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Back Office – Convergent Billing Slow to Catch On Despite Promise


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Posted: 08/2001

Back Office

Convergent Billing Slow to Catch On Despite Promise
By Chris Garifo

A single, convergent bill for residential and business telecommunications consumers has been an industry Holy Grail for years now, but the move toward reaching that goal is taking longer than the initial buzz might have suggested.

With service providers looking to provide all their customers’ voice, data and video, putting those services on a single bill seems more efficient and logical. So why is it the exception rather than the norm?

Industry insiders point to a number of reasons, including that convergent billing is harder than expected, and customers haven’t shown they’re very interested.

In fact, a backlash is possible when customers start seeing such bills.

Technology Proves Tricky

Part
of the problem is that multiple transmission platforms are needed to provide a
complete set of bundled services, says Andrew Burroughs, chief marketing officer
and general manager of Apogee Networks Inc. (www.apogeenetworks.com).
Apogee’s NetCountant product includes IP billing.

“Voice has been generally on voice switches like DMS-250s or Class 5 switches, and data has been on routers,” Burroughs explains. “So, it’s always been difficult to do billing; produce one bill; that sort of thing.

“But if voice and data become packetized, or run on optical switches and all that, then they’re basically running on one platform, and then one billing system would run them. So the real issue is that voice and data move onto the same switches.”

While some show interest in moving voice into the packet-switched world, such shift hasn’t occurred to any significant degree, and probably won’t for some time, Burroughs says.

"You
haven’t seen AT&T [www.att.com], Sprint [www.sprint.com]
or MCI [www.mci.com] moving all of their voice
traffic to data yet, have you?" Burroughs asks.

A reason for the slow migration is that the data companies that manufacture the elements needed for packetized voice have not developed back-office systems with the scalability needed to handle the huge volumes of voice they’ll face, Burroughs says. Many data switches simply can’t handle the billions of minutes of calls an AT&T transmits every year.

The
biggest challenge service providers face in convergent billing is to implement
systems that allow for convergence across the organization and all the different
billing systems required, says Kent Steffen, president and CEO of Telution Inc.
(www.
telution.com
).

Telution’s flagship product, The Com-munication Exchange, offers a suite of customer care, order management and convergent billing applications.

Traditionally, the OSS supported a service provider’s network, while the billing system pulled information from the network to charge customers. That’s not the case with convergence, Steffen says.

“Today, the convergent-type environment means that I have to have an OSS that manages not just my network, but potentially my partners’ networks,”

Steffen says. “So, I may have a local network and be using someone else actually for long-distance services, or I may want to bundle in IP services. So, the OSS role has changed from managing the network to managing the entire supply chain, which is the network, the partners’ networks, the

different types of ISP services–ADSL

services and things like that.”

Making the Right Commitment

Convergent billing isn’t simply a matter of finding a best-of-breed convergent-billing product, it’s an overall commitment to conducting business in a way that service providers have not done previously.

“It’s a matter of creating a whole convergent OSS/BSS type of platform, because I need to manage the network and I need to manage the billing process and I need to manage my relationship with multiple suppliers,” Steffen says. “And if a customer calls and they have a question about their bill or their service, I need to manage that

customer-care relationship across all those different services I have, which potentially could have a whole different set of networks and network partners in it.”

That means the service provider needs to augment its convergent billing system with a convergent customer-care system that’s coupled with a convergent order-management system.

Early on, when the industry began moving toward convergent billing, “A lot of people tried to do it with technology that was not designed for it, and there were some success stories,” Steffen says.

However, convergent billing became more difficult as companies scaled up with that technology.

“You saw the first wave of order-

management systems and billing systems that did what they did really well,” Steffen says. “And kind of the second wave that’s coming together addresses convergence types of issues across business lines and process lines, but also across the different organizations within a single provider, getting my order-management, my customer-care, my billing and my network folks all on the same page with what the business model is.”

Roadblocks Slow Adoption

In
addition to scalability problems, billing solutions haven’t been able to cope
with the complexity of the convergent product sets that operators are launching,
says Bob Bell, Geneva product strategist for billing and customer-care software
developer at Convergys Corp. (www.convergys.com), which earlier this year merged with U.K.-based
Geneva Technology Ltd. (www.genevatechnology.com).

Most billers offered products for a single market, Bell says. Service providers would buy products–one for voice, one for data, etc.–and try to integrate them. However, the architecture couldn’t support such a model, Bell says.

“Many people may have evaluated convergent billing systems, but found shortcomings in those solutions,” he explains. “Therefore, that served as a constraint for them launching convergent services.”

As
an interim or stop-gap measure, some service providers attempted what is
described as "electronic stapling," says Susan Culler, vice president
for Tapestry marketing at American Management Systems Inc. (AMS/www.ams.com),
which has developed Tapestry, a convergent customer-care and billing product
suite.

Such a bill would show the separate costs to the customer for each service, provide a sum for the total cost of the services and register whatever discounts may be due the customer. But that wasn’t true convergent billing.

“When I say true convergent billing, I’m really meaning everything from cross-product discounts and cross-product pricing, so that you can do one plan; one discount that takes into account all the products and services you have with the telco down to one bill that provides one consolidated, single bill,” Culler says. “Some folks would say they have done consolidated billing and implemented it, and all they’ve really done is bring together bills and kind of electronically stapled them together. But it isn’t like their customer care or their marketing systems or their pricing systems or their billing systems are really looking at all the customer services at one time throughout the entire process.”

Convergent billing is “definitely at the mid-point in the process” of becoming fully implemented throughout the industry, Culler says, adding that service providers will need to take “baby steps” toward offering a truly convergent bill. Trying to make the transition in one huge push is “just an impossible mission.”

Part of the problem making those baby steps hard to take is that the IP billing world lacks the level of standardization found in circuit switch-based billing. The industry is moving to correct

that situation.

"There is a lot of good standardization work going on
now," says Andre Kopostynski, product marketing manager for EHPT (www.ehpt.com),
a joint effort by Ericsson (www.ericsson.com)
and Hewlett-Packard (www.hp.com). EHPT’s product
line includes next-generation billing mediation software.

"However, every
player in the IP world has their own agenda," Kopostynski adds. "For
instance, Cisco [Systems Inc.,
www.cisco.com] is more concerned about
delivering the fastest router or IP device to the marketplace because they are
concerned about performance. Whether that router or IP switch or device is ready
or enabled to deliver sophisticated billing data is a secondary concern because
they also have their market pressures."

Part of the solution to the
problem is the work of the IPDR group (www.ipdr.org),
which is developing what its members hope will become an industry standard for
IP detail records (IPDR).

Even with standardization, however, convergent billing is going to continue to be incredibly complex because IP itself is complex, and the bundling of a multitude of value-added services, along with traditional telephony, wireless, IP connectivity and other services, is going to make that complexity several orders of magnitude greater. “And that’s putting a lot of demand on vendors like us, our competitors and other complementary players out in the field,” Kopostynski says.

Questions of Customer Acceptance

Eventually, the problems will be solved and the industry will make a stronger push toward convergent billing. The question then, however, will concern how customers respond.

"I’m
not quite convinced that the customer gets really too excited about [convergent
billing]," says Michael Conway, vice president of product development for Primal Technologies Inc.
(www.primaltech.com). Although customers may say they would prefer
getting a single monthly bill, the reality may be otherwise, especially when the
customer may have to pay the cost of the technology needed to make that happen.

“The customer will say, ‘Sure, I’ll take [a single, convergent bill]’; but if he finds out or sees that [it] has been put into the bottom-line pricing of his service, he’ll say, ‘I don’t think so,'” Conway says.

At the same time, sticker shock over the total price for a bundle of services could determine how customers respond. A residential customer may not think twice about paying a phone bill, ISP bill and cable bill that are spread out during the month. That same customer may balk on seeing those bills added together in a single statement, even after getting a 10-percent or 20-percent discount for bundling services.

“Some people have said, at the end of it, the objective is the maximum amount of revenue from a consumer,” Conway says. “So, can you send four separate bills of $25 each? Or are you going to end up just sending one bill of $80?”

What customers really want is a bill that’s easy to understand and accurate, Conway says. He adds that while a portion of the customer base always will jump from service provider to service provider, what is sure to cause churn among otherwise loyal customers is problems–especially if left unresolved–with the monthly bill.

“Yes, they get happier a bit with a 10-percent discount because of packages,” Conway points out. “But they don’t say, ‘Wow!'”

For resellers, the move toward convergent billing is going to offer opportunities and challenges.

"What
[convergent billing] does is give resellers a lot more value in what they can
offer into their communities," says Jennifer Fellows, director of strategic
marketing for ADC’s (www.adc.com) Software
Systems Division, which last year rolled out Singularit.e, an OSS suite that
includes the Singl.eView inte-grated customer-management and convergent-billing
application.

However, the ability to handle convergent billing may prove too costly.

“For [resellers] to justify robust billing systems that can handle bundling of traditional voice along with value-added IP services is going to be a very costly thing for them,” EHPT’s Kopostynski says. “And really competing on price only–I don’t know, I think it remains to be seen.”

Copyright © 2001 by Virgo Publishing, Inc
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