2. The General Process of Billing 2. NNNNN aUAUWN 1 Basic functionality of billing systems and architecture Components of a Billing System Billing System Requirements Major Billing Functions Billing System Costs Billing StandardsTelecom Billing Solutions 3 1. Introduction Billing and customer care systems convert the bits and bytes of digital information within a network into the money that will be received by the service provider. To accomplish this, these systems provide account activation and tracking, service feature selection, selection of billing rates for specific calls, invoice creation, payment entry and management of communication with the custamer. Billing and customer care systems are the link between end users and the telecommunications service provider. Telecommunications service providers manage and setup the networks to allow customers to communicate (provisioning), and bill end users for thelr use of the system. Customers who need telecommunication services select carriers by evaluating service and equipment costs, reviewing the reliability of the network, and comparing how specific services (features) match their communication needs. Because most network operations have access ta systems with the same technology, because most Telecommunications Service Providers offer essentially the same types of services and network facilities, Billing & Customer Care are becoming key differentiating factors and play a critical role in the customer's carrier selection decision. Telecom Billing has undergone a seismic shift from being a sleepy back office system to an explosive growth industry attracting attention from throughout the telecommunications industry. Just as networks are the backbone of communication, the ‘operations support system, including billing and customer care functions, are the backbone of the communication service provider. Traditionally viewed as little more than a necessary expense, the advent of a competitive telecommunications market has transformed Telecom Billing into an important strategic tool. For service providers, bills are the culmination of their revenue objectives. For customers they form one of the prime bases for the evaluation of service expectation. The bill is the most regular form of communication between the telecom companies and their customers. It provides the customer, with window on the Telecom Company, and the telecom company, with a ready means of communication with its customer. From both a financial and customer service perspective, getting the billing process right is essential for the future profitability of a telecom company. A bill is one means by which a service provider communicates with its customers. The bill performs three functions: © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 4 =It isa request for payment -It is a mechanism for customer care -Itis a marketing tool. Today for telecom companies, traditional competitive benchmarks can no longer ensure loyalty. Essentially the best competitive point left is billing, customer care and service. In the present and in future a leading determinant in market differentiation will be ‘customer-care and billing system - and in some cases, it may be the pivotal investment that will mean the difference between success and failure. © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 5 1.1The Evolution of Telecom Billing ‘About 15 years ago mast of the billing systems were developed in -house. The focus of the billing systems were limited to circuit switched telephone calls. The few parameters that can be charged for were basically duration and distance. The substantial growth of the telecom market in the late 1990's triggered a need for more complex billing solutions, The old in-house systems cost a lot to maintain and did not support all the new functionality that was required. In today’s communication service provider market, operators’ main priorities are basic revenue and profit. Hence the ability to produce accurate bills lies at the heart of ‘operator's activities, in both generating revenue and serving customers effectively. Moreover, billing is not simply influenced by the trends currently imposing themselves ‘on the communications industry, its strengths and weaknesses within a service provider's operations can actively help determine the effect of those trends om the operators business. Below is a graphical representation of the evolution of Telecom Billing Solutions over two decades. ert eee, Telecoms environment oes Short of mio conmonaaten Set oF pion Rape grown nnumoersteeoe ce ar rT ee ed ‘nnowse monoume otng stems Qutotinetax bing scutes or CLECS (ap Andes, Kenan) Ey of spect ters (ep Savile LHS, KSC Bling s8205%93807 ots fnew ing sper anny specatan (ap Fatal Stave Bete Sales) erase ora nets ‘tng devetopments Figure 1.1: Evolution of Telecom Billing Solutions © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.2. The General Process of Billing 2. NNNNN aUAUWN 1 Basic functionality of billing systems and architecture Components of a Billing System Billing System Requirements Major Billing Functions Billing System Costs Billing StandardsTelecom Billing Solutions 1 2. The General Process of Billing 2.1 Basic functionality of billing systems Billing systems collect, rate, and calculate charges for the use of telecommunication services. The figure given below presents a simplistic view of a billing flow. ‘all data is collected data stored callratedfor other charges in customer database billing & credits added Invoices are produced Billing is run pp —— Invoices are mailed Figure 2.1 basic architecture © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 8 The typical billing process involves collecting usage information from network equipment (such as switches), formatting the usage information into records that a billing system can understand, transferring these records to a Rating Engine, that assigns charges to each record, receiving and recording payments from the customers, and creating Invoices. Figure 2.2 shows a standard Billing and Customer Care pracess. In this diagram, the customer interacts with Customer Care or works with an activation agent to establish a new wireless account. The agent (CSR) enters the customer's service preferences into the system, checks for credit worthiness, and provides the customer with a phone number so that the customer may make and receive calls through the mobile telephone network. ‘As the customer makes calls, the connections made by the network (such as switches) create Usage Detail Records (UDR) of the activities. These UDRs include the identification of the customer and other information relevant to the billing system. The billing system also receives records from other carriers (such as a long distance service pravider, or roaming partners). The billing system then reformats the UDRs into an internal layout that is proprietary to the carrier, guides and updates the UDRs with correct customer and rating information. ‘After each UDR has been rated according to the customer's rate plan, it is stored in a “Bill Pool”. The Bill Pool is a data store containing all UDRs that have been rated and are waiting for the month-end cycle billing process to aggregate them and display them on a customer's bill. The customer then sends his payment to the telecom service provider. Payments are recorded (posted) in the financial system. Customer's bills are archived in “Billing History” files. These files are used heavily by various organizations within the enterprise: Customer Care (inquiries, adjustments, service order, etc.), Marketing (product analysis), Finance (revenue management, revenue projections, profitability, etc.), Audit, and Revenue Assurance. © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 9 Figure 2.2 Standard Billing Process 2.2 Components of a Billing System A billing system is composed of a series of independent applications that, when run together, are referred to as the billing system. Its major components are as follows: @ CDR— Call Detail Records (CDRs) Billing information regarding specific calls is contained in Call Detail Records. (CDRs) and include: : origination and destination address of a call (who), time of day the call was connected and duration of the call (when), the call type and its detalls (what), the connection location(s) of the call (where), and the cause of event recording (why). As not all events are voice or data “calls”, the record generated by the network element is often referred to as “Usage Detail Record (UDR)” and often contains non-telephony billing information such as: a downloaded movie, or IP content. Figure 2.3 shows the basic structure of a call detail record. This diagram shows that a UDR contains a unique identification number, the originator of the call, the called number, the start and end time of the call. This diagram also shows an additional charge for operatar assistance and that a UDR dynamically grows as more relevant information becomes available. © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 10 Figure 2.3 User Data Record Called Calling Number number 2125551212 2125551212 i f 0 Called Number Call Unique Originator Record ‘Identifier @ Guiding —This matches calls to customer calling plans. The application uses the start and end number and the duration and time of call to decide what the charge should be, based on the calling plans on the customer's record. @ Rating application—This program applies the rate for the individual guided calls. Rating gives the call a value to be charged at the time of billing (not including any promotions, discounts, or taxes). @ Billing-This is usually performed once a month. This job collects all of the rated calls that have been stored over the past 30 days. The program adds any promotions and discounts that are associated with the customer account. For example, if customers have called over a certain number of minutes, they might get a volume discount. In addition, taxes and credits are applied. @ Invoicing—When the billing job is complete, a file is created that includes all of the customer's information. This file is sent to a print house to be converted to paper Invoices. These invoices are then stuffed into envelopes, along with specific inserts targeted to the customer. Many companies will also create electronic statements and © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 1 send customers their invoices via diskette, tape, or even e -mail; alternative billing practice is especially common for business customers. 2.3 Billing System Requirements The following are standard telephony requirements used when issuing a request for proposal (RFP) for a new billing system or an enhancement to. an existing one: @ Customer-interface management—The billing system must be able to handle customer-initiated contact, oversee outbound customer contact, and manage the contact life cycle. @ Sales and marketing—A satisfactory billing system should answer customer query, handle commissions, provide sales support, track prospects, manage campaigns, analyze product performance, and acquire multiple dwelling units (MDUs).. @ Ofder handling—It is crucial that the billing system maintain eustomer-account Information, manage the order-entry life cycle, and oversee the order-completion life cycle. @ Problem handling—Billing systems should also be able to manage trouble-ticket entry, coordinate trouble-ticket closure, and track the resolution progress of a trouble ticket. © Performance reporting—A satisfactory system will provide performance reporting, ensure quality-of-service (QoS) reporting, create management reports, and generate regulatory reports. @ Invoicing and collections—It is important that the system perform billing inquiry, generate bills, handle collections, pracess deposits, perform account administration, maintain tax and fee information, process financial information, and manage customer- premises equipment (CPE) inventory information. @ Rating and discounting—Billing systems must manage products and services, coordinate rate plans, and rate customer-usage records. @ Installation and maintenance—The system should also provide workforce scheduling and manage activities performed at the customer premises. © Usage and performance data collection—An adequate system will collect data and handle interface from other providers. @ Information-systems management—Billing systems might also be called an to perform configuration management, ensure security management, oversee fault management, monitor performance, and manage accounts. © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 12 @ Systems architecture and environment—A billing system should perform data audits and integrity checks and ensure year-2000 compliance. 2.4 Major Billing Functions Typically there are two major components to Billing systems: the Rating Engine (Sometimes known as “front-end”) and the Invoicing Engine (sometimes known as “back end", "Cycle Billing", oF "Month-End Process"). The Rating Engine accepts UDRs from a service providers’ own switches or from other providers or billing companies’ systems (sometimes called incollects, or in-roamers), checks the validity of billing records, matches billing records to customers in a database, and provides billing details to other systems (sometimes called outcollects, or out-roamers). The Rating Engine also guides billing records to specific customer accounts, Guiding uses the event's identification information such as the calling telephone number to match the billing record to a specific ‘customer account. The Invoicing Engine aggregates billing records for a specific period (billing cycle), calculates recurring charges (e.g. monthly charges) and total usage charges (minutes or quantity of usage), and produces invoices. The Rating Engine: Processing the Usage As part of the billing system, the Rating Engine receives call details from various sources (event records), reformats and edits these into UDRs, assigns a customer account to the UDR (guiding), calculates call charges for each UDR, and gets the UDR ready for Invoicing. In a traditional voice telephony environment, The Rating Engine processes UDRs in a batch mode (or at best in near real-time). There may be several UDRs for each event. For example, a call may be originating at a local switch, translated by an 800 number service, and routed through a long distance switch. Billing and call processing can require a substantial amount of computer processing time because there may be many events for each call. Each UDR is rated individually after having been assigned a rating band or category first. After a UDR has been rated and the actual charge for the call is calculated, it is stored in a "poo!" of billing records that are ready to be invoiced (called a bill pool). A bill pool is a group of call records that have been updated by the Rating Engine to include charging © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 13 rate information. The bill pool usually contains records that are ready for the final stage of bill processing. Figure 2.4 shows the basic functions of the Rating Engine. This diagram shows how different event sources are received from various network elements or from other companies that have provided services to your customers. These records are reformatted to a common UDR format and duplicate UDRs are eliminated. Identification information in each UDR is used to guide (match) the record to an account in the customer database. The customer's information determines the rate plan to use in charge calculation. The rating process uses rate tables, the customers selected rate plan, and other Information (e.g. rate band, distance, time of day) to calculate the actual charge for each call, All of the information is added to the UDR and it is either placed in the bill pool (ready for billing), or it is sent to another company to be billed if the customer Identification is not part of this network's customer database. If there are any problems as the UDR is being processed, it is sent to Exception Investigation for further analysis. —_————, ; > Exception BILL Investigation POOL USAGE Figure 2.4 Rating Engine © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 14 Billing systems contain many databases of information. Some of the key databases hold customer information, usage records, rate information, and billing records that are ready to be invoiced. A customer database holds unique Identification information about the customer. This includes a customer account identification number, telephone number (may be the same as the account number), authorized feature list, rate plan identifier (which rate plan the customer subscribes to), service activation dates, and other information specific to a customer or account. A rating database holds the rate plan Identifier codes and charges associated with each rate plan. It may be necessary to divide the UDR inte several components parts. For example, a call from a mobile telephone may be divided into airtime, landline usage, and long distance usage. UDRs are commonly processed using a single rating software module. This module uses rate plan identification information found on the UDR (determined after the guiding process) to match to rate tables that allows a per unit increment rate, Rate increments can vary based on the time of day (TOD), day of week (BOW), holidays, and other factors. After the call rate has been determined, the Rating Engine places an initial value on the call. Tt may be necessary to re-rate the call based on information received after initial rating was calculated. Examples of this include: usage discounts (free minutes), toll free calls, (called party pays), and calls billed using an old rate table after a customer has selected a new rate plan. The Invoicing Engine: Month-End Processing The Invoicing Engine uses data from the updated bill pool and adds non-call related billing charges and financial adjustments. The billing system then adds fixed recurring charges (such as monthly service fees and taxes), applies payments that have been received, produces invoices, and maintains a history database. Figure 2.5 shows the basic activities performed by the month-end process. This diagram. shows that the first step in this process is the selection of customers whose cycle is to be billed during this “bill run”. Far each customer ta be billed, all usage having occurred before the cutoff date is then selected. The next step Is for the usage to be aggregated according to the way in which it will appear on the customer's bill; this step also includes the calculation of any volume discounts to which the customer has subscribed, Fixed charges - both recurring and non-recurring - are then calculated according to the product information retrieved from the product portfolio database. Taxes and surcharges © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 1s are then calculated (Federal, State, Local, FCC, Universal Service Fund, etc.) and the financial chart of accounts is updated with the debits and credits. Finally marketing and other messages are inserted into the customer's invoice, which Is then sent to a production facility (print shop, CD-ROM duplication, Internet website, etc.) for delivery to the customer. The invoice Is then archived in the Billing History database, and various reports are generated, such as financial reports, reconciliation reports, analysis reports, etc, Figure 2.5 Backend -invoicing engine Clearinghouse ‘A dearinghouse Is a company or association that transfers billing records and/or performs financial clearing functions between carriers that allow their customers to use each other's networks. The clearinghouse receives, validates and accounts for telephone bills for several telephone service providers. Clearinghouses are particularly important for intemational billing because they convert different data record formats that may be used by some service providers and convert for the currency exchange rate. Clearinghouses provide a variety of services Including processing proprietary records (e.9. switch records) into formats understandable by the member carriers’ billing systems, validate charges from carriers with intersystem agreements, and extract unauthorized or un-billable billing records. Clearinghouses transfer messages in a © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 16 standard format such as Exchange Message Record (EMR), Cellular Inter-Carrier Billing Exchange Roamer (CIBER), or Transferred Account Process (TAP) format. The EMR format Is often used for billing records in traditional wired telecom networks and the CIBER and TAP formats are used for wireless networks. The records may be exchanged by magnetic tape or by other medium such as electronic transfer or CD ROM. Clearinghouses receive billing records from companies (autcollects - sometimes called in-roamers) and submit billing records to companies (incollects - sometimes called out- roamers). Outcollects are billing records that are sent to other systems to. callect for services provided to visiting customers. Incollects are billing records that are received from other systems for services provided to their customers that have used the services of other networks. Inter-carrier billing systems must be capable of handling billing system errors. There are many events per call and the possibility exists for duplicate records or missing details in the billing records. Charges or records may be received for customers that do not exist in the local system or the inter-services (or roaming) agreement between companies may not be valid. Charges or records may be received from other companies (incallects) that have ‘crammed or slammed bills. Cramming is the erroneous or fraudulent addition of charges for services that were not agreed to by the end customer. Slamming is the unauthorized transfer of customer's preferred service provider to a different service provider. When errors or omissions are detected, individual UDRs or entire batches of billing records may be flagged for return to the sender and they may be tagged for further Investigation. Invoices Invoices contain the details of how much the customer should pay to the carrier, when the amount is due and other information regarding the bill. Invoices usually provide a customer with detailed information regarding the source of the charge (date and location), reasons for the charge (service provided), and the amount of the charge. Figure 2.6 shaws a sample invoice. © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 7 tal Wg it ‘ + i i i r ti ait ett sbaatbeennatnant £2 ae ae i ‘ERIEDETEDGUEET Figure 2.6 A sample invoice Invoicing Invoicing Is the process of gathering items to be billed (rated UDRs) that have occurred ‘over an invoice period, adding additional charges and credits that are not related to specific calls, and preparing the information (formatting) so it may be presented to the customer in a clear way. Invoices may be delivered by mail o in other formats such as CD-ROM or email. Management Reporting Management reports provide information to finance, sales, and operations on the performance of the system. Reports can identify problems such as, silent churn, potential new services, and network congestion. Chum is the process of customers © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 18 disconnecting fram one telecommunications service provider. Churn can be a natural process of customer geographic relocation or to may be the result of customers selecting a new service provider in their local area. Silent chum is the process of customers disconnecting from one telecommunications service provider due to a competitor's Influence. Silent churn is usually the result of inadequate customer service or lack of competitive rate plans. Customers that are transitioning to competitor's services will show rapid declines in usage of service. Management reporting can also be used to discover new services. By reviewing call patterns, churn and silent churn patterns, and customer feedback, managers can determine which new services may be good candidates for their system. UDRs and network activity can also indicate areas of network congestion and corrective measures (rerouting or adding resources) can be accomplished to overcome the challenge. Processing Payments Processing payments involves collecting assets to settle the customer's invoices. The typical forms of payments that are received from customers include checks, cash, wire transfer, credits, and credit cards. However, other payments or credits may be applied to the customers account. Recording the payment to the customer's account is called “posting”. Posting usually Involves using a payment coupon that has an account number on it and logging the received amount of money to the account. Ideally, the customer has provided the payment coupon with the correct amount. In some cases however, the customer might not have included the payment coupon or might have paid a different amount than indicated. In this case, posting of payments may result in errors such as posting to the wrong account or applying payment new invoices instead of old invoices. Posting to the Financial System The billing system records financial details (receivables) for the carrier. Periodically, summary information is transferred into the General Ledger (G/L) of the carrier’s accounting system. This summary posting groups different types of billing charges into summary totals to be posted to different financial accounts. These types of accounts include receivables or expenses, and each financial account is assigned a unique number © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 19. (in the financial chart of accounts). For example, payments received by credit card are usually categorized differently than payments received by cash and these totals will be recorded in accounts with different account numbers. 25 1g System Costs Billing system costs can “eat up” a substantial percentage of revenues collected. In addition to the initial acquisition cost of computers and software, operational costs tend to be very high. Of the service provider's staff, typically 20%-30% are directly or indirectly engaged in providing billing and customer care support. Billing system costs include the initial hardware, software costs of the system along with the operational costs such as invoice processing, bill printing and mailing, intermediary clearing house settlement companies, customer care (call centers), and collection services. Hardware and Software The hardware usually includes high performance computers that operate proprietary software. Due to the complexity of hardware and software billing systems, continuous training Is required in order to ensure quality services to the customers and to provide revenue assurance, Billing Cycles (Batching) If a company has many customers, they are typically divided into cycles (or “billing cycles.”) The billing cycles are different for groups of customers. This allows the billing system to bill only a portion of the customers at a time. Bill Printing and Mailing In most cases, invoice records are sent toa bill printing facility or they may be sent by ‘email or printed by the customer when the payment is made online. Bills that are sent to the printer and mailing house usually cost between $1-$3 per bill. Sending bills by email helps to reduce the cost of providing the customers with bills and receipts. Call Center A call center is a place where communication occurs between a carrier and its customers. Call centers assist customers with requests for new service activation and help with product features and services. A call center usually has many stations for call center agents that communicate with customers, When call agents assist customers, they are typically called customer service representatives (CSRs). Call centers use telephone systems that usually include © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 20 sophisticated Automatic Call Distribution (ACD) systems and Computer Telephony Integration (CTI) systems. ACD systems route the incoming calls to the correct (qualified) Customer Service Representative (CSR). CTI systems link the telephone calls to the accounting databases to allow the CSR to see the account history (usually producing a “screen-pop” of information). Call center telephone systems can cost over $3,000 per CSR station. The average telecommunications service provider has 1-2 CSRs for every 10,000 customers. This results in an average customer care call costing $7- $10 per call. ma Figure 2.7 Call center operations Collections Collections are activities that a service provider performs to receive money from their customers. Ideally, all customers will receive their bills and pay promptly. Unfortunately, not all customers pay their bills and service providers must have a progressive collection process in the event customers do not pay thelr bill. When customers are first added to a system, they are “scored” on the probability that they will pay their bills. Using information on their application and reviewing the credit © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.Telecom Billing Solutions 21 history as provided by an independent credit reporting agency accomplishes this. The collection process for delinquent customers usually starts by sending a reminder messages to the customer be mail or recorded audio message. If initial attempts to collect are unsuccessful, more aggressive collection measures are taken, such as: restricted calling, service disconnection and sending or selling the uncollected invoice to a collection service. Some carriers automatically re-route all calls made by a delinquent customer to a collections operator. This is called “Hot-Lining”. Hot-Lining is typically used when a telephone Is first sold or activated to allow activation after the customer has provided the information to register for service or when the customer has not paid their bill. If all attempts to collect from a customer have failed, a service provider may write off the uncollected revenue as bad debt, retain a collection agency ot sell the uncollected Invoice(s) to a collection service. If the account is written off as bad debt, the customer’s Information is usually placed in a negative file to avoid reactivation and their poor payment history is reported to a credit reporting agency. Various collection companies (collection agencies) offer collection services that work on a percentage of collected revenue. Some collection companies will pay for uncollected invoices. When uncollected invoices are Sold to collection services, the service provider is usually prohibited from working With the customer in the future regarding payment on the account. 2.6 \g Standards There are many billing standards that have been developed for telecommunications networks. Because the services offered by different types of network operators (e.9. cable television compared to local telephone companies) are beginning to overlap, billing standards are also converging. Billing standards define the measurements, record format and the methods of transfer for billing related information within a network. New services are being offered by network operation because of deregulation of the telecommunications industries around the world. As a result, billing standards are continually being revised and they are converging. Because companies can use different billing standards or different revisions © Copyright 2004, Sohag Sarkar, Symbiosis Institute of Telecom Management, Pune.