be foreseen. It sets out the tasks along with the business rules so that personnel can interpret and execute those tasks in a manner consistent with strategy. Why is it that so many new telecoms businesses do not define their processes first? Usually, it is simply that the pressures of time and resource overtake good practice in the rush to launch the new company, service or product. It can also arise from a lack of understanding of the contribution of process maps to the consequent successful operation
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of the business. The adage more haste, less speed applies in telecoms just as elsewhere; if decisions normally made when thinking about the process definition are ignored or neglected, they will end up having to be made in haste. It will happen when staff find they do not know how to handle a new situation that crops up unexpectedly, or that systems cannot cope. In practice a compromise needs to be reached, whereby the processes are defined at a high level, enough to give all parties a structure to work with, yet not in so much detail as to delay the operational launch. The detail can actually be filled in later, as an activity in parallel with service implementation and as the customer base (and the workforce) grows. After all, it is better to actually deliver telephony services to your own customers rather than to have meticulous process definitions only to find that your competitors have signed up all the customers. To help with this compromise, a number of template process models exist for standard telecoms enterprises (some may even be found on the internet) and these can be used as a guide, modified as necessary. 2.1.2 Process Maps Provide Information
The process definition is often documented as a map showing the sequence of process steps and responsibilities. When presented with training, the map informs operations staff how to recognise each distinct business case (and what constitute exceptions) and the action to take in each case. The map will also provide information to personnel in other responsibility areas, such as quality assurance, information technology, line management and audit, as to how the business is intended to function. Having the process properly defined will provide a primary source of information to the companys IT people in their selection of appropriate hardware and software platforms. The IT systems should be selected to support the process not, as is often the case, the other way round. For example, if the business wishes to offer customers access to facilities for self-care via the Internet, it is inappropriate to select a customer care system that does not support web access, thereby failing to meet the needs of the business which seeks to deliver service in a particular way. Knowing the process will help to clarify the interfaces between the various different internal business functions and the systems supporting them. In this way, the dependencies are highlighted and billing can be seen to be at the heart of the companys operations.
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Fig.4 Interfaces with Billing
Product Managers
Pricing and packaging Customer Care Orders
Orders, problems and preferences Customers
Service Activation Service activations and suspensions Call details and events
Billing detail Invoices and credits
Billing
Usage and revenue information Marketing Invoice and credit details Payments
Switches
Accounts
2.1.3
The Need for Business Rules
A significant contribution to the detail of process definitions has to be the specification of business rules. These must be defined for each major interaction with a customer or prospect for example: ! Which pricing and discount schemes may be offered to each type of customer? What threshold business value is needed before each level of discount is allowed? What rules apply to credit limits for each type of customer? Does that include the value of new orders, outstanding unpaid invoices etc? What rules are associated with order cancellation? Is the customer allowed to change his mind without penalty? What if equipment has been delivered and the installation procedure is nearly complete? If your product range includes bundles or packages of grouped product components, is the customer allowed to request a mix and match, and if so, what pricing rules apply?
! !
If you have not pre-defined these rules, do not expect your Customer Service Representatives (CSRs) to know the rules intuitively or to apply them correctly, particularly while the customer is on the phone asking to change his order. Thats why these rule definitions are important.
2.2
Setting Up Customers and Managing Orders
Somewhere near the beginning of the customer acquisition cycle, an individual or a business entity changes from being a prospect out there and becomes a customer, by the act of placing an order. The Order Management (OM) process includes capturing an order for a product or service from a new or existing customer and fulfilling their
Jonathan Hart - PBI Media Ltd 2002 23
requirements, making it possible for that customer to utilise the product ordered, to the delivery standard, timeframe and price agreed or promised. Fig.5 The Order Management Process
Capture Customer Details Product Management Select Product Take Order Set up Account Service Activation Collect Billing Data
Fulfilment
Network Provisioning
For OM, it is necessary to complete the tasks set out below. The actual sequence of the individual steps in the OM process is generally less important than their completion. So, the tasks are: ! Customer identification: ! ! ! Capturing customer profile data Maintenance and updating of company records
Taking the order: Researching and understanding their business requirements from telecoms services, including service delivery points or sites Selection of the most appropriate product and price plan to suit their requirements Setting out their order, gathering delivery and installation details Recording details of their method of payment Getting their commitment to the order
Credit scoring or creditworthiness checking Fulfilment: Sending out collateral material, such as contract forms, brochures etc Delivering any items not requiring installation (e.g., handsets, smart boxes) Account creation and activation
Service delivery: Site inspection, engineering planning and preparation
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Despatching (and if necessary, installing) Customer Premises Equipment Service activation Commissioning and testing
Enabling their first use of your product or service.
For corporate customers, there may need to be a number of additional business development steps, including for example, responding to an invitation to tender, perhaps a formal proposal, a demonstration or a pilot scheme. Often, these steps are completed by sales representatives or agents, including field visits to the potential customer, so the process will ensure the details of prospective customers who are progressing towards order completion (in the pipeline) are notified to sales management for planning and control purposes. 2.2.1 Order Management
Residential or small business customers may be satisfied with placing orders by email or letter, directly by telephone, or by completing a form from a brochure or website. Wherever there are larger volumes of customers with smaller orders, the efficiency of handling each unit becomes more significant. Of course in some cases a customer might seek to cancel or change an existing order, so the process must allow for such events and set out what else needs to be done at that time. The rules must be defined so the sales representative or CSR knows how to deal with each situation, and to correctly advise the customer the costs incurred by the change or cancellation. 2.2.2 Service Activation
The network (or the service platform) has to be notified that the customer is authorised to have access to and use the service. Activating the customer thus involves telling the network management system that the customers calling number or account number is to be recognised, perhaps with a PIN. Then the authorisation parameters will specify, for example, the type of service and priority (if any), whether or not premium rate or interconnect calls (long distance, off-network or international) are allowed. The activation may also involve setting up additional service features such as voicemail or call waiting. After the customer is set up on the network, additional service management commands may need to be applied from time to time, such as service suspension or reactivation, call barring (prevent calls from specific calling numbers) or exchange barring (block calls to certain exchanges or ranges of numbers). The service identification is typically the Calling Line Identification (CLI) that the customer uses. 2.2.3 Fulfilment
After receiving the customers order, it is customary to send some form of documentation, including welcome letters, copies of contracts and equipment operating manuals. If the service provision requires Customer Premises Equipment (CPE) to be fitted then the Fulfilment process will include scheduling site visits by installation engineers, stock movements (if the CPE is taken from inventory) and perhaps preliminary surveys. For high-volume residential services, it is quite common for the fulfilment tasks to be outsourced to companies with specialist packing and mailing service facilities.
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2.2.4
Billing Accounts
One of the last preparatory steps is to set up an account for the customer. This will require details of the correct address for posting invoices, their preferred method of payment and bank account or credit card details as applicable. The process step is not complete until there has been verification of those details sending a Direct Debit Instruction to their bank would elicit a negative response within a week or so if there was a problem, and checking credit card details can be done on-line.
2.3
Billing
Billing is the process of gathering details of all items that are to be charged to the customer, then calculating the price of each, applying any discount and calculating applicable taxation, and finally preparing an invoice to convey the debt to the customer. There are generally three types of charge: ! ! ! Recurring subscription, access fee or line rental Billable Events or Usage Charges One-Time Charges and Credits Fig. 6 The Billing Process
Use Service
Collect Event Data Fraud Management Mediation Interconnect Wholesale Marketing / Data Warehouse
Product Management
Rating
Set up Account
Billing
Product Management
Marketing
Bill Production
Accounting & Collection
2.3.1
Recurring Subscription, Access Fee or Rental
There is usually some form of recurring charge that is levied either on each billing cycle or at some other agreed period, for example, a monthly line rental or a quarterly subscription. This exists partly in order to recover the initial cost of providing the service to the customer, but also simply as an ongoing revenue stream. It also helps to underpin profits and cover equipment maintenance. Billing has to add the charge to the invoice at the appropriate time, properly itemised.
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2.3.2
Billable Events or Usage Charges
Since usage of the telephony service is rarely restricted to telephone calls only, the term Billable Events is used to refer to any event that consumes or makes use of the service for which the customer has to pay, even if it is provided at no charge. Usage can include calls, retrieval of voicemail messages, data file transfers and downloads, or directory enquiries. In cable networks, pay-per-view charges may be levied per film or sporting event. The key data required for Billing an event is usually known as the Call Detail Record (CDR), although the interchangeable term Event Record is valid for the more generic billable event. CDRs are generated by the telecoms network systems for every call, containing enough data for billing to work out how much to charge and to which account it belongs.
Fig.7 Making a call - 1
A
Local line Switch
NMS polls switches to collect CDRs CDRs
2.3.2.1
Making a Call
The sequence of events in making a call is broadly summarised in the accompanying set of diagrams. When Party A lifts the receiver, the connection is made to the nearest switch in the network. The network is shown as a cloud, representing all the complex connections, engineering and technology involved in the network of the particular operator concerned. For the purposes of this book, we do not need to disassemble the cloud much further.
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The switch checks the CLI to ensure the customer is allowed to proceed and then receives the dialled number as a string of digits. The switch determines the best routing for the call and directs it across the network to the called party B1. As the call is connected, a CDR is created by the switch to await collection by the Network Management System (NMS). Fig.8 Making a Call - 2
Alternative routing
CDRs File transfer to Mediation Mediation
Billing
Regardless of the routing, all the switches involved are all capable of creating CDRs, depending on their current set of control parameters. When the CDRs are passed to Mediation, all duplication of CDRs for a given connection is resolved.
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Fig.9 Making a Call - 3
A
Local line Originator
B1
B2
Alternative routing Gateway Terminator
CDRs File transfer to Mediation Mediation Interconnect Billing CDRs also sent to Interconnect billing Transit
CDRs
CDRs
If the connection requires interconnection of networks, then our switch directs the call to the Gateway, the point of interconnection. The call may transit a number of networks until the terminating network is reached and the call routed to its destination, B2. Along the way, switches may each generate CDRs for use of the host network, but at least one must be passed back up the chain towards the originator. Again, our Mediation has to resolve duplication of CDRs, but those CDRs sent from neighbouring networks are most useful for interconnect billing.
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Fig.10 Making a Call 4
A
Local line
Cell
B1
B2
Originator Gateway
Terminator
Roaming database
CDRs Transit
CDRs
Mediation Interconnect Billing
CDRs
At a high level, the same set of principles applies to Mobile calls, with the added complication of Roaming. When a handset is turned on, it broadcasts its identity to the nearest cell, which registers the handset for position and checks the central database for validity of the handset owners account. Assuming all is well, a call placed by A is routed as before, generating one or more CDRs along the way. If the called party B2 happens to be roaming on another network, then validity of B2s handset has to be checked with the owners home network before connection is allowed. When the handset is switched on within another host network, the nearest cell transmitter first of all checks its local database to determine if there is a roaming agreement with the owners home network operator. If so, then the host checks back at the owners host network if the owner is permitted to roam and is willing to accept roaming charges. The resulting information is stored locally for billing convenience. The transaction involves a remote database check, a process that may take several seconds. If cleared, the handset location and identity is logged. Hence when A calls B2, both the home and remote networks know where B2 is at the time, so the call can be correctly routed. As before, at least one CDR is sent back to the home network for retail billing, and a copy is retained for interconnect billing by the roaming host. Note that: roaming is the mechanism that allows a mobile customer to use their mobile phone outside their operators home service area. Interconnect is concerned with delivering a call to another operators network7.
See: Interconnect Q & A by Martin Browne, Billing Magazine Jan/Feb 2002 at www.billing.co.uk
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2.3.3
Credits
If for some reason the customer complains about the service, or disputes the charge for individual connections, we may choose to refund their costs and/or give them an ad-hoc credit. This aims to offset the customers inconvenience, and should be recognised on the next available billing cycle. The Customer Service agent or CSR therefore has to have facilities to raise the credit, and the billing system consequently needs to be able to present these credits or refunds, separately itemised, as part of the next bill.
2.4
Retail Billing
The subject of retail billing covers the calculation of charges and raising invoices for enduser customers. In this category we tend to include normal domestic and small business customers (also known as Small Office / Home Office customers or SOHOs) and many of the medium to large corporate customers. Very large customers or substantial users of capacity may have their own contracts, perhaps with their own pricing and discount plans these are discussed separately under wholesale billing, to make the distinction. 2.4.1 Historical Billing Methods
In earlier days, telephony was provided by nationalised providers, almost universally linked to the Post Office (hence the acronym PTT, for Post, Telephone and Telegraph services). The amount charged to the customer for telephone usage was measured manually. The telephone operator (here meaning a person tasked with making the connections, rather than an enterprise) was responsible for monitoring call duration, mainly by sampling (basically listening in) to see if a conversation was still in progress. The operator assessed the duration to the nearest minute or so, and wrote down the length of each call. The manual records were processed by an array of back-office clerical personnel and somehow a bill emerged. Later, the operator was replaced by automatic pulse-dialled switching equipment and automatic measurement of call duration. This was supported by telemetry, setting pulses or clicks at a rate given by the distance of the call or the number of switches involved n completing the connection. Billing comprised counting clicks for the line concerned. The amount billed was simply the number of clicks multiplied by the prevailing unit rate. These billing techniques still prevailed in some countries until quite recently, but were ultimately thrown out by customer pressure they were unauditable. Customers complained of excess bills, mostly to no avail. Unfortunately, such complaints were ineffectual as the onus was on the customer to pay, regardless. It did not matter that excess clicks coincided with nearby repair work by telephone engineers making lots of clicks on the line the customer still had to pay. 2.4.2 Cycle Billing
In order to avoid processing all of the customers at the same time traditionally at the end of the month the workload is distributed over the calendar month. Business customers may prefer end-of-period billing, but retail customers are usually less concerned. Consequently, each customer is assigned a cycle day or cycle number, to allow the distribution of billing by Operations personnel according to IT workloads. On the date set according to the billing cycle, the process has to assemble all the accrued charges for each account billable on that date. This will aggregate charges that have been raised since the previous bill. There are normally up to three types of charge:
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Usage Charges, in the form of rated calls, transactions or events. Charges are based on minutes of duration, quantity of data carried, fixed set-up cost, etc Recurring Charges, representing periodic access fees, subscription charges or line or equipment rentals One-Time Charges, any ad hoc charges for specific events such as equipment sale or initial set-up fees.
! !
For every account, Billing will aggregate the charges, usually sorted to present them by date and time within product or service. Depending on the contract or price plan, there may be a discount or included free minutes which has to be deducted if applicable. Finally the Value Added Tax (VAT) or Government Sales Tax (GST) is computed according to the tax jurisdiction, rates per product or service, or other rules. In some cases the tax has to be computed for the total undiscounted charge and separately for the discount (or any other credits), depending on the relevant legislation. Either way, the result has to be presented as clearly, completely and as accurately as possible. 2.4.3 Bill Production
The final stage of this step in the process is bill production, whereby the invoice is prepared and printed. If itemised billing is required, then details of each chargeable event have to be listed, usually in start date/time sequence within product, and then within CLI if more than one calling number is involved in the contract. Whilst traditionally it was presented on paper, it is less costly and more convenient for larger accounts for itemisation details to be presented on floppy disk or CD-ROM. The most recent developments in this area note that customers are very often happy to access their itemisation data through a secure internet web site, and to be notified by email of the total. At the time or writing, legislation in Europe generally still demands that the invoice itself is presented on paper, but co-operative business partners are finding convenient ways round this, usually involving e-mail. The era of EBPP (Electronic Bill Presentment and Payment) is undeniably upon us8.
See: PBI Media 2001 Report: EBPP The Market Opportunity
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Fig.11 EBPP Thick Consolidator Model
ALL BILLING INFO BILLERS
CUSTOMER
CONSOLIDATOR
Source: PBI Media Ltd
Fig.12 EBPP Thin Consolidator Model
FULL DETAILS
SUMMARY INFO
SUMMARY INFO
SUMMARY INFO
CUSTOMER
CONSOLIDATOR
BILLERS
FULL DETAILS
Source: PBI Media Ltd
2.5
Interconnect Billing and Settlements
Whenever a customer places an outgoing call or makes a connection that terminates in a different network, then an element of Interconnect billing applies. The other operator will expect to be paid for use of their network to carry the call part of the way. After all, operators are paid by their own customers to carry traffic wherever it terminates, but since they cannot charge another networks customer, they charge the other network operator instead9.
See: PBI Media White Paper: Interconnection Practical Guide to Interconnection in the UK
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Similarly, we (as an operator) might receive incoming calls that originated on another carriers network to terminate on our network. We will then seek to charge the other operator for the use of our network facilities. A similar situation applies in both cases if calls are carried in transit to another operators network. The total volume and value of calls may not be the same in both directions, and the totals may amount to very large numbers, so an Interconnect billing system providing appropriate functionality is needed to keep track. The interconnect billing process raises invoices to other carriers for terminating or transiting their calls, and produces reports for calls sent to (or via) other carriers for reconciliation against invoices received from them. The outcome is that every call or event, except those that start and end on the same network and that do not transit any other networks on the way, is subject to some form of interconnect charge, in one direction or the other. 2.5.1 Interconnect Rating
The complexities of interconnection mean that the CDRs or Event Records generated by our network have to be examined several times for different processing tasks. Firstly, we select event records for calls that originate from our own customers on our network for normal retail billing. Of those retail event records, we then select the subset of events that terminate on or transit across another network, to calculate the interconnect costs for reconciling the other carriers invoices. We also need to select other event records that are generated on our network for incoming or transit calls, to calculate interconnect charges for billing the other carriers. The amount we have to pay the other operator to carry the call will depend on a number of rating factors. The charge rates are set out in Interconnect Agreements, negotiated between operators whose networks are interconnected, to cover traffic in each direction. As telecoms capacity is increasingly sold on a commodity basis, interconnect has become a highly competitive arena, with any number of new rates and charge methods set between different pairs of operators. The rates will be updated from day to day, from interconnect partner to partner between the same points and even for different periods within the day. Therefore the operational staff who run the interconnect billing system will have to maintain rating tables that change dynamically. Unfortunately, we do not always have all the up-to-date detail of costs beyond the neighbouring carrier, partly because of this rapid rate of change and partly because they like to keep certain aspects of their operation confidential. This makes some aspects of interconnect reconciliation more than a little difficult. 2.5.1.1 Interconnect Rating Factors
Rating factors will include conventional factors used by retail, for example, the call duration or amount of data carried and the quality or speed of connection. However, interconnect rates also depend on the routing used in other words, who carried the traffic, across which different networks, and to which destination exchange or connection point. For example, if a caller on network A placed a call to a dialled number on network E, there could be many different routes to get there: perhaps A-B-C-E, or A-D-E, and so on. Given that each network is a different competitive entity, it is to be expected that the cost to operator A for sending the call to E will vary according to the terms negotiated between A and each interconnecting carrier, whereas the price (to the customer) will usually be fixed. There can be slightly bizarre outcomes sending a call from Germany to UK, for example, might be routed via the USA rather than through France or Benelux. It is not distance that
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matters with telephony, it is cost digital signals can be re-amplified a number of times without loss of integrity. There will usually be a call set-up cost component, payable even if the call is not successful from the customers viewpoint the sender pays for trying, as it were, whereas the customer does not. 2.5.1.2 Least Cost Routing
To minimise the cost impact by careful call routing, switching systems are increasingly including a Least Cost Routing (LCR) capability that permits interconnect calls to be routed in real time according to the LCR algorithm. Wherever possible, the switch will take into account the latest known charge rates in deciding the routing of a connection. 2.5.2 Direct and Cascade Settlement
The overall interconnect accounting process is also called settlement. Two common forms of settlement (and several others) exist. The common forms are Direct and Cascade, and operators generally use both. Direct Settlement is where the operator settles separately with each carrier involved in routing the connections. Cascade Settlement is where the operator pays the first in the transit sequence, they retain their agreed share and pay the next, and so on. In many cases, we may not be informed of the routing taken beyond the first, for commercial confidentiality reasons, so Cascade becomes the settlement of choice. Fig.13 Interconnect Settlements
Direct settlement
Cascade settlement
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Other models exist, depending on the extent of collaboration between interconnect partners. One is Sender Keeps All, on the questionable assumption that traffic in the other direction should be similar in volume. 2.5.2.1 Cascade Incoming or Incoming Transit
For incoming calls, we will transit or terminate the call on our network, so we expect to receive revenue from our neighbour. The first step of the cascade identifies the operator to whom we handed the call, so the basis of charge can be determined from database details of our agreement with that operator. The cost is calculated and allocated to the interconnecting operators account. This time, however, we are calculating the amount we are expecting to be billed by the neighbour concerned, in order to reconcile their invoice when it is received. If that operator does not have the necessary interconnect expertise or billing software, we can use our figures as a basis for settling their account. It is common for an added-value fee to be earned for providing this service. 2.5.2.2 Cascade Outgoing
If we are carrying the call in transit to another network, then provided a cascade agreement exists we will need to pay that carrier. We generally use the CDRs we generate at point of exit, depending on the systems architecture and on whether the call originated with one of our customers. 2.5.2.3 Direct Settlement - Outgoing
When settling on a Direct basis, we need to know all the carriers involved in a routing, to be able to apportion the revenue according to the rules for that routing. Where three carriers (including the sender) are involved, a typical apportionment is 40%-20%-40% respectively; when it involves four, it is 30%-20%-20%-30%. This reflects the importance of the originator and terminator of the call compared to the transit operator perhaps less complexity or equipment involved. Use of non-standard rates is almost as common.
2.6
Wholesale Billing
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Wholesale billing means that we contract to provide another company with bulk use of our network, perhaps between fixed points. What we bill the wholesale customer, and how, will depend on how their customers access and use our network as well as on the wholesale contract. The wholesalers traffic will include interconnect, so again we may have to analyse that traffic for interconnect costs and revenues, depending on what is negotiated in the contract. They might appear to us as a major user (perhaps a multi-national with offices worldwide) or as a reseller. It may be that the wholesaler has negotiated bulk rates from us for themselves as a single company or in effect a closed user group. They might then choose to bill their own internal cost centres as a cross-charge for telephony usage, with or without a margin. They will at least require from us an analysis of their traffic, selected out from the total traffic. Normally a data feed of CDRs is required from the wholesale billing system, so the reseller can perform his own analysis and as input to their own retail billing (or, quite conceivably, wholesale billing). Fig.14 Wholesale Connection Scenarios
Customer of Wholesaler - and of Host network Local line Indirect access
Host network
Wholesalers network
Direct access
Alternative called party connections
Indirect Access to Our Network If the wholesaler has their own network, they will probably set up dedicated points of access for interconnection with our network. These points are usually controlled by intelligent switches, able to validate and route the traffic as well as generate their own CDRs as we will, at the coincident points of access on our network. In this case, our network will provide some element of bulk or long-distance support for the wholesalers operation.
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2.6.1
Indirect Access and Calling Cards
With an Indirect access model, the caller uses last mile access to reach the wholesalers network. The first part of the dialled number string is the indirect access prefix, which routes the call to the wholesalers point of access. The wholesalers system then checks the callers identity from either the CLI or from the next part of the dialled number string, that may include an account number or PIN, before routing the call to its destination. A variant of Indirect Access is the pre-selection model, where the end-customer will opt to have all calls routed through the wholesalers network. They will remain the customer of the operator for the last mile, but again only for line rental. The operator will need to route all calls from that CLI to the wholesaler without necessarily having a dial string prefix. Instead, a list of pre-selection CLIs has to be maintained at the nearest switch. For the Calling Card model, indirect access is provided by any customers last mile, such as from a hotel room, private line or pay phone, to the wholesalers point of access. CDRs for calls to the indirect access point are recognised and charged according to contract but generally on some aggregation of time, distance and total duration. The wholesaler often requests a high-priority feed of their CDRs in order for them to be able to debit their customers account as soon as possible. If the wholesaler provides a pre-paid card service, whereby fixed-value cards are sold through retail shops or other outlets, the remaining credit on the card has to be checked before completing the circuit and again during the call. The functionality to support this is often provided at the switch, theirs or the network operators. 2.6.2 Resellers and Virtual Carriers
The wholesaler may in fact own no network infrastructure at all. They may be acting as a reseller or even as a virtual carrier, whereby all of their network resources are provided and owned by other operators. We will have to recognise their traffic, either from the CLI, the point of origin of the caller or the called number, and provide a file of CDRs to the wholesaler as part of the billing detail. The business of servicing a Reseller can follow a number of similar models, for example: ! ! selling bulk minutes (often over nominated routes) for competitive retail sale selling data capacity, in terms of megabits or gigabits per second, perhaps between specified access points or nodes or for specific time periods in the day leasing specific lines or circuits or set portions of larger-capacity trunk connections (e.g. a satellite transponder, or a fibre pair of an optical cable).
The implications for billing are that invoicing refers to the contracted register of services per customer. Charges may be calculated according to the contract rather than using a published tariff. The rating factors may include the routing involved, the prevailing price (that may be a variable) or the actual usage. 2.6.3 Basis for Billing Wholesale
Wholesale billing may comprise line rental or capacity rental (e.g. leased circuits, satellite transponders or fixed transport capacity), not necessarily with charges for actual usage. For dedicated connections, usage is often not considered relevant. The price we charge the wholesaler can be based on anything from a very simple formula to complex billing algorithms, for example:
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! ! ! ! ! !
Flat rate, fixed amount per month Discounted variable rate, based on standard retail factors (time of day, exchange pairs) Rated individual CDRs, charged at wholesaler-specific rating factors A currency multiple of the total number of minutes or megabytes per period Variable rate, based on quantity thresholds Fixed margin over transport and/or routing cost.
Except for the simplest formulae, we will need to process CDRs generated on our network. We have to recognise CDRs that belong to the wholesaler, whether they will be passed to the wholesaler or not. Calls that we carry on behalf of the wholesaler have to be regarded simply as traffic on our network, since we cannot bill the end-customer on a retail basis. If it is our last mile and the caller is also our customer, we can bill the customer only for rental of the last mile access to our network, and not for the call. 2.6.4 Wholesalers Retail Billing
How the wholesaler bills their retail customer will depend on their business model we will only be concerned with our contract with the wholesaler. What matters to us is whether the wholesaler will require for that purpose a file or data feed of rated or unrated CDRs generated on our network. The wholesaler may bill their customers a number of ways: ! Pre-paid access cards this assumes an access control mechanism at their customers point of access to the network to check the card when the call is placed. It will also need to rate the calls in real-time in order to stop the call when the customers credit expires. Using their own CDRs they will use their own billing system. We will need to use CDRs from our network to generate the wholesalers invoices. Using our CDRs we will pass a file of CDRs to their billing environment. The CDRs may be rated or unrated, depending on whether they require reprocessing using their own retail call rates. Quality of Service Billing
! !
2.6.5
In data services, ATM for example, there may also be a contracted quality of service (QoS) component to the charge. In this case a discount is applied if the service level achieved is less than the level agreed in the contract, typically measured in terms of actual data transfer rates and error levels experienced. In such cases, a record of the measure for the billing period has to be provided to Billing, in order that the correct discount can be applied. However, one challenge is to be able to measure QoS automatically and accurately most often it is derived as a result of manual assessment. 2.6.6 Interconnect for Wholesalers
We also have to take into account what happens to interconnect costs and revenues when deciding the pricing basis to the wholesaler. All CDRs that are generated for the wholesalers customers have to be examined for any interconnect cost or revenue potential. If the call terminates on another network, we are liable for the interconnect charge and will seek to recover it from the wholesaler. If the wholesalers end-customer uses our network to get to the wholesaler, and the call terminates on our network, we should be able to recover interconnect costs independently of the wholesalers bill for their
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customers access through our network but this may be taken into account in the contract. Innovative pricing models currently being offered include a fixed margin over cost option, whereby the price is based on our costs. Here, we clearly need to determine any interconnect charges we incur. Hence to bill the wholesaler, we need to rate the CDRs for interconnect charges, possibly add a call set-up cost element, and then add the agreed margin, thereby using both the interconnect billing system and the wholesale billing system (if different) for this process.
2.7
Accounts Receivable and Collections
There should not be much confusion between billing and accounting, but occasionally some of the IT people have been known inadvertently to blur the distinction. 2.7.1 Accounts Receivable
Once a billing system has computed the total amount to be invoiced on this cycle for a given customer, details have to be passed to Accounts Receivable (A/R) so that the collection of monies due can be prepared. According to the customers preferred method and date of payment, A/R will set up a collection file, containing details of the Direct Debit or Credit Card transfer for each account. The amount will be collected automatically on the specified date, unless the customer raises an objection before the collection file is despatched. If the customer is to pay by cheque, then one has to wait until it arrives, goes through Remittance Processing and is presented to the bank for clearance a few days later. In the event of an enquiry by the customer, the CSR first clearly identifies the customer (for security reasons), before revealing their account details. If the CSRs look in A/R for the debtors ledger to determine how much money that customer currently owes, then all is well. If they look only in the retail billing system, they may overlook other debts owing from wholesale or non-telephony sales recorded in other billing systems. It may also be that the billing system assumes the debt is collected, on the basis that A/R is a separate system. A/R generates the collection file and assumes that the debts will be collected, whereas the bank might have other ideas for some account holders. It all depends how pedantic one chooses to be in answering the enquiry, and in such matters, accuracy is best. 2.7.2 Collections
The objective of the Collections process is to bank the highest possible percentage of the amounts billed. Why not all of it? Well, unfortunately, not everybody actually pays. 2.7.2.1 The Cheque Was In the Post
Traditionally, payment was made by cheque sent in the post, or by cash deposited at the bank. If payment was not received within a specified number of days after due date, the collections reminder process was initiated. This involved sending increasingly strident reminders to the customer in the hope they would remember to send in the payment. If nothing happened, there was the option of sending the debt to an external collections agency specialising in applying pressure, always able to come to an arrangement if the customer was in temporary difficulties. Finally, there was the ultimate option for legal proceedings and other expensive means of indicating extreme displeasure at not receiving the monies due.
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2.7.2.2
Automated Collection
However, the contemporary process is more likely to include a very high proportion of automated electronic banking transactions. When the customers invoice is raised, a record is generated by the billing system or from Accounts Receivable (depending on the systems configuration) according to the customers preferred method of payment. A file of these records is generated and sent to the bank or credit card agency, just in advance of the due date. The bank then transfers the requested funds from the customers account to the providers account, and all is complete until the next billing cycle. Unfortunately, not all customers have sufficient funds, so a number of the transfer requests are rejected by the bank. The bank may automatically re-present those a few days later, but in many cases the request is returned to the telco. The traditional collections reminder process can be followed to some extent, depending on the banks rules regarding automated transactions. In some cases, the amount can be collected next cycle, provided the customer is notified in advance or it may be necessary for the direct debit instruction or credit card mandate to be renewed. 2.7.3 Restricting Access
One way of encouraging reluctant debtors is to restrict their access to the network. This can be introduced in stages, perhaps first by inhibiting international calls and premium rate services, later by interrupting calls, finally by suspending the service completely (except for emergency calls). Normal service would be resumed as soon as payment is received and we would probably be a little quicker to introduce restrictions were it to happen again. In repeating patterns, we may ask the customer for a deposit as part-payment in advance. It depends on how valuable that particular customer is considered to be, or how exclusive our service is. Local custom may play a part in some Asian countries the bill is habitually not paid until the service is actually cut off, so the provider has to allow for this and treat it as normal. One European mobile operator initially sends out text messages every time a late-paying customer tries to use the service, reminding that the bill is overdue and with some success. Another common technique is to redirect all outgoing calls via the call centre, so that the customer can be firmly but politely reminded to pay up. These restrictions are, in effect, a firm but courteous reminder that the debt must be settled.
2.8
Revenue Assurance
The purpose of the Revenue Assurance process is to minimise revenue loss. The Revenue Assurance process is a methodical inspection of every step in the end-to-end billing process to ensure each step is performing correctly, together with the instigation of cost-effective remedies where errors are found and correction is feasible. Revenue Assurance seeks to review everything that contributes to Billing, the reference data, the transactions, the calculations, working practices and systems, to quantify any leakage and determine its source. Given that Billing is complex, the Revenue Assurance process has a lot of ground to cover10.
10
See: PBI Media Report 2001, Successfully Managing Revenue Assurance;
Margin Management Briefings 2002 applying Revenue Assurance to your business.
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Fig.15 The Role and Scope of Revenue Assurance
Customers Marketing
Collections
Product Assurance Credit Management
CRM Policies
Performance Measurement Billing Assurance Fraud Management
Products & Services
Customer Services
Networks
Billing
Mediation
Source: PBI Media Ltd 2.8.1 The Causes of Revenue Loss
Revenue losses or leakage can potentially occur at every step in the billing process. A succession of small errors and processing flaws can compound together to result in the enterprise receiving less revenue that they are justly entitled, on average amounting to around 10% of legitimate billable revenue. Another aspect is fraud, the intentional avoidance of payment for use of your services. 2.8.2 The Objectives of Revenue Assurance
The objective is to maximise received income for the enterprise, to ensure that, as far as possible: ! ! ! ! All customers are legitimate entities with impeccable credit ratings All usage is captured and billed correctly All bills that are sent out are completely accurate All customers due to receive invoices do so
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! !
All revenue is collected from customers when due All fraudulent access and use of services is eliminated.
Failing perfection, we compromise by seeking to achieve the optimum outcome, a tradeoff between commercial risk and practical reality. Revenue Assurance will establish and maintain techniques to ensure, as far as possible, the integrity of the end-to-end billing process. In practice, Revenue Assurance is a continuing battle against a series of minor failures and accidental errors, faulty equipment and software bugs, oversights or weaknesses in the ordering and billing processes. In effect, the objective is to minimise damage. A carefully-designed series of process controls has to be implemented that trap errors as soon as possible, highlighting when data is dropped, customers are overlooked, revenue is not collected, and so on. The RA process is one of investigation and analysis, to ensure the highest proportion of legitimate revenue is being billed correctly, and that the minimum is lost through bad debt or fraud. 2.8.3 ! ! ! ! ! ! Validating Accuracy Accuracy and completeness of all billable event records from any source Correct computation of all billing transactions The correct delivery of all products and services Consistency of billing with contracts and tariffs Fraud is reduced and maintained at acceptable levels Effective Accounts Receivable and Collections procedures.
The primary tasks in RA processes are to ensure:
One of the outcomes of Revenue Assurance is the identification and elimination of weaknesses in the end-to-end process. This can be caused by ineffective financial or process controls, the occasional misinterpretation of business rules - or by management not exercising enough attention to detail, resulting in poor execution of the process. Another source of weakness arises from products that are available but are not selling in sufficient numbers, or give higher than average levels of operational problems or complaints. Dealing with problems incurs unwanted extra costs, from staff time dealing with the complaint to the cost of warranty claims or repairs. 2.8.4 Fraud
What presents an ongoing problem for the provider is the F-word, Fraud. The definition of Fraud encompasses all access and use of network facilities where it is the deliberate intention of the user to evade payment. It may be only theft of electrons and it is hard to maintain an inventory of them but it is a criminal activity. If the customer has not paid, does the provider know whether the customer is bona fide or not? They have to balance the chance of collection problems against the potential revenues, performing an amount of checking before the service is first made available whatever is considered reasonable.
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The cost of fraud prevention should be in line with the amount of revenue lost. Losses should not be seen simply as revenues that cannot be collected, bearing in mind that there are real costs associated with fraudulent interconnect, premium rate or shared cost calls. A load on the network from fraudulent use might also interfere with real customers quality of service. What should be avoided (this has allegedly occurred) is making a capital investment to upgrade network capacity, only to find it is mostly used to support fraudulent traffic. The accepted wisdom is to make life as difficult as possible for the defrauder (single user or large group). It also mean working with your competitors, by sharing information, in order to detect and prevent fraud by criminal organisations which operate on a national or international basis. 2.8.4.1 Subscription Fraud
The most common form of fraud is subscription fraud, whereby the subscriber gives false details when registering as a customer, never intending to pay. Clearly there has to be some form of customer validation procedure in place when registering new users. This will include external reference checks, for example: ! ! ! Electoral rolls for domestic consumers Company registration checks for incorporated entities Credit checks for business users.
In addressing leakage through fraud, the provider has to comply with legal constraints, even if the defrauder does not. While it may be allowable to deny a connection to a suspected defrauder, actually cutting off the call in mid-call may not be, depending on the local jurisdiction. 2.8.4.2 Premium Rate Service Fraud
The principle of Premium Rate Service (PRS) is that the carrier and the PRS provider share the revenue for all calls to the PRS. This means that the more calls to the PRS, the more revenue for the PRS and it is the carrier that has to pay, even if the call is itself fraudulent. Hence, if the PRS provider can somehow arrange for a large number of calls to itself, preferably that someone else has liability for, then it is a useful revenue stream basically, from the carrier. One technique used by the fraudsters was to establish a fraudulent connection, then identify businesses with PBX equipment, often using auto-dial PCs. After hours, they would dial the PBX number, hunt for the back door dial tone used for remote diagnostics and software upgrades, then dial out on that number to the PRS. The hapless business was then liable to pay for the calls on one occasion amounting to over $160,000 in one weekend and the fraudsters would claim innocence as they invoiced the carrier.
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Fig.16 Example - Premium Rate Call Fraud
Autodial PCs
PABXs
Honduras
Mexico
etc
PRC Services
2.8.5
File Controls
The major purpose of process controls is to ensure that all work is accounted for, whether processed correctly and fully, or whether rejected or discarded for some reason. The simplest controls are those that count CDRs or billable events, aggregate total minutes or megabytes and reconcile them within each executable program. What is then required is to check that one programs output is input to the next program in the series. This may be made more difficult if adjacent programs are run on different cycles, for example if this program is run daily and the next in series is run ad-hoc or at period-end. Additional controls are then required of numbers and names of files processed. If a data error is found and corrected, then the relevant program has to be re-run. The controls must allow files to be recreated for this purpose, but not for an input file to be processed twice in the same run this would quickly lead to duplicate billing and customer complaints. 2.8.6 Process Controls
There are other effective means to improve revenue collection, mostly operating on the same principles as Quality Assurance a series of steps that constantly check what is being done back against what was actually intended. This means that every process that somehow leads into Billing has to be self-validating while the process is being executed. For example, the Product Development process should involve nearly all departments of the company, including Network management, Marketing, IT and Billing, Finance and Accounting this is in order to ensure all buy in to the new product and set out
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implications, costs and development readiness timescales11. If any one party is not a signatory to a new product plan, then there is no assurance that the product will emerge as intended. Additional process controls can be used to determine and monitor the causes of problems in processing CDRs. The Message Investigation unit the functional group within Billing that analyses and corrects faulty or rejected CDRs should report the incidence of errors of different types. In this way, further investigation nearer the suspected root cause can take place such as within Rating tables, Mediation, or at a particular suspect switch.
11
See PBI Media 2000 Report: Marketing and Billing New Products (for step by step process plan)
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Billing Systems and Billing Data
This section is concerned with the main features of IT billing systems, the primary software components and the data sources required for Billing. Technical and architectural aspects have been avoided, because presenting the full range of options is beyond the scope of this book. At the time of writing, there are hundreds of system vendors offering many times that number of current billing products, for different platforms, capabilities, specialist applications or performance, so this book will deal in generalisations.
3.1
System Components
In the larger telecoms operator, it is likely that the billing system will comprise several discrete components, often from different vendors - and even different billing systems for different products. In theory, this allows best-of-breed system components to be selected and integrated into the whole solution, but it might be equally valid to acquire a fully-integrated solution from a single vendor. Fig.17 Components
Customer Care Order Management Fulfilment Trouble Tickets Number Management Service Activation Provisioning Account Activation Work Force
Credit Management
NMS
Billing System?
CDR Collection
Mediation
Rating
Billing
Bill Production
Other Sources
Fraud Management
Accounting
Collections
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The complete billing environment will include the following functionality in its components: ! ! ! ! ! CDR or Event record generation part of network switch or hub system capabilities, or as a by-product of other processes (e.g. installation tasks) CDR file collection by file transfer from the switches, sometimes performed by the Mediation system Mediation specialist software to filter and reformat different source format CDRs to a common layout Rating guiding CDRs to accounts and calculating the basic charge for each event Billing calculating recurring charges, adding one-time charges or credits, aggregating event charges and calculating product- or account-level discounts, relevant taxes and invoice totals Bill Production specialist invoice printing or itemisation file media preparation systems Collection Accounts Receivable systems and late payment follow-up procedures Number Management control and allocation of CLIs.
! ! !
The overall environment will need to include other major applications that are integrated with or dependent on billing, such as: ! ! ! ! ! ! ! ! ! ! The Call Centre the interface between the operator and the customer Customer Care systems, for enquiries, complaint and problem tracking, contact history and Order Management Call management using Automated Call Distribution (ACD) and Computer Telephony Integration (CTI) systems Document management and CSR information support Service Activation to control and manage network access transactions Fraud management intelligent mechanisms for fraud detection and alert Work Flow management systems to deal with process hand-offs between departments Work Force Management, for the allocation of engineering resources dealing with installation and servicing issues Inventory management, covering the supply and installation of equipment Change Management and IT implementation management systems to track and maintain system configuration information in a dynamic environment.
The actual configuration for any one type of enterprise is not pre-ordained, but is predicated by IT strategy and the systems architecture.
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Fig.18 Architecture
ACD, CTI etc
Call Centre and SOM
Fault Management Fulfilment
Work force Management
Middleware Billing
Service Activation Accounting
Data Warehouse
The configuration will depend on prevailing business requirements, budget, timetable, special process or pricing needs, vendor competencies and political necessity. Generally though, all the functions will be needed in one component or another, in one form or another and it is up to IT to resolve situations where duplicated functions exist or missing ones are needed. Selecting the appropriate mix goes right back to understanding the business strategy and process support requirements for the enterprise.
3.2
Billing Data Sources
In order for the end-to-end billing process to be able to perform correctly, data has to be collected from a number of sources. It is essential the data is accurate, or the resulting bill can be challenged meaning that the customer can legitimately delay payment until the inaccuracy is resolved. 3.2.1 Customer Account Data
In order to send the customer an invoice, you need to know at least their name and billing address, and the customers preference for payment method. If any kind of automatic collection is to be used, such as direct debit or credit card debit, then relevant details are also needed of their bank (sort code, account name and number) or credit/debit card (provider, card number, expiry date and sometimes a security code or card issue number). With this data, a file can be assembled and sent to the bank or clearing house to arrange the funds transfer on the appropriate due date. For corporate accounts, a larger data set is needed. This will record the companys internal structure including all the different physical addresses or sites where service is to be delivered, such that itemised bills can be presented in the order that reflects the customers reporting requirement. As long as the itemisation is presented by CLI or extension suffix, then it is a relatively straightforward matter. However, if the customer
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requires sub-totals, for example by Cost Centre, then Billing has to recognise what constitutes a Cost Centre from the data in every CDR from that customer. In those cases where the Cost Centre is not implied in the CLI, (for example, when a CLI could be shared by several cost centres), then the customer has to enter the cost centre code, either by an automatic PBX function or on the keypad of the handset, before entering the dialled number string. He must do this for every call. Fig.19 Customer Hierarchy
Invoice for rest Company Invoice for Mfg

North office
Group
Cannot be Invoiced for subsidiaries
Company
Company
Invoice for Sales

Central office South office
Sales
Mfg
Sales
Mfg
Sales
3.2.2
Product Pricing Reference Data
In order to calculate the price of a call or connection, the billing system must have access to product description and pricing reference data. This data starts with an entry in a product table for every product or service, so the service can be presented clearly on the invoice. Pricing reference data comprises a number of entries in a price table, one for every instance of every pricing variation for each product, for each occasion that a new variant is introduced. It will also show the price for every combination of billing factor values (or ranges of values) within each product. 3.2.3 CDR Generation
In contemporary digital networks, control and routing of calls is managed by relatively conventional computer systems. These computers are usually high-performance variant PCs running specialist network management software programs that are responsible, among other things, for call set-up, call routing and monitoring. The programs also
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generate CDRs for each connection instance or Event, and it is the CDR that is the fundamental source of data for usage-based billing. When a caller starts to make a connection, the switch software assembles the dialled string of digits and caller information to format a CDR. The Call Detail Record is created when the caller finishes dialling, and is updated while the call is in progress. When the call ends,(for whatever reason), the CDR is written to a stack of CDRs for completed calls and held awaiting the next step. If the call continues for a significantly long time, then one or more in-progress intermediate CDRs may be written out during the call. The typical CDR will usually include at least the following basic data items: Calling line identification (CLI), also known as the A number representing the party that placed the call Called number (or B number) the party receiving the call Start date, time and end date, time of the call The type of call (voice, data, fax, operator connected, etc) Duration of call, usually to the nearest part-second How the call ended, whether normal (A or B hanging up) or not (service break) CDR identification number, a unique tag for each record Routing information Identification of the switch or hub that generated the CDR. There will be other data items as well, but the above lists the major items most commonly used for billing. 3.2.4 ! CDR Stacking and Collection The Network Management System (NMS) sends a polled request to the switch for the contents of the CDR stack. The data is transferred as a data stream to the NMS computer, where CDRs are formed into a file. This will be a standard sequential or text format file with simple control totals (number of CDRs, number of minutes or megabytes involved in those calls or connections). These files are held ready for collection for the next stage in the process, Mediation. The stack reaches a configured limit, expressed as a number of CDRs or a total data size. When the space available for stacking CDRs overflows, data starts to be lost. The switch is unable to save CDRs beyond this capacity, and rarely is configured to save event data on local disk it is usually too busy managing calls.
The CDR stack grows until one of two events occurs:
If instructed to do so, the switch software will generate CDRs for any or every event or incident on the network, according to the values set for its configurable parameters. Because the stack of CDRs may include records from this superset of events rather than the subset of simple call events, the term System Message Detail Record (SMDR) is sometimes used (as well as Event Records) to describe the generic event record at this stage. The extra records provide a valuable information source regarding intra-network call routing, polling incidence, traffic congestion and faults. In this way, the SMDRs become a major input to network engineers and management for capacity planning and network problem resolution.
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3.2.5
Recurring Charges
From the earliest days of telephony, it has been customary to charge customers for the availability of the service, regardless of whether they actually use it. Initially they were charged a subscription fee, giving rise to the term subscribers rather than customers. The revenue was required to offset the heavy investment in lines and equipment and this fee still applies, though often termed an access fee or line rental. Most customers will thus be billed a recurring charge, levied on a periodic basis (typically monthly or quarterly) regardless of the nature of the service.
Billing is required to look up the charge based on the type of service contracted. This will tend to change only occasionally (e.g. being updated to allow for inflation), so billing will only have to calculate minor adjustments due to the service starting, changing or ending part-way through a billing period. 3.2.6 One-Time Charges and Credits
Where high-capacity voice or high-volume data services are provided, there is usually an equipment component involved in service provision. This might comprise, for example, installing a Private Branch Exchange unit (PBX), a router or other Customer Premises Equipment (CPE). Depending on pricing policy, the operator may choose to charge for the work and/or the equipment involved, such as for site surveys, engineering installation and commissioning, or the equipment itself. This situation will give rise to a one-time charge to the customer, meaning that the charge is not repetitive. Such charges are often calculated manually, external to the billing system unless an internal menu of pre-defined, standard fees or equipment item prices already exists for use. Raising the appropriate charge is usually one of the last steps of the engineering work scheduling and execution process, although the value of the charge may have been negotiated during the order management process.
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3.3
Mediation
In the average network, there will be a number of switches, and these will have been acquired over time as the network expanded. Even if they were sourced from the same vendor, it is quite likely that different versions or even different types of switch were supplied. With each new version, the vendor is also quite likely to have introduced new functionality or new facilities for control or management of the network. Hence there is a similar likelihood that the event records generated by the switch will incorporate different data elements and thus be a new format record. Mediation sits between the network and the rest of the billing system components, to insulate billing from the impact of changes to CDR formats, and from the need to deal with records generated for management of other non-billable network events. 3.3.1 Selection and File Controls
One of the primary functions of Mediation is to be able to amass and process CDRs from a variety of sources, into a common format suitable for processing by the next step in the billing chain. CDRs can be generated on the network according to run-time parameters set by the NMS, by all the different types of switch and hub equipment. CDRs can also represent all the different types of call or network transaction that occur, so records will be presented in a wide range of formats and layouts. The first step in mediation is to validate the file controls for each of the files transferred from the NMS. An additional external control is also needed to ensure that all files have been transferred. Records that represent billable events are separated out from the others for further processing. Non-billable event records are usually sent to other systems for analysis, and control totals are maintained accordingly. 3.3.2 Validation and Re-formatting
The format of each CDR is examined. Every CDR is checked for completeness and individual fields are validated to ensure the values fit within the ranges defined for that type of CDR. Records that have faulty or unrecognisable contents are set aside for manual scrutiny by Message Investigation personnel. If there is any problem, the CDR is rejected for review, correction and resubmission as appropriate. Sometimes the whole file is rejected, as the safest means of ensuring the data sent to Billing is complete and correct. The mediation system takes validated CDRs and standardises the format to meet the requirements of the next steps of billing. This involves both field sequence and dimension changes, and often includes translation of contents from the original set to the value range set expected in the rest of the billing suite. 3.3.3 Consolidation and Duplication: Mediation Rules
The next stage is to ensure that the number of CDRs handed to billing is correct and consistent with the number of calls detected. For example, with a very long call there may be a number of intermediate CDRs generated on the network, but it is in effect only the last that should be used. Mediation therefore has to discard all the earlier CDRs in the set. Another cause of duplicate CDRs arises when more than one switch generates a CDR for a given connection as it transits the network. Mediation has to recognise the uniqueness of each call and select one CDR for it. Another mediation function occurs with free-call and shared-cost calls. In these cases, it is generally necessary to create a duplicate CDR, one for the caller (charged at zero rate or at the callers part of the shared rate) and another for the recipient, the party that is
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paying the other share of the call charge, usually with the A and B numbers reversed. Having a duplicate also ensures that both parties will see the call on their invoice itemisation. It is generally not desirable to send duplicate CDRs to Billing. Apart from the cases described above, it is a fair guess that duplicates mean that some form of error has occurred, perhaps from accidentally re-processing a CDR file from a switch. In older networks such as analogue mobiles, a duplicate caller identity could mean that an attempt at fraud had been made with cloned SIM cards. To detect the duplicates, Mediation lays out as many CDRS as it can in the computers memory and scans for the key signs of duplication. Any unexplained cases are selected out for further investigation. The detailed functionality of Mediation is governed by a set of rules that are tailored for the needs of the enterprise and entered as program parameters to the mediation system. Many of the rules are concerned with record formats and data sources, and how to crossmap data elements from the input CDR to the format needed for billing. Others define, for example, how to check file controls or dictate how to recognise and process special case CDRs such as free calls. Maintaining the rule set is an important part of billing accuracy.
3.4
Rating and Pricing
Ordinarily, rating systems are mostly concerned with two primary functions: ! ! Guiding the call to the account responsible Calculating the undiscounted price of an event.
This has to be performed as quickly and efficiently as possible, noting the generally massive volumes of data that have to be processed. 3.4.1 Guiding and Account Identification
Having conveyed a call across a network connection, it is desirable to know to which account the usage charge should be sent. This can in most cases be worked out from the A number, by looking up customer service records in the billing or rating database. The database records the CLI for each customer (for corporate customers, perhaps many CLIs or a range of numbers), cross-referenced to the account to which the calls should be charged. Alternatively, it could be a shared-cost or free call event. In these cases, Mediation and Rating between them have the task of guiding the call charge to the called party (free-call) or to both (shared-cost call). For residential customers, knowing the account number is likely to be all that is needed at this stage. For corporate customers, however, there may be a need to allocate the call to a cost centre or sub-account to reflect their business structure. The CLI or even the calling extension can be used to determine to which of the customers physical sites the call belongs, allowing the charge to be allocated to that site. With some business customers, it is up to the caller to specify a cost centre for later bill analysis purposes. An extra sequence of numbers is dialled as a dial code prefix for each call, before dialling the called number. The prefix is entered using the handset keypad or perhaps automatically by software in a smart box or their PBX. This extra data is recognised by the network switch and is recorded as an extra field in the CDR. The billing system then uses the code to allocate the charge within the corporate account. The event may alternatively be related to installation or purchase of equipment, in which case the A number is meaningless and an actual account number is used (indicated in the type of event) with a product or service code that may be used to determine the unit price. Guiding is then given by the account number.
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3.4.2
Rating
Once the Event Record is guided, any customer-specific contracts can be retrieved and used in the pricing. This somewhat depends on the design of the software being used it may be that normal rating is used for simplicity and is subsequently overridden during the billing process. A number of rating factors may be parameter to the rating calculation, depending on the type of service and the tariff or price plan being offered. Fig.20 Rating Voice and Data
Geography
Calling and Called Numbers, Roaming Start / end times, special dates
Route, Carrier, Network
Time
Weekday / Weekend
Volume
Duration Direct dialled, operator connected, reverse charge, etc
Megabytes / Packets Quality, line speed, Error rate, Committed Information Rate
Event Class
etc
The primary drivers for rating are found in the CDR or event record data. These are factors used to search against entries in rating tables of prices for each type of service or product to find a match. The various rating factors determine which price is used in the set of circumstances defined by those factors. For example, if a call is started at a certain time of day, then that start time will fit into a time charge band (e.g. peak or off-peak), thereby dictating the rate to use for the call. The key data for rating tables will generally include the following elements: ! ! ! ! ! ! ! Service type Service instance * Distance charge band * Time of Day band * Unit charge rate (currency) Unit charge measure (e.g. 0.1 seconds, 10.0 kbytes) Connection charge or call set-up fee
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! ! ! !
Minimum charge Maximum charge Date and time that this rate is effective from Date and time that this rate is effective to.
The fields marked with and asterisk (*) include values that need to be extracted from other tables for each event record. For example, the Distance charge band may be derived from the two exchange codes of the calling and called numbers; using the values from the CDR, the exchange pair is found in a table of valid pairs giving the resulting distance band prevailing on the date and time on which the call was started. Once guided and priced, the event records are filed for processing at the end of the billing cycle for that account. 3.4.2.1 Data
Data calls are classified differently because the profile of a data call is different to a voice call, featuring contiguous high-rate transfers in either direction, interrupted occasionally. If data were transmitted by voice, it would be analogous to a person yelling continuously without pause until they ran out of breath, possibly immediately followed by another yelling in the other direction. Usually, data calls are set up for connections between computer systems, and hence may be of varying duration from momentary to semi-permanent. High-performance data circuits use different equipment and connection protocols, hence this cost element is taken into account when determining the pricing formula. What matters for charging purposes is the amount of data transferred across the connection (measured in kilobytes or megabytes) as well as (or instead of) the duration. Other factors include the transfer rate (faster is more expensive) and quality of service in terms of the likely or actual error rate during transmission (perhaps taking error detection and correction facilities into account). For data calls, the CDRs generated therefore have to supply the extra details: ! ! ! Amount of data transferred Transfer rate or speed Quality of connection
Because connections can extend over long periods, intermediate CDRs are usually generated (e.g. every ten minutes) particularly useful if the connection breaks at some point so that the customer can at least be charged for the usage up to the nearest intermediate point. On the other hand, even if the call terminates normally, the customer will expect to be charged once for the whole call, so the billing process will need to aggregate the interim CDRs into a single billable event. 3.4.2.2 Other Usage Events
In this category are all events that might not be classified as calls or data connections, but are potentially billable, and potentially at different rates to normal connections. These events include: Call Forwarding; Recording or retrieving a voicemail message; Sending a fax; Calling the helpline; Directory Enquiries. In many cases, the provider may choose to bill at normal connection rates, or at premium rates (perhaps for added-value services such as helpline calls), or they may choose not to bill for these events. Unless these events are priced before being sent to Billing, there needs to be a corresponding entry for each type of event in the pricing table showing the unit rate.
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3.4.2.3
Applying Rating Factors
In a simple example, assume the call charge to a conventional retail customer depended on the following factors: ! ! ! Distance called Time of day at start of call Duration of call (minutes and seconds)
The CDR would need to hold all the data values for these factors for each individual event instance unless default values were taken for any missing factors. To determine the unit rate, Billing has to match all the corresponding values in the pricing reference table. Charging for distance implies that the two exchanges involved (of the A and B parties) are recognised to determine a distance charge band. Billing would first determine the charge band by looking up a table of exchange pairs to match those involved in the call. If the two exchanges are the same, then it is priced as a local call, otherwise the matching entry gives the charge band. Then using that value and the other two factors, Billing examines the pricing reference table for that product and charge band, for the time of day factor (less than or equal to call start time) and then multiplies the given corresponding rate per second by the call duration. A very simple example of Rating is presented in the diagram. Fig.21 Simplest Rating Example
From CLI # / To CLI # / Start time / Number of minutes Call #1 Call #2 From the Rating tables: Exch A to Exch B / Before 17:00:00 / @ 0.010 per sec Exch A to Exch B / After 17:00:00 / @ 0.002 per sec Exch A to Exch D / Before 17:00:00 / @ 0.025 per sec Exch A to Exch D / After 17:00:00 / @ 0.009 per sec Plus : Pricing variations for (e.g.) Originating Exchange; Terminating Operator; Type of service; Day of week; Special dates; Customer attributes; contract prices, Freefone / Premium Rate calls etc. Price 9.021 Price 8.119 From A / ToTo Bxx 15:30:27 / 15:02.09 Axx / B / / 15:30:27 / 15:02.09 From A / ToTo Dxx 18:53:02 / 15:02.09 Axx / B / / 18:53:02 / 15:02.09
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3.4.2.4
Rating Table Dimensions
If in the preceding simple example there were only 6 distance price bands, 4 time of day bands and only one product, there would be 6x4x1 = 24 entries in the rating table. This has to be examined for rating every CDR. There would also need to be the distance charge band table holding all valid exchange pairs (perhaps several hundred pairs) and the band corresponding to each pair (one of the 6 in this example). This situation would continue until a price increase was announced, when the price table size would need to double, depending on the number of new factor values concerned. Holding two sets of data allows billing to overlap the processing of existing CDRs against the old values with the need to set up the new data ready for use in time. It would also allow Billing to process CDRs against the correct pricing set applying at the time of the call, not at the time of processing. As additional factors become involved, then clearly the number of entries in the reference data table increases dramatically each time extended by the number of values (or value ranges) of the next new factor. Hence, considering in practice a likely range of products and services, the corresponding variables and value combinations, maintaining the table with a fully correct set of values becomes a continuous and demanding task. 3.4.2.5 Split Rating
In some cases, calls will span the start of a new time band, which leaves the customer open to being under-or over-charged, depending on the time. In some cases, shrewd customers would place a call just before peak time started, keeping it open during the day to reduce costs. So to correct this anomaly an operator would specify split-rate charging for calls, whereby a call starting 10 seconds before peak time would be charged for 10 seconds at the low rate and the rest at peak rate. If the operator applies split-rate billing to eliminate such discrepancies, then in effect that part of the calculation has to be performed twice (or more), once for each band, with the resulting call charge being the sum of the parts. 3.4.3 Rating Discounts
Increasingly, the computer intelligence to calculate per-CDR discounts is moving away from the billing engine and closer to the network. This means that rating systems often need to be able to access or hold more customer data than the CLI numbers, so that accumulated usage totals per CLI or per product per CLI can be maintained for discount purposes. This allows the correct charge per event to be passed to billing or to a Hot Billing output (discussed later) and for excess use to be passed to the Fraud management system for evaluation. 3.4.4 Pre-Paid Service Rating
There are several different types of pre-paid service, but the principle is that the customer pays in advance for a given amount of usage. While the call is being set up, the system has to determine if there remains sufficient credit to allow a minimum connection time, depending on the distance and time of day (or other factors) involved. The system can be anything from a call-box card reader working on much the same principle as with simple coin operation: pay first, flat rate per distance regardless of time of day, cut-off on expiry of credit. A pre-paid network service can also be based on an advance credit to a normal post-paid account (as when a deposit is paid before the service may be used), or with pre-paid mobile services, when a value-holding card is purchased at a retail outlet. In either case the system has to check the credit available either from the card or from an accounting database for a given account before connecting the call. Rating has to decrement the
available credit at a rate given by the normal prevailing rating factors, and this is usually performed in the switch software rather than as for normal post-paid services, post-call in a separate system component. 3.4.5 Regulatory Issues
The prevailing regulatory rules depend totally on the jurisdiction in which the call is made. The idea of regulation is to ensure a level playing field for competition, to ensure the incumbent is not able to prevent fair competition. The rate per call for a given distance may be set by the Government Regulator for the country concerned, or it may not. Mostly, charges are set in outline and then varied by competition, hence each operator will charge the same for terminating calls but competitively for transit. In one country, no regulatory rules were set regarding connection charges to the incumbent operators network from pay phones. The incumbent was able to set an interconnect charge to a competitor at the amount collected per call; the result was somewhat predictable the competitor had to withdraw from the market.
3.5
3.5.1
Billing and Invoicing Operations

Controls
Any financial system has to have controls, to ensure that all transactions are recorded and auditable. So, the typical controls include the following: ! For each CDR-generating switch in the network, the following totals should be reconciled to the corresponding numbers processed in each step of the billing process, usually, per day): o o o o The number of CDR files sent from each switch The number of CDRs held in each file The total number of minutes of usage held in the CDRs in each file The total value of rated CDRs in each file (this may arise from CDRs generated by other operators, or from pre-paid services where a value is computed by the switch)
The total value of revenue in invoices raised, by product or service, per billing cycle, compared to the total sent to the bank for automatic remittance collection (direct debit) plus that sent by other means (electronic or post) The total undiscounted value of calls rated, compared to the total processed in the billing system.
These totals give a measure of the extent to which CDRs are flowing through the system, but they must be synchronised to be useful operationally. Generally a significant number of CDRs cannot be successfully processed. The causes are many, such as: corrupt or incorrect data; file inconsistencies (where file control totals do not match file contents); CDRs which cannot be billed (guiding number not found, perhaps fraud or where a new customer is not yet set up in the billing database); no rating table data for this type of product or service; and other causes. The controls should therefore highlight where losses are detected. Mediation will routinely alter the total number of processable CDRs, for example: by consolidating interim or partial CDRs into one; by generating additional CDRs (for free-call or shared rate services, to notify both the A and B parties of their share of the call charge); by discarding CDRS according to business rules (such as zero-duration calls). Hence in comparing
control totals from different system components, it is important for operations staff to be able to reconcile like numbers. 3.5.2 Billing Cycles
One of the challenges facing billing operations is to level out the workload across the month. One way to achieve this is to assign a billing cycle to each customer account, whereby their invoice is raised when that cycle is processed. Enough cycles need to be set up to offer flexibility to the operations staff, so they can allocate billing cycles to processing days within a day or two of the preferred invoice date. Corporate customers tend to require their invoices to cover events up to the end of a month, so the majority of CDR data needs to be processed at month-end. Residential and smaller business customers tend not to be as concerned about the invoice date, so they can be processed when more convenient. 3.5.3 Bill Production
After the billing run, invoices are ready for the final stages of production. In the past, bill production implied a hefty print run, so large it would often be outsourced to a specialist printing company with high capacity equipment. Larger customers then requested that the detail of itemised calls and call charges should be sent on magnetic media (floppy disk or CD-ROM), with only the invoice summary sent on paper. At this stage of the process, it is necessary to record the invoice details in the accounts receivable system, for later collection from the customer. Use of paper as the invoice medium remains a legal requirement in many countries. Increasingly, however, customers are requesting their bills to be sent electronically by email or using other facilities collectively known as Electronic Bill Presentment and Payment (EBPP)12. This offers flexibility to the customer for call charge analysis (maybe by call centre, extension or location) or for abuse detection (out-of-hours calls, international or premium rate calls, etc). Furthermore, sending a file rather than paper reduces environmental impact as well as bill production costs to the operator. Extending the principle further, many operators and service providers are moving the CDR detail to a secure internet web site for each customer to view and download as they wish (incidentally, sometimes incurring a call charge in the process). This also permits the provider to offer CDR analysis tools as part of the service - a valuable aid for the customer in managing use of their telephony services.
3.6
3.6.1
Retail Billing
Aggregation and the Bill Pool
The first task is to select which accounts are to be billed at this time. By selection of a billing cycle for each account, it makes it straightforward for Billing Operations to choose the cycle, knowing the overall workload profile associated with that cycle. The set of billable CDRs that are ready for invoicing are collectively held in what is often called the bill pool. The bill pool contains all rated CDRs that are as yet unbilled, but may not all relate to the current period usually if they were delayed into billing for some reason in an earlier period.
12
See: PBI Media 2001 Report, EBPP The Market Opportunity; also EBPP vendor profiles
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For each account in the selected bill cycle, it is necessary to sort and total up all the rated CDRs, initially by product or service package within each customer account. This sort order to some extent depends on whether the pricing formula contracted with that customer includes a discount (see next section), or if the customer has a hierarchic account structure. Then it is necessary for the sort sequence to include product group, cost centre or sub-account levels as necessary. Aggregating usage in this way allows the period discount by product to be computed. Having assembled all the aggregation discounts for the account, the invoice contents can be calculated, including tax (VAT, GST etc) if applicable. If itemisation is required, then it may be necessary to rearrange the CDRs in the correct sequence for presentation. Generally, this will be in date/time order by product or service within service identifier (CLI), but clearly the customer may be offered an option to have the charges grouped according to some other sequence. 3.6.2 Billing Discounts
Thanks to the pressures caused by fierce competition in the telecoms market, the range of discounts and other incentive schemes being offered to customers are many and varied. In essence they fall into the three main types discussed below in this section, but the imagination of marketing and product management will produce others possibly unrelated to total usage, here raised as a fourth type. Fig.22 Discount Schemes
Free minutes 100% Tapered discount (applies to all usage) Tiered discount (etc)
Discount rate
9%
6%
3%
Usage level
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3.6.2.1
Tiered Discounts
This is the first basic type of discount, whereby the more the customer uses the service in the billing period, the higher the level of discount he receives. Thus for a minimum level of usage, the first tier, the customer might receive no discount at all (zero percent), then as usage passes the first threshold, usage thereafter is subject to (in this example) three percent, then six, and so on. The important distinction is that the discount applies not to the total but to usage after that point, up to the next tier threshold. 3.6.2.2 Tapered Discounts
This is a variation on tiered discounts, whereby as a threshold is reached, the level of discount entitlement reached will apply to all usage for the period. This is more generous to the customer than a tiered discount. 3.6.2.3 Free Usage
Most mobile phone users will be familiar with this type of discount, whereby a number of free minutes are allowed per period, depending on the price plan. What it amounts to is a tiered discount with the first tier set at 100% discount. After the threshold number of free minutes is used up, the discount is zero thereafter. Note that reaching the maximum number of free minutes may occur in the middle of a call, so the billing system must be able to split the discount across the threshold. 3.6.2.4 Friends and Family
The Friends and Family discount was a notoriously successful discount when it was first offered in the USA by MCI to their customers, to the extent it is now offered by most operators in return for either a small recurring charge or free for setting up the facility. Most fixed line customers will be familiar with the concept, whereby calls to a list of perhaps five or ten customer-specified numbers would be rated at a heavy discount, regardless of when the call was made. The billing system had to be able to store the list of specified numbers for each authorised CLI, and recognise CDRs for calls made to those numbers. The CDRs are then either grouped as a special call type to show the discount, or rated at the special price, depending on the billing system implementation. The other significance of this discount for Billing was that MCIs main competitors could not support the Friends and Family scheme in their billing systems. Consequently, MCIs offer remained unique (and hugely successful in attracting new customers) for several months while competitors IT billing systems were frantically updated to match the facility. This is another illustration of how essential Billing can be in countering competition. 3.6.2.5 Other Discounts
Marketing will create many special offers in order to entice new customers or to stimulate additional usage. There are much heavier loads on a typical network during the business day, so it has long been customary for operators to encourage non-essential traffic to be made during quieter periods. This was achieved simply by offering a much cheaper rate per minute for evenings and weekends this additional usage is particularly valuable to the carrier in off-peak periods when the network is by definition not busy. At those times, all additional revenue generated will be of benefit, assuming the costs of promoting the special offer are covered the cost of transmission and servicing of extra calls is very small compared to the revenue. Such discount offers are often not presented as discounts in the sense of a visible credit against the normal price. More often the calls require special prices, naturally much lower than peak rates, to apply over the defined routes or on the days or at the times quoted in the offer (an example of this could be an offer of: all calls to Australia half price on Christmas Day). What this means for Billing is that the rating of call CDRs related to the
offer has to be performed to the exception rather than to the rule of normal business, so the rating system component has to be more flexible than otherwise. 3.6.3 Bill Formats and Messages
Part of the competitive appeal of one operator against another can be the presentation and appearance of the bill. Choice of style, format and design can attract different market sectors, while different payment options and levels of detail can attract others. One means of communicating with a particular customer group is the addition of a marketing message targeted at that group. The definition of group can vary from bill cycle to cycle so that the message can vary from a simple seasonal greeting to targeted publicity to promote an upgrade offer for services used in that customer group. Choice of the customer grouping and the corresponding message of the day to present on the bill can become a powerful marketing tool. 3.6.4 Billing as the Differentiator
Information presented with the invoice can be a major factor in attracting and retaining customers. If a residential or small business customer, for example, has several lines (and thus several CLIs), it can be very useful to be presented with a single bill for all services regardless of the CLI from which it was made. A larger business may prefer to have calls itemised by cost centre or to have the invoice divided over several accounts.
3.7
Wholesale and Interconnect Billing System
The system components used to process Wholesale and Interconnect billing are often shared, since there is enough similarity in processing requirements. They will generally not be the same as those used for retail billing, because: ! ! ! The CDR data set that has to be processed includes CDRs that are not billed to retail customers Often zero-duration calls will be included, to account for the call set-up cost component that is not generally billed for retail The rating algorithms require a data structure based on routing as well as country pairs or remote network and exchange pairs, as well as on factors agreed in the individual contract We need to calculate amounts due for invoicing inwards and transit calls, and for reconciliation for outwards calls against the other operators interconnect invoice Wholesale bills may need to incorporate interconnect cost elements Internal accounting and reporting requirements reflect the bulk nature of wholesale and interconnect traffic Statements more often summarise traffic by route CDR volumes are very much larger per account than for retail customers. Interconnect
! ! ! ! 3.7.1
Interconnect billing is concerned with calculating the amounts due to be paid to and received from each of the network operators that our enterprise connects with. The CDR for interconnecting calls holds the routing in the form of a chain of codes representing the identifiers of each of the network operators involved. So, to calculate the amount due
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from or to each operator, we use all those CDRs which have an interconnect element to the call (i.e. originating or terminating on another network). Note that the set of interconnect CDRs will include: ! ! CDRs that are billable to our retail customers but not all of the retail CDRs, since many calls will remain on our network CDRs that are billable to our Wholesale customers but not all of the Wholesale CDRs, since it depends on how the wholesaler connects to or within our network CDRs that are only billable for interconnect such as transit or incoming terminating calls. Reconciliation Estimates
! 3.7.1.1
Unfortunately, we do not always know the full sequence involved in the interconnect routing. This is because our interconnect neighbours (or others further down the route) will sometimes mask out the routing data for commercial reasons. In those cases, we can only estimate call costs based on country pairs or network and exchange pairs rather than on actual routings used. Reconciliation is then based on matching the total minutes and total numbers of calls against the incoming invoice, together with a fair comparison of the amount invoiced against our estimates. It is of course important to synchronise the periods being reconciled. 3.7.1.2 Interconnect - Incoming and Transit
The CDRs we use for incoming or transit calls will be generated from our network node at the point of interconnection with the adjacent operator. We do not use these CDRs for retail billing simply because the caller is not our customer but we do need to add these CDRs to the set to be processed for reconciliation of incoming interconnect invoices. 3.7.1.3 Interconnect - Outgoing
The source data for outgoing interconnect usage is the same set of CDRs used for retail billing, together with the set of CDRs for outgoing side of transit calls. The rating factors are different to retail. The system will examine the code for the adjacent network operator (to whom the call was passed) and determine the settlement method, the rate for the distance concerned and any other rating factors. We may or may not know the entire route involved. Billing aggregates the rated CDRs by operator and settlement method for the route or destination concerned to await reconciliation against the operators invoice. 3.7.2 Wholesale
For wholesale billing, we have to identify which CDRs belong to the wholesaler. We may only need to process CDRs from a specific set of switches, according to the wholesalers network model. In other cases we may have to recognise the A number as being a wholesalers pre-selecting customer or even that the B number has a prefix of the wholesalers point of presence. CDRs for the wholesalers customers must not be processed by our retail billing. The CDRs will nonetheless be processed for wholesale billing purposes, to calculate the amount due from the wholesaler for use of our network. We may need to pass the CDRs to the wholesaler for them to be able to perform their retail billing function, depending on the agreement.
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3.8
Accounting and Collections
If the objective of the business is to generate profits, then the objective of billing is to generate complete and accurate invoices. The tracking of amounts due and received, the actual collection of money, of revenues due to the business, are the next steps in the overall process. Fig. 23 The Collection Process
Send Bill
Remittance Processing Send Reminder Call & Discuss Suspend Service Suspend Account
Fraud Management
Service Management
Legal Action
3.8.1
Accounts Receivable and Remittance Processing
The billing system will have notified the Accounts Receivable system of details of each invoice raised. On the appropriate due date, for those customers who have authorised it, a direct debit or credit card transaction will be sent to the financial institution concerned. Otherwise we have to wait until the customer pays the account by some other means, usually cheque or a bank transfer (initiated by the customer). If the customer pays by cheque, we have to have facilities to receive and process the cheques. The process is quite cumbersome opening the post, batching and validating the papers, allocating the payments to the account concerned, sending the cheques to the bank, etc. While smart paper-handling systems can alleviate the task, it is becoming an increasingly more expensive option and thus less attractive for the business, and is often outsourced to the bank (using a Lockbox facility). In this case, we have to wait for the bank to notify us what has actually been received. The business may offer residential accounts to be paid by cash or cheque into a bank or post office. In this case again we have to wait until we are notified by the bank that payment was made in this way, specifying the account numbers and amounts concerned.
3.8.2
Exceptions
Every remittance handling process has to allow for exceptions, for example: cheques dishonoured, accounts closed, under- or over-payments. The business cannot really be sure the account is paid until the time for processing and clearing the payments has passed, unless some sort of pre-authorisation is used (e.g. credit card remittances) or by pre-payment (as in pre-paid mobile services). 3.8.3 The Cheque Is In The Post
After 30 days from invoice date, the business should have received a remittance from the customer. A simple trawl through the ledger will highlight who has not paid, so the Collections process moves to the next stage. Generally, the first step is to send a reminder notification, but increasingly partly because of risk of fraud businesses are looking to more prompt ways to encourage the late payers. These include sending an email message, or for mobile services, an SMS text message reminder is sometimes used. Either way, we again have to wait for the customer to pay. 3.8.4 Bad Debts
At some stage after the reminder has gone out, the business has to decide that the customer is unable or unwilling to pay. Provided there has been no dispute about the invoice, we have to trigger recovery action that will become progressively more firm. One technique is to restrict the customer from making long-distance, international or premiumrate calls. Another involves altering the service parameters on the network so that outgoing calls are redirected to our call centre to insert a discussion with the customer regarding non-payment. Many companies rapidly reach a point whereby the customers service is suspended altogether, and the debt passed to a specialist debt recovery service, usually outsourced. After all, different persuasion techniques are needed to the gentler and more courteous customer care services the business normally provides to regular customers. In any event, details of the customer should be recorded for subscription fraud analysis and to avoid offering the same customer any service in future, except perhaps on a pre-paid basis. 3.8.5 Pre-Paid Services
One obvious solution to minimising bad debt is to bill the customer in advance. For fixed line services, this often amounts to no more than requesting a customer deposit or payment in advance. This is a simple way of managing the risk, allowing usage up to that amount and sometimes beyond. When the deposit is used up, monitored typically on a daily basis, the customer could be advised and perhaps the service restricted until the next billing cycle or the next deposit is received. For mobile services, the potential fallibility of the retail customer and high equipment costs requires a more rigorous solution. If pre-payment works for pay-phones, why not for mobile? The concept requires changes in the handset, the switch and the billing system. The first part was to link the stored value on a pre-paid card bought through any one of a number of different retail outlets to the handset and thence to the control software in the network. The next part required the switch to recognise the remaining credit on the card, to rate the call in real-time, to record remaining credit and to cut off the call when credit was exhausted. The third part required billing to ignore CDRs for pre-paid events but include them in the set for traffic analysis and capacity planning. Use of pre-paid services remains the biggest growth area in telecoms. It provides anonymity to the customer, no need for any contract or bill shock at month-end. It also
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helps the customer to maintain tight budgetary control particularly useful for students. To offset the handset costs, unit call prices are very high, so the provider benefits. 3.8.6 General Ledger
This is the repository for summaries of all financial transactions. As such, it will receive details of billings, analysed by product type or customer type or whatever the Chief Accountant requires. It will also receive details of remittances and bed-debt write-offs, usually with a systems interface from Accounts Receivable. It is probably not the best source of up-to-the-minute information about sales, cancellations, fraud levels and traffic patterns, but is a valuable source to review costs and historical revenues.
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4
4.1
Other Systems That Interact With Billing

Customer Care and the Call Centre
From time to time, the customer will want to contact your company. In many cases, the Call Centre (or Contact Centre) is the only medium used by the customer for communication with the company. Customers will wish to make contact whenever they want: ! ! ! ! ! ! ! ! To make an enquiry about a service To register a complaint about poor service quality or service interruption To place an order for a new service To upgrade existing products To change the parameters of an existing service, such as call forwarding, call barring or exchange barring To enquire about recent bills or account status To notify changes such as a new address or new bank details To compare your product pricing against a competitors.
The normal practice of giving support to a reasonably large number of customers is through a Call Centre, offering immediate response and a single point of contact. Customer Service Representatives (CSRs), or Agents, react to customer requirements with the help of on-line information, recording contact details and the nature of the requirement for further action if necessary. The process must attempt to resolve the customers question to the best result possible, in one single contact. This is not always possible, for example if there is a need to repair network fault or replace equipment. The CSR should answer the customers questions, attempt to complete the necessary action him/herself, or at least initiate corrective action by others that will resolve the problem and be confident that the back-up process will ensure that action is taken. 4.1.1 Billing and Accounts Enquiries
Having identified the customer, the CSR must be able to respond to the most common billing enquiries. These include requests for: ! ! ! ! Account status and amount outstanding Explanation of, or rejection of, one or more call charges on the detailed call itemisation statement Payment history details Temporary alternative payment arrangements.
A number of issues are important, the first being security. It is imperative that the CSR establishes that the caller is bona fide, otherwise there is a risk of confidential account details being divulged. The CSR must also have adequate enquiry mechanisms to allow quick identification of the customer (for example from their CLI, account number, name or postcode), and then have immediate access to the security code or PIN to minimise the risk of unauthorised access.
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4.1.2
Order Management
With the support of an Order Management system, the CSR can capture details of a new customer order, triggering the process steps to deliver the product or to commission service access. Ideally, the CSR support systems are integrated to the extent that details of the customer order are sent automatically to the various other system components dealing with fulfilment, service activation, billing and engineering installation, as necessary. Ideally, your order completion time should be sufficiently short that there is little need to allow for anything other than new orders or service cancellations. However, it is reasonable to expect the customer to change their order before delivery and activation is complete, so your process should specify the rules as to what changes are allowed without charge, or what charge should apply. The rules may get complex for product bundles and packages, but the process for dealing with various types of change (within reason) should be thought through when the product is being designed or at least, before the CSR encounters the situation in practice. In many cases, service cancellation within a specified time will incur a penalty for the customer, to offset the cost of sale, lost business or installation costs. Whatever charge is actually levied must be forwarded by some means to Billing to include it on the next invoice. 4.1.3 Contact History
This is all about establishing a good relationship with the customer. Every time a contact is made it should be recorded so that the CSR has a clear picture of the history of events from the customers point of view. Every order, invoice or payment should be recorded along with every outgoing marketing call, advertising promotion, brochure, every incoming call, enquiry and in particular, every complaint and who dealt with it, what was the outcome. This not only allows the CSR to know the sequence of events but also to assess the likely degree of customer satisfaction with our service perhaps indicating how likely the customer is to churn to another provider or to upgrade their existing portfolio of our services. The contact history additionally helps to monitor how CSR time is spent in the call centre, individually and collectively. It can also provide a possible indication of how competent individual CSRs are at dealing with customer problems. In order to keep the history viable, every contact must be recorded by the CSR (or by the relevant computer program for mailings). This has to be achieved as a matter of routine and as consistently as possible, with the CSR diagnosing the reason for an incoming call and recording different aspects of the contact if it progresses from one thing to another. It is quite reasonable for a complaint call to end up with the customer accepting the resolution and ordering a new service.
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4.1.4
Complaints and Fault Management
There are three reasons for recording faults reported by customers: ! ! ! To ensure every one is followed up, resolved wherever possible and closed To respect the customer for having taken the time and trouble to report it To be able to analyse problems statistically for trends or incident recurrence, to identify faulty equipment or software
The customer will want to be reassured that a fault or problem will be addressed and resolved with minimum delay and inconvenience to him. From a billing point of view, it is customary to grant some form of allowance or credit to offset the problem, assuming the customer has in fact been inconvenienced. A record of the amount credited, the date and reason must be passed to billing to appear on the next invoice or on a separate credit note on the next billing cycle. Depending on the size and degree of the problem, empowering CSRs to give a credit to a residential customer should be acceptable. On the other hand, a corporate customer may have negotiated a service level agreement with you, and will expect the terms of that agreement to be complied with including penalties for non-compliance. 4.1.5 Problem Resolution
Operations management needs to review reported problems periodically to identify common or recurring features or trends. Problem analysis may point to network equipment failures, intermittent service problems, software errors or poor information design. Hence the CSR should be instructed to categorise and record problems in a form that can be analysed later. It is useful to categorise first according to the source of error details provided by the customer and then according to the actual or suspected cause. A customer might report my phone doesnt work, a problem later diagnosed as a faulty handset or battery, misuse of handset keys, network congestion, poor reception, faulty network equipment, or even that his service had been suspended due to non-payment of his account.
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The information from this analysis will give long-term benefits: being able to detect and repair faults more efficiently; having an instruction manual rewritten more clearly (and in the customers preferred language); or, selecting a more reliable equipment supplier when the contract is due for re-negotiation. Another outcome may be a need to redesign the bill and the information presentation, if that is a frequent cause of customer questions. In the event of a service fault or billing error, it is wise to empower the CSR to offer account credits in recognition of the inconvenience suffered by the customer. This means that the CSR has to have an interface with Billing to record the details for inclusion on the next bill. On resolution of a major problem, the reporting customer might be notified of the outcome your prompt (and courteous) response could stop them taking their business to your competitor, so be grateful they informed you in time. 4.1.6 Customer Changes
It is important that the database holds the most up-to-date information about the customer, including mailing information, site locations, and bank or payment details. So when the customer contacts the company it may provide an opportunity to ensure the details on file are correct. However, there is a security aspect to consider it is not appropriate to change details without being quite sure that we have the actual customer on the phone. It could be considered embarrassing, an invasion of privacy, or even a security breach to send for example the customers invoice details to another party. Maybe there are calls itemised with the invoice that should not be revealed. For that reason, some kind of password or security code should be agreed with the authorised customer representative early in the process.
4.2
Call Centre Systems
In order to maintain operating efficiency, Call Centre systems have to be effective in managing call traffic. This involves allocation of work, database information retrieval and updates, and presentation of information to the CSR. Thus the CSRs provide service on a multi-server queue basis, theoretically minimising the time a caller is kept waiting. Although the smaller call centre will operate very successfully with simple Customer Care systems, the larger contact centre will find economies of scale from use of sophisticated call traffic management systems including ! Automated Call Distribution (ACD) allocates an inbound call to the next available CSR; also allocates outbound calls to suitably-qualified CSRs when traffic volumes permit Computer Telephony Integration (CTI) recognises an incoming CLI and where possible retrieves customer details for the CSR before connecting the call; also retrieves customer history for outbound call campaigns Interactive Voice Response (IVR) conducts an automated dialogue with incoming callers to pre-filter types of call to the most appropriate group of CSRs or deal with enquiries automatically through voice recording.
In general, these mechanisms will not directly interface with billing data as such. The IVR could in theory access invoice details or account balances to present an automated response to simple enquiries, but this is not normally a cost-effective approach. The customer database (or a copy) is used by CTI systems to retrieve customer names and service details, and by ACD systems for outbound campaigns. The link to Billing data is more tenuous unless Billing is the source of a list of candidate customers for the campaign.
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4.3
Product Management
The ideal product management process starts with someone in the enterprise having a bright idea, and reaches a climax when the product is launched and used for the first time by a customer. At that point, it is necessary for Billing to be ready to invoice customers for the supply and use of that product, at the published or contracted tariffs. Fig.24 Product Management Process
Concept
Product Design Consult Marketing Consult Operations Consult Finance Consult IT Department
Networks Customer Care Billing Bill Production Publicity Fulfilment Training
Iterate with modified design?
IT System Changes
Review
Unofficial process shortcut ??
Implement Rollout
Monitor Performance
There are several stages to the product management process: 1. Concept Someone has a bright idea for a new product, maybe even a competitor. The general shape of the product or service is formed with an idea of the target markets. 2. Market research A certain amount of intuitive and carefully detailed research has to be conducted to evaluate the likely number of customers, the potential revenues and product image that will be attractive. ! Prepare business case
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Based on the background research, the business case can be prepared and presented to management. The investment cost in terms of advertising and promotion, the internal infrastructure needed for product delivery, training and fulfilment is estimated together with assessed IT systems impact costs. The anticipated revenue spread over the case period sets the scene. 3. Design Product ! Specify product content, bundling, delivery and pricing A more precise assessment is made of the public face of the product, in terms of pricing and discount schemes, launch timetable, product content (new or existing features), marketing incentives at launch and so on. A detailed statement of capital investment or infrastructure changes necessary to support the product has to be prepared. 4. Consultation cycle: o Marketing Given the product design, does Marketing agree that the product should be launched as designed? Is there time to prepare the TV and media advertising campaign before launch? Operations Does Operations have the capacity to support the new product, in terms of Call Centre agents, systems performance and estimated process timings? Customer Care Is the Call Centre prepared to take on the extra product load in terms of staff training, information for customer enquiries, orders for upgrades or enhancements? Billing Are the individual programs in the Billing suite able to mediate, rate and guide the charges for the product CDRs? Can Billing operations accommodate the reference data load and testing of the new pricing structure and discount schemes in the lead time given? Bill Production Will the planned new promotion material fit into the production equipment? Is there time to arrange the artwork and printing of the brochures? Can the invoice layout support the addition of this particular product, at detailed and summary levels? Can the print vendor arrange to make the layout change ready and tested in time for launch? Fulfilment When the publicity material is printed, will it be ready for distribution at the Fulfilment house in time? Will there be an adequate supply of the free
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alarm clocks that are part of the promotion, ready in time? Is there a suitable packing and postage arrangement with the vendor? o Training Does the Training Department have enough information to prepare internal training presentations for all parties involved in the delivery and support process (sales representatives, CSRs, engineering, network operations, Billing, IT personnel, back-office staff, management)? Finance Are there adequate capital funds and cash flow available to invest in the new product for the duration of the project for its deployment? IT Department Are all necessary changes properly specified and understood? Can the changes be made and tested in time for Launch? How does the priority of currently approved changes in the pipeline affect this programme, and vice versa?
5. Review outcome, modify design and iterate the consultation process Having gained essential input information from the various departments, whether affected or not, it is now possible to evaluate whether changes need to be made to the product design, or to the proposed pricing, content or launch timetable, allowing for those changes? 6. Plan implementation Set out the detailed tasks needed to launch and service the product, and ensure there are sufficient resources and that those involved accept and agree their responsibilities. 7. Rollout. This works fairly well in theory. Unfortunately, in the high-pressure telecoms world it is quite normal for the process not to be followed13. All too often, it consists of step 1, some of step 2 and then step 7. Then Operations has to pick up the pieces. Other steps occur later, on the fly generally after the product has been launched. It has been known that the first inkling one call centre had of a new product was when CSRs saw advertisements for it on bus shelters while on their way to work! It is equally unfortunate if Billing were not able to invoice customers for the product within a few days of launch or if Fraud Management were unable to prevent encroachments in time.
4.4
Service Activation
Networks with a larger customer base will generally use a system for Service Activation (SA) to sit between the Billing and Customer Care systems and the Network. There may well be a range of different switches and equipment types, so it is desirable to isolate the core systems from the complexities of the network, in a similar fashion to Mediation for CDRs.
13
See: PBI Media 2000 Report: Marketing and Billing New Products (for 12 step Process Plan)
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The SA system will accept business level transactions, usually from Customer Care sources, translating them into network management commands. The typical functions supported will relate to particular CLIs or groups, and will include: ! ! ! ! ! ! Activate or suspend service Call barring (block/unblock) Exchange or call prefix barring Call forwarding Pre-selection Activate or suspend functionality (e.g. switch on/off Voicemail).
In a more complex or longer-established network the variety and sequence of commands to perform particular service activation tasks will become quite complex to manage. A side issue is the need for the system to respond in an appropriate timeframe for the command concerned for example, it is not always practical to expect the system to activate a range of new numbers in real time while the network is busy.
4.5
4.5.1 ! ! ! !
Reporting and Management Information

Operational Reporting Management information regarding orders, revenues and event volumes by product and customer type Monitoring volumes of work, levels of complaints, faults, compliments, call centre statistics, usage patterns and distribution by product Information to Marketing regarding the success of promoted offers or the effectiveness of advertising campaigns Control totals of CDRs, minutes, megabytes and packets carried, revenues processed and collected for reconciliation elsewhere in the billing process. Data Warehouses and Data Mining
Reporting is required for a number of worthy reasons. These include:
4.5.2
The potential for reporting is limited only by the resources available and the imagination of the recipient. One solution to an apparently endless need for data analysis and reporting is to establish an entirely separate database containing a structured copy of all operational data, in a Data Warehouse or a series of Data Marts. This will incorporate data in summary and detail form, about products, customers, CDRs and ERs, revenues and costs in a vehicle designed for high performance reporting and efficient response to on-line queries. The data selection and analysis process is known as data mining, because of the potentially immense value to be gained by the business from information extracted from the data. The scope can include: ! ! ! Acquisition trends, relative success and profitability of different products Call traffic volumes and patterns for network capacity planning, special marketing offers Geographic analysis of network usage for planning cell expansion and call access points
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! ! ! !
Demographic analysis of customers, revenues, to minimise uncollected debts Fraud pattern detection Problem and fault analysis to identify faulty equipment and software Interconnect cost analysis to negotiate more cost-effective routings.
All this information essentially relies on billing data rated and priced CDRs, tied to the customer classification and type concerned, in addition to the geographic data sourced from network and cell usage from the CDR and postcodes from the customer database. 4.5.3 Churn
Losing (and gaining) customers is called churn. Churn rates of 20% to 30% and more are not uncommon, particularly in the mobile market. After years of indifference to the practice of customer service, there is universal acceptance by all operators and service providers of the importance of high-quality customer care. Losing a single customer because of poor service may not seem to have a large impact on the bottom line (unless it is a major corporate user) but a succession of losses will.
One measure of the value of a lost customer is the wasted cost of acquisition, another, the estimated revenue lost over the next few years. Take the hypothetical average revenue per customer, multiplied by say only half of the expected churn within all the customers you plan to have over the next five years, and the result shows how much you stand to lose from churn. Make every effort to retain good customers, and the value of good service takes a higher profile. Worse, that lost revenue goes to a competitor. Either way, losing a customer is something that should not be allowed to happen by default.
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For this reason, the billing database should be analysed on a regular basis for the signs and symptoms of potential candidates for churn. Together with an analysis of complaints or payment amounts, there may be pointers to customers who may be unhappy, so offering alternate price plans may prevent them from churning.
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5
5.1
Choosing and Implementing a Billing System

Billing Only, or Something Wider?
One of the first problems to consider is, what exactly is the company looking for? It may be a facile question, but it does start to ask the set of questions that result in the selection of an appropriate platform. It goes in a sequence roughly like this: ! ! ! ! ! ! Corporate strategy defines the products, customer base, growth targets of the business Operational strategy defines how products and services will be supplied and how customers will be supported Process definition states what has to be done to support the business The strategy and process model sets the background for the Requirements IT strategy defines the technical environment and architectural constraints, in which systems supplied from the various vendors will be required to cooperate The Requirements Definition states what the systems must be capable of, in terms of functionality, performance, capacity and maintainability, against which vendors may propose solutions Once the systems have been selected, Working Practices (based on the process model) can be defined. The Working Practice definition forms the basis of operations, of user training and hence User Acceptance Testing The Acceptance Criteria state the service levels contractually required for compliance with the Requirements. They provide the basis upon which the completion of the implementation project depends, before payment is made and the solution is considered fit for operational deployment The Testing Strategy defines how compliance will be measured.
There are sufficient numbers of software vendors out there who would be delighted to supply, and of course they are competing with each other for your business. Hence it is reasonable to suppose they compete by offering more interesting products, more attractive prices, or better support. If you do not have a clear statement of requirements, they cannot be held entirely responsible if their solution does not do what you wanted it to do, but you thought that you meant to say so but didnt14.
14
See: free White Paper 2001: Choosing a Billing System. Email: billingconsult@pbimedia.com
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Fig.25 Principle of the Selection Process
Strategy
Process
Requirements
Procurement
Gap Analysis
Acceptance Criteria Testing & Results
5.2
Requirements Definition
Requirements have to be defined in three main areas: ! Functional: This covers three main aspects: o Process, including all specific tasks, pricing and discount calculations, algorithms, data manipulations required in order to support the various steps in the business process. Data, including entity/relationship models, customer and account data structures, product and pricing structures, field specifications needed. Include all reference data sets Performance, including process timings and volume specifications, growth and capacity requirements.
o !
Technical: These items specify the IT environment, platform, and any operating system, middleware or hardware constraints. Include all software interfaces, architectural requirements, existing system components that the new system is required to interface with, with precise details. Miscellaneous: Requirements for support, training, vendors corporate substance, escrow, competitive supply considerations anything you require the vendor to comply with (subject perhaps to negotiation)
One of the more important considerations is to present requirements at three levels: Critical, Mandatory and Optional.
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Critical means that compliance is an absolute threshold, and non-compliance will immediately and automatically rule the vendor or product out of further consideration. Mandatory means you want it, but non-compliance may require customisation or some other acceptable compromise. Optional means either nice to have or the vendor will get extra brownie points for offering this feature.
! !
Set the rules and stick to them and it helps to know before entering negotiations with a vendor whether a requirement really is a Requirement or is an item on a wish-list.
5.3
Buy, Build or Outsource?
One of the selection decisions is whether to Buy, Build or Outsource the software15. The respective considerations for each are set out below. It helps to understand the companys strategy before making the choice; investment requirements and risks vary widely between these choices. 5.3.1 Buy
This is where the operator buys or licenses a software package, a system from a vendor or software house, for operation in-house. This tends to be the most common billing solution, offering short implementation time scales and a system that has sometimes been tested and used by other telecom companies ostensibly a lower risk approach. There are, however, several hundred current billing packages that potentially offer a solution to your billing requirements, so selection can present challenges and delays while you verify various claims made by the vendor. Having the operation in-house implies a need for you to recruit operational and support personnel, together with taking responsibility for their training, welfare and management. Perhaps you will have to set up an IT department to implement some local customisations. It is certainly advisable to have your own testing team to undertake acceptance testing; dont let the vendor mark his own homework! The Buy investment is potentially lower than for Build, depending on the extent of local customisations needed. The vendor should normally amortise the development costs over a number of sales, and you tend to get a higher level of functionality than for inhouse developments more bang for your buck, as it were. Unless the package is heavily customised (when the approach takes on some aspects of the Build option), you will probably end up using a version of the vendors software that was built some months earlier and specified months earlier still. Hence the products, packages and discount schemes you can offer may be available elsewhere in the market (albeit perhaps not at the same price), and your bill presentation facilities will not be unique. Even if you are careful with your requirements, it is possible that the system may be used by your competition this may or may not present a problem to your Product Management or Marketing people. 5.3.1.1 Advantages A product version would normally be available immediately to get the operation started quickly
15
See: PBI Media Report 2000, Build, Develop, Outsource.
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Other companies will have used and proven at least part of the software, reducing the risk The development investment tends to be spread by the vendor across a number of customers, reducing the cost of delivery of billing.
5.3.1.2 Disadvantages There is an initial investment required for servers and software, but thereafter cash flow would be at maintenance levels You will need to recruit and train operations staff and some level of in-house IT expertise, albeit at average skill levels, to manage the operation on a day-by-day basis Your systems functionality and presentation capabilities will not be unique in the market. Build
5.3.2
This approach implies you will use your own IT department expertise to design and develop a bespoke system solution, exactly tailored for your requirements. It usually involves a longer lead time and maintainability issues downstream, but presents an opportunity to offer unique products, services or discounts and differentiated customer support that packaged solutions may not offer. Rapid application development techniques can mean that in-house bespoke solutions will be delivered in acceptable lead times, comparable to Buy solutions involving extensive customisation. You need your own IT department and internal specification, design and testing capability, but the result will be unique. Ultimately, building a solution may be the only approach, should timescales, performance or capacity constraints of standard packages be reached. One example was an Italian mobile operator, experiencing such a massive growth rate in numbers of customers and CDRs that it predicted only months to reach the outer capacity limits of their package, even customised for performance. The companys best investment choice was to develop an ultra-high-performance bespoke solution for the core rating and billing engine, but was able to retain many other components of the package that that were less critical. 5.3.2.1 Advantages The solution would normally be tailored precisely to your requirements, including product pricing, bundling and discounting features, capacity and performance The software would offer unique features and differentiators (note the original unique impact of Friends and Family) Overall costs and lead times may be comparable to (or even lower than) heavy customisation of a package The life of the system may be expected to be longer than for Buy.
5.3.2.2 Disadvantages A major investment is required for IT design and development staff, some at high competence levels, as well as a need to retain and motivate them for ongoing support and maintenance tasks There would be an investment in development computer facilities as well as operational platforms There is a high but manageable risk of failure, from accidentally poor specification, design or development As for Buy, you will need to provide and train operations staff to manage the operation on a day-by-day basis.
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5.3.3
Outsource
Outsourcing is a variation on the traditional service bureau concept, whereby an external supplier owns the operational computer systems and provides a billing service to your company. You feed their systems with the event records, they do the rest. This implies they invest in the hardware, they employ the operational, IT and support personnel and you pay licence fees, generally based on billed revenues and volumes. You also accept the consequences of relying on another company for a critical core operation not necessarily a bad thing. There are two main types of outsourced operation16. The first is the traditional Service Bureau model, running your systems on their computers, on your behalf (this might be analogous to a car valeting service: they take your car away, service it and return it in an agreed time to an agreed quality). The second type is the Application Service Provider (ASP) model, where they run their systems on their computers, on your behalf (perhaps analogous to a mobile valeting service, whereby you can see the car (or, examine the data) while the service is in process). [Apologies both to Bureaux, ASPs and car valeting services if the comparison is considered unfair]. Outsourcing is very convenient if you have a new product or service that is undergoing trial deployment. This can occur at start-up, perhaps while you evaluate market response to a new product or pricing scheme, or perhaps while you wait for the IT department to implement the billing changes necessary to bill for it. There is a low capital investment required, but running costs will tend to be higher (to cover the suppliers investment). Unlike an in-sourced approach, however, outsourcing does not have to be considered as a long-term solution; although there may be long-term cost considerations, it is viable if it is convenient. You must have a clear Service Level Agreement (SLA) with the supplier to cover all aspects of the operation, including: CDR collection cycles, output delivery deadlines, overall performance, response times to correct problems, cover at weekends and holiday periods, and most importantly, responsibility for errors. To achieve process turn-round times comparable to in-house operations, there would need to be a direct, highperformance data link between your network switches and the outsource partners platforms. Many companies believe you should have an SLA when dealing with in-house operations, and at the same level of detail as that suitable for outsourcing. This is formed on the principle that if you cannot manage the operation internally, you may not be able to manage it externally (and vice versa). 5.3.3.1 Advantages The lead time to establish billing is about the minimum achievable. Billing can be established within a period measured in days Minimum investment in operational staff and equipment Minimum risk approach There is a cash flow advantage because the initial investment is limited to set-up costs only, and ongoing charges are based on billed revenue. The billing system is already established and fully operational.
16
See also: PBI Media White Paper November 2001, Outsourced Billing Market drivers, models and pricing for development in Europe
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5.3.3.2 Disadvantages It may happen that the server is remote from the telco, which should not in practice present operational difficulties provided it is a 24x7x365 service Tendency to be the least customised approach (although this might not apply to the presentation and house style of the user interface) The unit cost per bill will be higher than for an in-house solution Detailed knowledge of the billing system and its maintenance will be held by the outsource partner, not kept in-house. Many view this as high risk. Data security implications for valuable customer records.
5.4
Planning
A common feature of billing implementation projects is an enormous pressure to get the project completed quickly. The sooner the billing system is up and running, the sooner that revenues can be collected for the business, so the timeframe set by management is always less than needed under the circumstances. This makes planning and sound project management two of the critical success factors. A high-level view of the overall programme of work will have three main streams of activity: the Service Delivery or network management side of the business, the IT responsibility domain and Operations. The streams are by no means independent. The plans for each have to come together at the end, but might initially look as shown in the diagram. Fig.26 Outline Implementation Programme
Ops Strategy
Process Defn Acceptce Criteria
Working Practs
Build Training
Recruit & Train CSRs
User Accept Test Resilce& Perfmce Test Ops Ready Test
Business Strategy
Rqts Defn Procure /Develop Systems Vendor Testing
IT Strategy
Build IT Infrastr
Installn Test
Integrn Test
Network Strategy
Procure Network
Build & Test Network
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Whilst this diagram shows some dependency between the streams, it does not show the relative timing of the tasks concerned. The notional Gant chart gives a clearer picture of the more likely sequence of events. Note the importance of Change Management activities, right from the start. Fig.27 The Programme Plan
Change management Strategy Programme management Process design Working practices
Requirements & Acceptance criteria Procurement & Gap Analysis Development/Delivery Testing Training Acceptance and rollout
5.5
Testing
One problem with the logic of the plan outlined above is that Testing has to start sooner than at the end of Building, and even before the end of Process Design. Because of the time pressure, testing time is usually compromised there has to be a balance between going live with faulty systems and loss of business through not going live. Its a matter of risk assessment, and it varies from company to company. In fact, testing activity needs to start from very early in the project: ! ! ! ! ! Do the process models logically and fully describe the main business activities? Are the Requirements complete and consistent? How can each Requirement be tested, to see if it has been met? What business situations are needed to test Working Practice definitions? How thorough and consistent is the Quality Assurance approach used by the system developers?
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! ! !
What test data and expected results are needed to support User Testing? How are we to measure Acceptance? What provision is there in the plan, for testing?
Thorough testing has several stages. In this example, the vendor could be an internal IT department responsible for development and delivery of the system: ! ! ! ! ! ! ! ! Unit testing (performed by the developer) to confirm that each individual module is coded correctly Component testing (performed by the vendor) to confirm each component or subsystem meets the design specification System testing (performed by the vendor) to ensure all system functions are executed correctly Interface and Integration testing (performed by the integrator) to ensure different systems elements interact correctly Resilience testing (performed by IT and operations) to ensure recovery in the event of a crash User Acceptance testing (performed by business users) Operational Readiness testing (performed by personnel involved in day-to-day running) to ensure everyone and everything is ready to go live Performance testing (performed by IT and operations) to ensure that planned operational volumes can be processed in the time available.
5.6
Acceptance Criteria
The concept here is to define the basis on which you would be prepared to pay for and go live with the chosen solution. Acceptance criteria should be defined and applied contractually for any approach, since they define the expected capability and acceptable levels of failure to comply. It is customary to define acceptance criteria in terms of specific functional or performance capabilities. Acceptability has to be clearly defined, quantified in terms of numbers and severity levels of errors or points of non-compliance for contractual clarity. Error severity is generally defined at three or four levels, approximately: ! Severity One the system is unusable and cannot handle normal workloads or deliver valid outputs or has a global scope error that precludes partial working Severity Two the system has a major error or fault that prevents completion of normal work, but is localised so that the impact can be compartmentalised Severity Three the system has a localised error that will cause it to produce incorrect output if processing were to run to completion but which does not prevent partial working Severity Four the system has a fault that may be described as documentary, cosmetic or inconvenient, but which does not prevent completion of normal work.
! !
What the Acceptance Criteria must state is the number of each of these that are allowed before non-payment or penalties apply. For example: for initial use, acceptability is defined as zero Severity One and Two, no more than ten Severity Three and no more than thirty Severity Four.
Clearly, for any fault to be classified as a given type of error, the correct functioning should also have been previously defined, either in the original Requirements or in subsequent appendices or annexes, or in approved change requests. The need to identify faults in turn implies that a managed programme of testing will be undertaken, in order to identify and track tests, results and incidents (problems or faults). The full specification of an end-to-end strategy for software Quality Assurance (including vendor activities) and acceptance testing is beyond the scope of this document. The need to track incidents and when a given item of functionality is due to be delivered or repaired, in turn implies that suitable incident management and IT configuration management processes are needed but thats another story.
5.7
Migration Projects
Migrating a Billing system is like changing the engine on a Jumbo jet, only at 33,000 feet and 500 miles per hour. Thus began a telecoms conference presentation, offering advice on how to approach migration projects. Even if the old system is still running operationally, there have to be basic reasons for the migration: ! ! ! ! ! Increase capacity and improve performance Capability to bill for new products, price plans and discount schemes Mergers and acquisitions consolidating two or more billing databases from different source companies, or standardising on one billing platform Disposals creating a new billing environment for selected customers and products Convergence (or divergence).
Earlier in this chapter, the issues of selecting and implementing a new billing system were reviewed, but within the topic of implementation, the real challenges of migration were not. Here are some of the challenges, and some considerations regarding the migration process. 5.7.1 Data Challenges
Of course, many of the problems boil down to the quality of the data. Perhaps the source data in the old system was never subjected to the rigour of the validation mechanisms built into the new, so at first sight it may be all unusable. Not a good start. In preparation for the move, we assume that competent data analysts have performed a detailed cross-mapping of old data fields to their new system equivalents. How do the individual fields compare? What will we do about the differences? Some of the questions include these: ! Data entities Does the new entity/relationship model have anything like the same elements as the old? How do they correspond? Is the new model more or less restrictive in handling, for example, customer account or product component hierarchies? Data attributes Do all the old elements have an equivalent in the new records? Does the new have meaningful spare elements that can be used for the extras? Field and array sizes Do the maximum old data values fit into the new? Can the old address line fit into the new? Are there enough address lines?
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Content values Do the field codes have the same range of values, or is the new range a subset/superset? Do old and new equivalent values actually have the same meaning or interpretation? If the new range is a superset, what do we plan to do about expanding old instances to new? Customer records Do the old customers exist in the new database already? How are we to recognise and match them? Did both systems use exactly the same naming conventions and abbreviations? Post codes (and other similar reference fields) Did we originally check every address against its postcode in the old system, and if not, how is Marketing to get accurate geographic and demographic information from the migrated data sets? Does it matter? Do the old and new billing and financial controls have a direct correspondence? How exactly will we reconcile old system controls to the new ones during and after migration? How many records are there in the old system, of which types (or entity types and instances)? And of what data quality? Have we run analysis and sampling programs against the old system (and the new, if it already contains data) to confirm every one of our assumptions? Will we run the same billing cycles? If not, how will we reconcile old and new cycles? How will we compare data sets, bill run results and control values for confidence and audit acceptance purposes, before and after the migration? How are product reporting, financial and management information outputs to be compared? If we have a different result in the new system, can we explain and reconcile the difference? What is considered a satisfactory degree of consistency?
There are several other reconciliation-related operational considerations: !
! ! !
One of the many problems is that we will probably encounter faults in the old systems, old data sets or in the old processes (as discussed under Revenue Assurance) that are not present in the new. This makes reconciliation particularly difficult, as the outputs from old and new will never match. It has also occasionally been known that the new system contained errors not present in the old system For these reasons, it is essential for Audit to be involved all the way, right from the start of the planning process. It is vital that the acceptance of the new system is achieved with their full understanding and endorsement of the migration process, particularly regarding error corrections in the old data and modifications to auditable data values.
5.8
Resourcing
One of the great challenges for a telecoms enterprise is the attraction and retention of good personnel17. The competition is intense for experienced staff, so resourcing becomes a key function, a critical success factor. In general, the company has three options: ! !
17
Permanent staff Contractors
See: PBI Media Report: Telecoms IT, Billing & Customer Care Skills and Salaries Survey 2000. Also the sequel survey in 2001 at www.globalbilling.org (within the GBAs Knowledge Bank section)
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Consultancy firms
In practice, a mix of personnel is most likely. 5.8.1 Permanent Staff
When your new project comes along, you may find your existing permanent staff are not available, being already fully occupied on other essential tasks, or they may not be experienced in the new software or technique. Hence you will incur a steady overhead (and project lead times) for training, otherwise they may not perform at the speed or skill level of an experienced person. Their contribution should be frequently appraised and sincerely appreciated. Permanent staff are generally thought to be the least expensive option, but opinions vary on this. Permanent staff can require high overheads, and in some cases the salaries needed to attract key personnel are high. There is always a volatility factor once you have trained them, they are more valuable elsewhere, so recruitment and retention will always remain important. 5.8.2 Contractors
In principle, you should be able to engage experienced specialist contractors with ease, provided there is a reasonable lead time. The theory goes that contractors are disposable, but it is essential they are closely managed to ensure they remain fully productive and never engage contractors on hourly rates. There is a risk of dependence on contract staff, so certain roles may have to be appointed for lengthy periods which can induce a measure of resentment from permanent staff. If the systems you deploy are extremely successful in their own markets, there might be a shortage of contractors with previous experience of the product. Check carefully to ensure the contractors have actually worked where the product has been installed, particularly if the vendor is offering you a major new version. Professional standards of contractors vary widely, to both extremes, so the selection process must be rigorous do not be afraid to reject substandard contractors at any time. Being disposed of is supposed to be one of their operational hazards. Their contribution has to be carefully managed and continuously monitored. The other issue arising from using contractors is the need for you to deal with Agencies. There are very few professional agents who understand the business of telecoms, who understand IT and who will take the time to understand the problem you are trying to solve. Too many offer you glib stories of expert recruitment personnel and a database of thousands of contractors, where in reality they are primarily interested in placing contractors as a commodity. They use a tick-in-the-box mentality for matching the contractors alleged skills against their view of what you require, and are less interested in actually helping the client to address a shortage of expertise. By the time a position is advertised, the requirement is distorted and diluted from what you want. They are not much help to the contractor either, most agents being significantly unprofessional in responding to and managing contractors. The opinions expressed in this paragraph are based on a sample of perhaps 50 agents over a period of twenty years. 5.8.3 Consultancies
Using consultancies is another form of outsourcing, whereby responsibility for a defined piece of the work is given to another company. The cost will usually be the highest of the three options, because you have to pay for the project risk they take on your behalf as well as their overheads and profits. In return, they mitigate the risk, provided you have defined their terms of reference precisely.
It has been known that some consultancies use under-experienced staff to fill out the resourcing of their client projects. One assumes this is done in the hope that senior staff will compensate for the lack of experience of the juniors, that the client wont notice anything and that lack of business knowledge doesnt matter if the consultants methodology is good. Unfortunately they dont, they do and it does, respectively. Interview every new member of their team you are paying, after all. There are other models whereby the consultancy offsets a part of their fees against shares in the client business. Then both parties share in the benefit of a successful implementation.
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6
6.1
Recent and Emerging Changes in Billing Practice

Electronic Bill Presentment and Payment (EBPP)
When first introduced, call itemisation was seen as a major benefit. Customers were able to see and validate how their invoice had been derived from their usage. The bill provided an audit trail, permitting the individual to have clear visibility of unit call pricing accuracy. Call itemisation led to multi-page statements. In some cases, larger corporate customers received several boxes of stationery, unwieldy and impractical. The next obvious step was to provide itemisation on electronic media, initially floppy disk but usually CD-ROM. The customer could then study and analyse the data according to any convenient formula. This delivered real usability benefits to the customer. Surveys of customers use of itemisation found that in practice they do not always wish to access all the details only on doubt or dispute, perhaps when the invoice total was significantly different to that expected. Processing the detail was a different matter entirely. Customer management needed to allocate costs, to find exceptions, to locate unauthorised usage, to assess the performance of different sales employees against telephony usage, and so on. What was required was an entirely electronic means of sending the invoice and itemisation data to the customer. This minimised invoice preparation and distribution costs as well as shortening delivery lead time, with no loss of customer service quality. The first challenge was legislative18. In many countries it is not legal to send an invoice via email a paper copy is required to meet the needs of taxation and audit laws. This can be easily overcome by sending the original paper invoice somewhat after the copy advice is sent by email. Provided the customer agrees to pay when advised in this way, (perhaps with a discount incentive), then the law and the business are both satisfied. The fact that it is easier for the customer to authorise payment by email to internal cost centre management is also a benefit to the customer as well as reducing payment delays. The second challenge was security. Use of email and making the itemisation file available on a website are not entirely secure. File transfer to deliver the itemisation detail file is not the simplest and safest means. The solution was to offer encrypted attachments to email the invoice, and to provide the customer with access to their data on a restricted basis through a secure Internet website. The web presentation of the itemisation data becomes a valuable tool for marketing as well as a potential differentiator for the customer. Several EBPP products, using webbased billing platforms, allow powerful end-user selection, manipulation and analysis tools. In this way the customer or their cost centre managers and authorised personnel can have access and process the itemisation data for any useful purpose. One outcome of such processing can be that the customer is able to identify their most heavily-dialled destinations, thereby enabling negotiation of more competitive rates over those routes. Hence, providing the information may not always benefit the provider, but perhaps the customer will appreciate the information value and will be less likely to churn.
18
See: PBI Media 2001 Report: EBPP The Market Opportunity, and EBPP Vendor Profiles
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6.2
Customer Self-Care
Partly to keep incoming traffic down into the call centre, and partly to give the customer greater flexibility, an increasing number of providers offer secure internet websites for the customer to access their own billing records. Provided the customer is suitably identified for security, this allows the customer to make their own enquiries and keep their own records up to date. The customer is usually provided with facilities to enquire about account information and view call itemisation details. Several operators have extended the website facilities to include product ordering and service management. This permits the customer great flexibility to maintain their own choices for call barring and service selection and at a time of day convenient for them. This can be quite useful if the account holder is going on holiday and in the meantime perhaps does not want premium rate or international calls to be made by other members of the family. One of the key drivers for this initiative is the link between the number of call centre contacts and operating costs19. Less incoming calls means that less CSRs are required to service them. It has been recognised that encouraging more transactions to be conducted by the customer without using the call centre has a significant impact on reducing the total number of CSRs required.
6.3
Hot Billing and Real-Time Billing
The typical operational billing cycle produces invoices for the customer once per period, typically monthly. There are several circumstances giving reasons to reduce this delay,
19
See: care.
PBI Media Report 2001, CRM to CMR a paradigm shift in customer
Also: PBI Media Report 2002, CMR for the Wireless Industry
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from the customer wishing to receive an interim account, to an account in the process of being closed. Sometimes the desired response time is measured in hours (hot billing) to minutes or less (near real-time or real-time billing). This means that the NMS must recognise the request and treat the call and process the CDR differently to a normal postpaid call, and the billing system has to be ready to process the CDRs concerned. 6.3.1 Hot Billing
The concept of hot billing is to be able to present a bill to the customer on request, often for only some of the total services or CLIs used. The CDR thus rated has to be sent immediately to the billing environment so that it can be presented to the customer. This service is particularly valuable for hotels and business centres except where they use smart PBX facilities that perform the task locally. Customer accounts for hot-billed CDRs do not normally benefit from product and service discounts, particularly for those discounts for aggregated usage over the billing period. It is feasible to apply a discount estimate or an allowance, possibly based on previous account performance, perhaps adjusted at period-end. This approach can introduce complexities in the reporting and reconciliation process, so it is generally considered easier to provide hot billing conditional on discount exclusion a small cost in return for the facility. 6.3.2 (Near-) Real-Time Billing
The concept of Real Time Billing (RTB) is that the customer is to be billed while the call is in progress. In theory, it means that the customers account should be progressively debited during the call, and this should be visible to the customer while it happens. This presents an impossible problem for conventional billing environments, which cannot achieve a real-time response because of the inherent delays built into their batch-oriented architecture. There is a finite delay between the completion of the call, the generation of the consequential CDR and the CDR being made available to the billing system, and another delay while the billing system is cranked up and an ad-hoc cycle executed for the selected account. This delay is an accumulation of operational batching steps (CDR generation, polling, collection, mediation and rating). Used on a selective basis, this overall cycle can often be shortened, at best to around 15 minutes of the call being completed in practice, it is a more typical two or three hours later. Real-time rating is possible with newer architectures, assuming the switching systems have the rating capabilities needed to work out the value of the call. In addition, the switch must have the ability to feed progressive debit data for the selected CLIs out to a bill presentment mechanism for guiding and display. If used frequently, this functionality would tend to overload the switch. As things stand currently, this type of fast-response facility is mainly used (where available) for fraud detection and alarm functions. There is still a finite external delay in presentment, so the overall approach is usually more correctly entitled near-real-time billing. The overall RTB functionality is sought mostly for internet and content delivery services. The nearest equivalent existing examples occur with coin-operated and pre-paid services, whereby the network systems check the remaining credit on call set-up and perform a rating function while the call is in progress. However, in both these cases, whilst his remaining credit is debited as the call progresses, the customer has explicitly paid beforehand.
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6.4
Billing Convergence and Integration
As the ownership of telecoms companies moves across the corporate landscape, there is an increasing collaboration between other industries and telecoms. Many new entrant owners from other fields, such as power distribution, rail and road networks as well as utilities, are able to capitalise on their traditional corporate assets such as real estate, customer base and distribution outlets. This means that there is an increasing interest in integrating the telecoms customer database with information from the traditional base. Knowledge of a prospective customers high utility usage or poor past performance as a debtor, for example, can be valuable indicators of potential performance of a customer when attracted to the new telecoms offering. In several countries, however, a cross-flow of information is controlled by data protection legislation. Increasingly, innovative services are combining the convenience of mobile telephony with other types of billable event. For example, by connecting soft drink dispensing machines to central computers, a call to a number associated with a particular machine triggers the machine to dispense a can, and the charge is added to the telephone bill. Ordering travel tickets and pizzas are other examples. Billing only has to cope with an additional type of event, assuming that it has facilities to look up one-time charges for that event type. Innovative types of event are increasing both in incidence and diversity as m-commerce takes hold, offering products and content over mobile services20. The range is limitless, but the customer has to be willing to purchase.
6.5
Billing for Internet Services
This is currently one of the more active areas for discussion. The particular interest depends on whether ones perspective is representing the customer, the telecoms carrier, the internet service provider (ISP), the website, the publisher or the content provider. The basic relationship model is shown in the diagram on the next page. In the first stage, a connection has to be made between the customers computer and the Web. A typical customer is connected to a digital voice network using a circuit-switched connection, whereas the internet uses packet switching and a different transmission technique (Internet Protocol or IP). To connect the computer, a voice call is placed to the most convenient Internet Service Provider (ISP) at their Point of Presence (POP). At the POP, the modems make the handshake connection, and the transmission protocol is converted to IP. The computer sends the user log-in string that is validated if necessary at the POP, and the session commences. Billing so far comprises a recurring line rental to the end-customer, plus charges for the duration of the whole session, on the basis of a voice call connection to the ISP. Whether the call is actually billed at retail to the customer or at wholesale to the ISP depends on the carriers contract with the ISP. The ISP may additionally charge the end-customer for a recurring internet access fee or subscription, or the ISP may choose to offset that fee against revenue from advertising. If the carrier charges the customer for the call, the ISP may theoretically be able to charge the carrier a small amount, along the lines of interconnect, but this is not commonplace in view of the margins involved.
20
See: PBI Media Report 2002, CMR for the Wireless Industry, managing costs, commerce and customer relations for the mobile industry.
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Fig. 28 Basic Internet Charging
A ccess C harge?
Service C harge? O r C om m ission?
SP / PT T
PO P ISP Site
IP N etw ork
G oods/Services?
C redit C ard?
The service provider offers a portal into the internet, a point of presence to the world-wide web and the point at which the customers account identity and security codes are checked. They are in a position to control the customers access to internet transactions, and may or may not charge for this service; a service charge is more usually applied if advertising has a lower profile with that ISP. Through that portal, the customer has unrestricted access to the web unless a filter or screening mechanism is provided by the ISP. Meanwhile, assume the end-customer has navigated to a typical commercial website, which has goods or services to offer. The customer may face another restriction as part of the site service offering, having to register or pay a subscription fee, depending on the site. The customer can be billed for the goods indirectly, through an essentially external transaction via credit card, provided directly (for example, by fax authorisation) or through a secure site with encrypted data protection. Neither the carrier nor the ISP has any awareness of the external credit card transaction, which is generally many times more valuable than the access charge to the customer. As usual, the credit card company receives a commission on the sale, but it is unlikely that either ISP or carrier can charge a commission to the web site for such transactions, because they are essentially unauditable. This situation remains unless the ISP and web site owners have a close relationship and the customers origin can always be linked to a given sale.
6.6
3G and UMTS: Charging for Content
In this model, the carrier provides the means for the customer to have a wide range of telephony services, with an emphasis on having access to value-added service content. The end-user may be the customer or their delegate (e.g. an employee or family
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member), so the end-user may not be the one receiving all the invoices, but could be responsible for incurring many of the charges by using the services or accessing the content. When the additional entities are taken into account, the billing model becomes quite complex: Fig.29 UMTS Role Model
Payment
VASP
Billing Subscription / Subscriber Payment
Subscriber
SP
Usage Payment
Delegation of Service Usage
Accounting
Delegation of Service Usage
Payment
User
Net Operator
Billing
Payment Source: UMTS Forum
The carrier traditionally invoices the customer a recurring charge for access and call charges for the time connected. Given the always-on nature of the UMTS connection, it is as yet undecided how to charge for data calls. Because the percentage of traffic taken up by voice calls drops dramatically compared to data on UMTS, then voice calls will probably be provided for a nominal cost or even free. Data connections may be charged along the lines of existing 2G (second generation) data services, per packet or per megabyte. Some parts of the connection may be absorbed by the ISP it partly depends on the nature of the data being transmitted, and partly on the direction: an upload is not expected to be either as large or as valuable as a download. The challenge to billing will be to sort out the different events and work out how much to charge for each event and to whom21. So where does the real transaction leave the other participants? Working backwards: ! The telecoms operator at best receives a fee for the amount of data transferred and can allocate a tiny proportion of the recurring access fee from the customer to the actual transaction. At worst, they receive a fee only for
21
See: PBI Media/Siticom Report 2001, The UMTS Technology and Billing Challenge
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the call on a wholesale basis from the ISP. Having enabled a high-value transaction (without telecoms the purchase might actually not have been made), the operator receives the least part of the deal. ! The ISP may receive a commission from the vendor (in this case the website). That can be negotiated by recognising the captive market base of the ISPs customers, countered by restricting access to the publishers content library. The industry is still trying to devise content protection and encryption schemes that limit end-use solely to the customer, but this is not resolved. The website pays the wholesale rate for the goods to the publisher or wholesaler The publisher pays a royalty back to the originating manufacturer, author or artist.
! !
Even if the goods are an MP3 music clip or a video or photo downloaded to the customers computer, then neither the ISP nor the carrier can detect it, as there is no difference between data packets containing music and data packets containing email. Until a standard protocol is defined that will identify added-value transmissions, then the Billing industry will continue to research ways to bill the customer directly for the services, as another type of billable event presented on the telephone bill. Tracing the customers origin depends on the web sites knowing the IP address of the ISP, the dependent IP address of the customer, There is no immediate evidence of the customers CLI by the time the IP packets reach the website, so nothing can be tracked back to the customers telephone account without collaboration between all parties. The originator may wish to modify their revenue model to reflect the ease of access by the end-customer. A piece of software, for example, may traditionally have been distributed on CD, but when offered on a website, a micro-billing charging model may be much more effective. Small financial transactions for use of the software may best be handled by billing on the telephony account. If the service was an on-line accounting package, for example, then the basis of charge could be one billable event per accounting transaction recorded, perhaps on a tiered scale depending on volumes. If the service was an on-line game, the charge could be per bullet and per soldier, perhaps on a sliding scale depending on strength. If the service was a word processor, the charge could be per merged mail address, per spell-check operation or perhaps per thousand words. The billing challenge remains the same: to recognise the chargeable event, record it at source, convey it to the billing environment, then determine how much to charge and to whom. As in the 2G access model described earlier, there has to be an auditable link between the user and the event; in the 3G environment, there also has to be a link between the user and the customer.
6.7
Quality of Service Pricing
In its simplest form, Quality of Service (QoS) pricing does not present an issue: the customer is offered better quality services for a higher price. However, some of the transmission protocols such as ATM (asynchronous transfer mode) are designed to allow shared use of a high-capacity circuit by several customers. These services are valuable for high-quality videoconferencing and voice facilities, where occasional packet loss is not as critical compared with data transmissions. The protocol is partly to make optimum use of the circuit and partly because each customer does not make continuous high-rate transmissions. This can however give rise to service degradation as network load increases, which may mean that the service level provided falls below that committed, whereupon the customer becomes entitled to a reduced rate or a discount.
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For Billing, this means that service levels have to be continuously monitored on the network. Measures of transmission error rates and packet loss per customer have to be fed back to the billing system in order that actual performance can be compared against contracted levels. In this way a sliding scale discount can be applied to the specific service for each customer according to those measures.
6.8
The Impact of Commoditisation
As more and more trunk capacity is built over the same routes, competitive pressures drive down the charges unless, of course, there is an excess of demand over supply. If there is substantial spare capacity, it is likely that the carrier will probably be supplying wholesalers or service providers rather than (or as well as) end-customers in order to maximise revenues. In many cases, supply is now exceeding demand by a substantial margin, and it will remain this way until more customers make more use of services that consume available bandwidth. This means that carriers are forced to offer capacity at very low rates to get market share and revenues, increasingly on a commodity basis perhaps at different rates according to spot demand for capacity. It also means that billing has to allow the unit rate for capacity to vary widely per wholesaler and for unpredictable periods. Further, billing will have to be provided with data regarding the capacity purchased, as opposed to that used, in order to calculate the charges. This leads to a new regime for wholesale billing. It was accustomed to having a small number of wholesale customers purchasing or leasing fixed capacity over extended periods, a situation that was often billed simply from a spreadsheet. Instead, the carrier will now have to deal with many customers, and perhaps only occasionally, or for a larger number of shorter lease periods. A different form of billing is needed to support the increased activity.
6.9
Reducing the Cost of Billing
It was traditional that billing capability was justified in order to be able to bill for the services that attracted the customers in the first place, offering some service that gave competitive advantage to those customers very often from the presentation and content of the bill itself. Establishment of the billing environment usually involved a massive investment over a number of years, covering many software components and hardware systems, personnel development and expertise. Once an enterprise is established, attention turns to corporate efficiency and operational cost reduction initiatives. It soon becomes obvious that the investment in billing functionality and billing operations is disproportionately higher than for other parts of the operation, and is increasingly seen as an expensive overhead rather than an investment. Analysis of operational costs (including software licences and staffing) will enable an average cost per invoice to be derived. This is an important measure, because if the average unit cost per bill is greater than the average revenue per bill, the enterprise has at least one problem. Reducing the cost of billing is becoming an important initiative. Operators are becoming aware that the substantial licence costs for mainstream billing software products have to be carefully justified, so new avenues are sought. These involve process improvements, product and pricing rationalisation and migration away from inefficient and hard-tomaintain legacy billing platforms, installing newer, more functionally rich and cost-effective software systems allowing the customer a greater range of choice in ways of dealing with the company.
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Appendix: Glossary of terms

References to other glossary terms are noted in italics Description 2G GPRS enhancements to 2G protocols that improve performance some way between 2G and 3G, based extensively on the same network elements as 2G, thereby being cheaper to implement than 3G Current mainstream second generation GSM mobile technology, supporting adequate voice and text message (SMS) services So-called Third Generation technology supporting high performance, high quality mobile transmission, allowing (e.g.) mobile video telephony Automated Call Distribution. A computer system used in Call Centres that accepts incoming calls or arranges outgoing calls and allocates each to the next available CSR in turn according to a flexible set of rules Asynchronous Transfer Mode, a transmission protocol (or an Automated Teller Machine) Call Detail Record, a computer record of all the data about an individual call (or in the broader sense, an Event) that allows tracking and billing to occur Compact Disk Read Only Medium. Ubiquitous large-capacity digital storage medium for music, CDRs, general computer data, photographs, etc. An electronic link between two customers that is dedicated to their use for the duration of the connection (unless multi-drop). Allows maximum use of available capacity by those customers. (See also Packet) Calling Line Identification how the network recognises an individual service instance (e.g. a domestic telephone number) A term used to describe the totality of network equipment and inter-connections operated by a carrier (or other business entity) that provides the customer with the means of making that call A technique of numerically assessing the likely creditworthiness of potential customers based on their volunteered answers to various socioeconomic questions posed in their application for new services or a new account Customer Relationship Management, the science of dealing with customer problems, orders and requests in order to maximise customer satisfaction, company revenues, marketing effectiveness, etc
2G
3G
ACD
ATM
CDR
CD-ROM
Circuit
CLI
Cloud
Credit Scoring
CRM
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CSR
Customer Service Representative, the personnel responsible for responding to customers needs usually at a Call Centre (or Contact Centre) for any industry dealing directly with their customers. Known also as CSEs (Executives) or Agents Computer Telephony Integration. Generic call centre term for linking database information with calls to help the CSR Electronic Bill Presentment and Payment electronically sending formatted information about bills and accompanying detail to the customer, by email or Internet web site access, with an electronic payment transaction in the other direction such as by Direct Debit. The concept of trading over any electronic medium, generally used to refer to Internet transactions, mostly without human intervention (except for the buyers). (See also mcommerce) The preparation and delivery of items needed to complete the suppliers side of the contract with the customer, including paperwork, equipment, freebies etc The point at which two different clouds are physically interconnected, usually at a switch General System for Mobile (originally something in French). Most European mobile services are GSM General Packet Radio Service, a development of GSM giving more speed to individual users for short periods Internet Protocol. A resilient packet-based transmission technique that divides up the data to be sent in order to maximise the number of different messages that can concurrently share a network (not their transmission efficiency). Delivers the Internet , now popular for mixed voice/data networks. Integrated Services Digital Network A banking service (more common in the US) for accepting cheques direct into the bank rather than going via the payee The concept of trading using mobile telephony as a medium, perhaps benefiting from the networks knowledge of the customers general location (See also e-commerce) A measure of time used as a quantitative basis of charging, being on the one hand the duration of a single call instance and on the other, the bulk total of all calls in a given period from or to another network A compression method most widely used to minimise the data size (hence transmission time) of music or sound clips
CTI
EBPP
e-commerce
Fulfilment
Gateway GSM
GPRS
IP
ISDN Lockbox
m-commerce
Minutes
MP3
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Multi-drop
A traditional method of sharing a single phone line between a number of customers, usually allowing any one of them to use the line at a time (notwithstanding eavesdropping). Fine in remote areas with low usage. Network Management System, the computer system(s) responsible for controlling network traffic, collecting usage (CDRs) and problem information and dealing with soft maintenance issues A conceptual envelope containing part of a message being carried from one customer to another. May be an amount of data or a soundbite from a voice call, allows efficient sharing of the network by relatively slow traffic (see also circuit) A variable data item whose value directs the processing of a system component (e.g. priority , payment method ) Personal Identification Number. A password code allegedly known only to the customer and the system or network and used as a key Computer hardware and software systems providing functionality to perform automated business operations Point of Presence. Where (usually, to dial) to get access to a service provider, to get somewhere else, such as Internet or indirect access long-distance cheap phone calls A set of prices and discount schemes for a group of products and services that may be offered to a defined range of customers for a period in time The steps that have to be taken to complete a business action The recording of a Process design so that personnel may be informed how to execute the steps in a consistent and manageable fashion The transmission technique or language that allows two network elements to talk to each other and understand Post, Telephone and Telegraph the former established, usually Government-owned provider of those services Purchaser of bulk capacity from telecoms carriers for resale at retail or wholesale at a margin The facility provided by a mobile service provider to the customers of another provider to send and receive calls on their network, for a fee The actual path taken across one or more networks by a call or data transmission The quality of the feature of an IT system that
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NMS
Packet
Parameter
PIN
Platform
POP
Price Plan
Process Process Definition Protocol
PTT
Reseller
Roaming Route or Routing Scalability
permits or inhibits an increase or decrease in processing capacity, often by an order of magnitude, without causing major chaos or massive re-investment Service Activation Sending an instruction to network management systems that will allow a customer to access and use a network service Short Message Service, beloved of mobile-phoneowning students, as a usually inexpensive way of sending short text messages to other mobile phones A recurring regular fee for access to a service or network, once upon a time charged with overtones of exclusivity for the buyer The carriage of voice or data traffic Universal Mobile Telecommunications System. Imminent new 3G ultra-high-performance always-on mobile service, next Grail for many vendors, operators and providers. Movies on your mobile? Digital Subscriber Line (with several x variants, e.g. ADSL = Asymmetric DSL)
SMS
Subscription Transport
UMTS
xDSL
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Tarifica services for Billing & CRM
REPORTS
IP and billing P2P Evolution, Revolution or Flash in the Pan? EBPP The Market Opportunity Re-engineering Billing for IP Content
Wireless & 3G The UMTS Technology and Billing Challenge Microtransactions, Billing and Payments CMR for the Wireless industry Managing costs, commerce and customer relations
Best practice Handbooks Managing Successful Revenue Assurance CRM to CMR a paradigm shift in customer care Marketing and Billing New Products a winning combination The book of Billing for Telecommunications
Further details including Report table of contents at our website: www.billing.co.uk
WHITE PAPERS
P2P Demystified Introduction to technology and potential of Peer to Peer and Person to Persons
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The EBPP Selection Process road to customer enlightenment or pathway to misery Asia Pacific in the frame to next EBPP rollout EBPP developments in the Asia Pacific region Introduction to EBPP Interconnection Practical Guide to Interconnection in the UK Towards a Content Economy the Only Certainty is Uncertainty
Choosing a Billing system How to avoid spending Zegabucks when choosing a billing system Outsourced billing: Market drivers, models and pricing for development in Europe
CRM for Profit Customer Lifetime Value under the Microscope
Email: billingconsult@pbimedia.com
NEW SERVICES
Margin Management Briefings applying Revenue Assurance to your business Benchmarking Billing Operations identifying best practice CRM Workshops Quantifying ROI of CRM initiatives principles and methodology applied to your business Contact: mhhealy@pbimedia.com
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The Book of Billing for Telecommunications

The Book of Billing for Telecommunications

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications

The Book of Billing for Telecommunications

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications

Researched and written by Jonathan Hart ISBN: 1- 903733-23-5

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications

ContentsThe Book of Billing for Telecommunications 1

1.3.2.1 1.3.2.2 1.3.2.3 1.3.3 1.3.4 1.3.5 1.3.6

Challenges for New Entrants............................................................................................ 17

1.4.2.1 1.4.2.2 1.4.3

1.4.3.1 1.4.3.2 1.4.4

1.4.4.1 1.4.4.2 1.4.5

Resources and Expertise ........................................................................................................... 19

The Business Processes of Billing

Why Talk About Processes? ............................................................................................ 21

2.1.1 2.1.2 2.1.3

Setting Up Customers & Managing Orders...................................................................... 23

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications

2.4.1 2.4.2 2.4.3

Interconnect Billing and Settlements ................................................................................ 33

2.5.2.1 2.5.2.2 2.5.2.3

Wholesale Billing .............................................................................................................. 36

Accounts Receivable and Collections .............................................................................. 40

2.7.2.1 2.7.2.2 2.7.3

Revenue Assurance ......................................................................................................... 41

2.8.4.1 2.8.4.2 2.8.5 2.8.6

File Controls ............................................................................................................................... 45 Process Controls........................................................................................................................ 45

Billing Systems and Billing Data

System Components ........................................................................................................ 47 Billing Data Sources ......................................................................................................... 49

3.2.1 3.2.2 3.2.3 3.2.4 3.2.5

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications

One-Time Charges and Credits ................................................................................................. 52

Rating and Pricing ............................................................................................................ 54

3.4.2.1 3.4.2.2 3.4.2.3 3.4.2.4 3.4.2.5 3.4.3 3.4.4 3.4.5

Billing and Invoicing Operations ....................................................................................... 59

3.6.2.1 3.6.2.2 3.6.2.3 3.6.2.4 3.6.2.5 3.6.3 3.6.4

Bill Formats & Messages ........................................................................................................... 63 Billing as the Differentiator ......................................................................................................... 63

Wholesale and Interconnect Billing System ..................................................................... 63

Accounting and Collections .............................................................................................. 65

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications

General Ledger .......................................................................................................................... 67

Other Systems That Interact With Billing

Customer Care and the Call Centre ................................................................................. 68

4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6

4.2 4.3 4.4 4.5

Choosing and Implementing a Billing System

5.3.2.1 5.3.2.2 5.3.3

5.4 5.5 5.6 5.7

Recent and Emerging Changes in Billing Practice

Electronic Bill Presentment and Payment (EBPP) ........................................................... 90 Customer Self-Care.......................................................................................................... 91

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications

Hot Billing and Real-Time Billing ...................................................................................... 91

6.4 6.5 6.6 6.7 6.8 6.9

Jonathan Hart - PBI Media Ltd 2002

The Book of Billing for Telecommunications