T h e Te l c o R e v e n u e A s s u r a n c e H a n d b o o k

Simply put, a telecommunications network is built and custom-

ers are allowed access to it. Customers make calls, the information
about the calls is collected, the collected information is translated
into a bill, and the bill is submitted to the customer for payment. Af-
ter that, the customer pays and everyone is happy.

In this ideal scenario, we should be able to apply a simple, basic

formula that says our overall earned revenue equals the number of
minutes of service delivered multiplied by the billing rate. In this
scenario, there is no leakage.

Calls Billing Payment

happen happens happens

1000 minutes of service delivered

x
0.05 per minute
=
$50.00 earned revenue

Figure 1.2.2 Simple view of the revenue generation process

In financial terms, if a company delivers 1,000 minutes of service,

and the billing rate is five cents per minute, there should be $50 in
earned revenue at the end of the day.

What Really Happens?

In most cases, what really happens is that telcos deliver a consis-
tent level of service but achieve less revenue than they expect. In
our example, the 1,000 minutes of service actually resulted in only
$40 of revenue. This means $10 of revenue was somehow missed by
the revenue management operations. This missing amount is consid-
ered leakage.

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