One Step at a Time

Posted: 08/2002

One Step at a Time
Catalog, Rating, Mediation Solutions
Ease Migration to Convergent Billing

By Peter Lambert

Randy Minervino

cross-service discounting will be the order of the day as new customer growth
shrinks and churn numbers rise, industry experts predict. Implementing this
creativity will require an end to the use of separate service catalog, pricing,
rating and billing systems for each service type, they say.

"Aside from a certain amount of
saturation out there, the cost of selling a new service to an existing customer
is much smaller than the cost of acquiring a new customer," says Randal
Minervino, vice president of sales and marketing for Profitec Billing Services
Inc. "I’m already paying to invoice that customer, and for 10 cents I might
be able to add a $10 Internet access payment each month."

Thanks to emerging solutions that
place convergence at various points along the pricing and billing chain, service
providers and resellers constrained in spending might be able to answer the
convergence mandate in step-at-a-time fashion

Creative bundling appears to have
been the overriding need for Connecticut Telephone, which in May signed a
three-year deal with CTI Group (Holdings) Inc. to implement the MagnaFlex
convergent billing system, a solution the vendor says offers event-driven,
"service neutral" support for any kind of billing event, from VoIP to
pay-per-view content services.

"MagnaFlex will support our
current product base as well as our evolving menu of IP-based services,"
says David Epstein, CEO for Connecticut Telephone, which offers a portfolio of
broadband, voice and wireless services to business and residential customers.
"Not only is MagnaFlex scalable to accommodate our future growth in
customers and services, but it will enable us to create value packages of
converged services that will give us a distinct marketing advantage over the

Lucky Few

Larry Davis

"There are not many billing
systems that are truly convergent — driven off an account number, rather than a
phone number," says Lee Cuff, vice president of sales and marketing for
CommSoft, provider of CommVergence applications designed to support local and
long-distance telephony, cable, paging, wireless and a variety of data services.

Adds Comm-Soft president and CEO
Larry Davis, "In wireless, the need to change rate plans on the fly has
been around the from the start, and now that’s moving into wireline."

With convergent service packaging in
mind, some smart and lucky carriers started back-office consolidation in earnest
before the market crash. Nextel Communications Inc., for example, nearly has
completed a three-year consolidation of 14 separate operations support systems (OSSs)
and 11 databases, using Amdocs and other vendors. Nextel is finding billing
system management in the convergence age so potentially burdensome it is
offloading the job to partners. "We’re moving toward a total outsource
model to keep IT headcount down, so we look to system integrators for an outside
view," Dick Cichanowicz, vice president of IT for Nextel, told Billing
World 2002 conference attendees June 18, in Baltimore.

The same day, Cingular Wireless
announced it had consolidated billing and customer relationship management (CRM)
systems in five regions onto Amdocs’ Ensemble convergent voice and wireless data
platform for customer service, provisioning, rating, billing reporting and
professional services.

Virtually all major carriers,
especially merger and acquisition players that must consolidate disparate
networks and support systems, are pushing toward similar goals. "You’ll see
creative bundling — all under a customer-centric context — come out from us
and our affiliates and back-office integration efforts to support that,"
says Shawn Hakl, director of strategic planning, billing and infrastructure
services, for Verizon Communications Inc. Among Verizon’s top priorities:
plugging revenue leakage and "consolidating systems in wireline, then
across our affiliates," Hakl says.

Younger CLECs that started with more
state-of-the-art billing systems also may be positioned relatively well for
convergence, says Jack Storer, director of market development for ADC
Telecommunications Inc. "Integrated communications providers do real
converged billing today," he says. Storer notes Allegiance Telecom Inc.
bills for local, long distance, Centrex, private data and Internet access using
ADC Singl.eView billing software.

But in hard times, money to
implement convergent services is tight, even among those that have migrated from
older billing systems. "We’ll do anything we can to create new services,
yet we have no money to do that," Nextel’s Cichanowicz told the same
Billing World audience. As a result, Nextel is looking for creative contracts
and creative solutions from vendors. The same vendors currently report such
creativity is constrained by customer demands for narrow "pain-point"
products with in-year payback on investment.

New Complexity

For providers saddled with duplicate
systems, managing converged services requires stapling together multiple OSS
processes and multiple bills and adds up to a human intervention scenario that
drives operations costs through the roof and Wall Street valuations through the

Steve Borelli

"The real challenge to billing
systems lies with cross bundling and discounting local, long-distance and
broadband access, and to date, the answer has been to throw more people at the
problem, which is very costly and not scalable," says George Bordo, vice
president of service provider solutions for system integrator Danet Inc.
"The amount of human intervention and duplicate data entry is costing the
big guys millions of dollars a day."

Bordo and others say carriers large
and small are aware that they’re down to one option for ushering in an age of
creative, rapid, flexible, prepaid and post-paid service packaging and pricing:
implementing some measure of converged mediation, rating and/or billing systems.

Verizon, for one, is "talking
about everything from their wholesale operations to their own back-office
lifecycle processes," Bordo says. "If you’re just reselling broadband
DSL, that’s relatively simple, but if you’re reselling local services, the
complexity opens more opportunities for lost data and inefficiencies, so there’s
a requirement for OSS application-to-application integration from the reseller
systems for entering orders on back through the wholesaler’s systems.

"Resellers need to operate
their own OSS apps to validate and verify information coming back from the
wholesaler, and that need absolutely increases as the reseller expands the range
of services he offers, " Bordo concludes.

While offering a consolidated
invoice may be attractive to end customers, centralized customer service
constitutes a more important demand, adds Profitec’s Minervino. The company’s
OmniBill Discount Codes module provides templates for several hundred discount
options across several dozen services. "Consolidated customer service also
brings challenges, because your support now has to be multidisciplined," he

Mediation Shield

George Bordo

Fortunately, carriers and resellers
with multiple installed systems do not face all-or-nothing replacements to ease
those convergent services pains.

Darren McKinney, director of mobile
product marketing for Amdocs, says steps to convergence can start with stapling
separate bills into the appearance of a single invoice; graduate to implementing
multiple mediation and rating systems feeding one billing system; and finally,
reach completion in the form of a single product catalog.

As broadband and 3G wireless
carriers prepare to launch content- and transaction-based services that go
beyond pricing by time or distance, vendors including Convergys Corp., Intec
Telecom Systems, Narus Inc., Openet Telecom and XACCT Technologies Inc. say much
of the complexity for carriers and resellers can be solved through convergence
at the mediation level. At that level, usage data from disparate networks and
services can be "normalized" into common rating formats, thereby
shielding older billing systems from new ways of pricing and rating prepaid and
postpaid services.

At Convergys, vice president of
product marketing Demetrius Taylor says the overriding aims are to help
customers reduce risk and protect investments through flexible system migration,
user-defined parameters for usage processing and modular offerings like
Convergys Mediation Manager and Convergys Settlement Suite. "Mediation
shields billing and other systems from new factors and is a way for me to get
started with a customer, as are partner relationship or settlement

Fred Brott, president of carrier
access business for Intec Telecom, echoes the investment protection theme.
"Resellers want the same relative service offerings as the incumbent
carriers, and our mediation systems can take all those services, including short
messaging, IP and 3G, and feed them to existing billing systems," he says.
"We see a mix in resellers, some with their own equipment, so we need to
provide our reports to them from the 280 mediation customers we have among the
Tier 1, 2 and 3 carriers."

Convergent Rating

However, while convergent mediation
can protect older investments, minimal human intervention will be achieved only
at the heart of the billing system. Amdocs’ McKinney explains, "If you have
two billing systems and you’re trying to cross-discount products you need a
common product catalog, which is where you define pricing plans."

Darren McKinney

Instead of ripping out multiple
legacy billing systems, providers can consider implementing an
"adjunct" or "bolt-on" middleware system designed to work in
tandem with legacy billing to create, mediate and rate new services. Amdocs
Enabler is designed to do this, as are products from Abiliti Solutions, ADC, am-beo,
Convergys, CSG Systems Inc., HighDeal Inc., Ericsson Inc., Sentori Inc. and
Telution Inc.

Many of these adjunct systems are
built around a common product catalog open to new product definitions, as well
as old definitions drawn from legacy billing.

In 2.5 and 3G wireless and wireline
broadband, "There are now opportunities for specialized rating engines and
the need for real-time rating for prepaid, as well as the need to track and pay
content royalties," says Jean Marie Lalanne, vice president of global
channel partners for France Telecom software spin-off HighDeal. "At the
easy level, you might charge $2 and pay a 20-cent royalty, but the value will be
found in the context of the service bundle. You need tools to compute the
revenues a piece of content will bring to the bundle, compute its costs, track
customer behavior and rerun multiple what-if scenarios, enabling you to fine
tune and continually optimize pricing."

Fred Brott
Intec Telecom Systems

Along those same lines, Telution
designed its Coordinated Service Delivery system to "bundle, price and
discount from the same common data model," says president and CEO Kent
Steffen. "Then on top of this, we supply an analytics and reporting suite
to assess how long provisioning took, what bundles are working well, what
carrier partners are meeting service level agreements and the like."

In addition to unifying usage data
collection, rating tables and product catalogs, vendors say they are now
addressing pragmatic, even mundane, operations issues associated with
convergence — particularly delinquency and partial payments.

If a customer taking multiple
services submits a late or partial payment, for example, to which of the
services does the reseller or service provider apply the payment? Steve Borelli,
executive director of new products for CSG Systems, says customer retention
goals will dictate fine responses. On delinquent payments, for example,
regulations may prohibit sudden service shut-off or collection agency action on
regulated voice but not on unregulated Internet access. Similarly, regulations
regarding partial payments may guide providers in writing, rating and billing
rules for determining which service gets paid first. Further, the provider’s
delinquency policies might seek to distinguish among customers that are premium
users of only one of the bundled services.

Providers and resellers will have to
think about all this and more as competition increases. "Wireless providers
appear to be pressing most for a toolset that allows pricing on new dimensions,
and broadband providers will follow," says Andre Kopostynski, director of
marketing for Ericsson customer management solutions. "For wireless,
typical churn is 3 percent to 5 percent a month and 30 percent a year, so
aggregated, bundled, personalized services are needed to keep customers."

Step-by-Step Convergent Pricing and Billing

Step 1 — A convergent mediation
system unifies duplicative, per-service data records into common format, but may
continue to feed multiple rating or billing systems.

Step 2 — A convergent rating system
provides common cross-service discount tables, but may continue to feed multiple
bills "stapled" together.

Step 3 — A convergent billing
system provides unified bill, but may not incorporate unified catalog.

Step 4 — A convergent product
catalog, incorporated in billing or "adjunct" rating engine, enables
discount packages built into service definitions from inception.

Source: Author


The Links

Abiliti Solutions

ADC Telecommunications

Allegiance Telecom Inc



Cingular Wireless


Connecticut Telephone

Convergys Corp.

CTI Group (Holdings) Inc.

Danet Inc.

Ericsson Inc.

CSG Systems Inc.

HighDeal Inc.

Intec Telecom Systems

Narus Inc.

Nextel Communications

Openet Telecom

Profitec Billing Services

Sentori Inc.

Telution Inc.

Verizon Communications

Technologies Inc.

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