Europe
: With next-generation networks in place and devices on the shelves,
op-erators are faced with a new headache: what to charge for mobile
services – and how to collect?
Mobile network
operator and service providers are seeking ways to increase the return
on their enormous network investments. New data, content and messaging
services offer them the opportunity to raise average revenue per user
(ARPU), optimize average margin per user (AMPU) by lowering total
cost of ownership, attract new customers, and bolster customer loyalty.
But this is only possible if operators can charge for the content
and services they deliver.
To monetize their
content operators need other charging systems. Their cur-rent legacy
charging systems have been customized primarily for voice calls, and
typically can only rate simple price plans. This won’t do in
tomorrow’s data-centric world.
Billing mechanisms
Operators and service providers use two primary methods for charging:
• Post-paid, where the customer is sent an invoice at regular
intervals –monthly or quarterly – and payment is made
via cash, or the provider has the pre-authorization to debit the user’s
bank account for the due amount
• Prepaid, where the customer pays in advance for using the
service and the prepaid account is deducted in a delivery versus payment
mode.
Current charging systems have a major shortcoming: they process post-paid
and prepaid users separately. This means double effort for the definition,
change and adaption of new tarif models and, even worse, the high
costs of operation of two systems.
The return on
innovation
To capture new revenue from their users, mobile operators must have
flexi-ble systems that allow them to offer a variety of services,
including voice, data, content and applications. And they must be
equipped to support the emerging pricing schemes and promotional bundles
that will maximize their profits.
A uniform group-wide
system could cut costs dramatically
Many carriers and newly merged operators have effectively band-aided
doz-ens of charging systems together over the years. The result is
a plethora of platforms that rarely interact and are often managed
by different departments within the company. In yesterday’s
voice-centric world, the existence of two systems, one maintained
by the operator’s network department and the other overseen
by the IT department, was necessary to avoid revenue leakage. However,
in tomorrow’s data-centric world, these same systems are likely
to cost money – not save it.
Major upgrades
are needed to cope with mobile content billing
To deal with the diversity, richness and complexity of mobile content
services and business relationships, operators’ traditional
systems require substantial enhancements. Areas in which major upgrades
are needed include the ability to:
• cope with diverse and rapidly changing pricing and business
models
• process transactions in real-time, especially for prepaid
customers
• handle more sophisticated presentations of information on
the cus-tomer bill
• manage revenue streams and minimize the problems of fraud
and bad debt
• provide a holistic view of the customer to allow better customer
care, churn management, and the upselling and cross-selling of services
Competitive edge
hinges upon the ability to offer services and charge for them flexibly.
Powerful charging capabilities – in real-time, for every type
of user, for all kinds of content and services, and regardless of
the type of net-work are essential.
Unexploited business
potential
Unmeant, many operators are leaving money on the table. They have
ambi-tious plans for their mobile data and content services–
but their legacy sys-tems are going to prove more a hindrance than
a help.
As a rule, legacy
systems complicate mobile content deliver and charging.
• They force operators to charge for wireless data, content
and messaging services by the megabyte, effectively encouraging a
new, flawed business model that ignores the actual value the user
would be willing to pay for. What’s more, volume and time based
charging lacks transparency and is difficult for users to follow.
Without access to an accurate, real-time view of the account balance,
advice-of-charge degrades to an “approximation-of-charge.”
Display-ing an inaccurate or misleading charge will result in customer
confu-sion, and ultimately customer dissatisfaction. Thus, differentiated
charging based on different parameters – price of the actual
product, resolution of graphics, quality of service, player level,
time of day, lo-cation, personal discount, contract type, service
type, access fees – that reflect the service’s real value
will make or break mobile content and data offerings.
• They force operators to segment their customer base in prepaid
and post-paid users. Thus, saddling operators with the cost and complexity
of supporting two billing systems and offering users two sets of data
services. Two departments supporting two charging sys-tems and two
customer databases are duplicate costs.
• They miss opportunities in providing restricted service menus
to prepaid users. In many cases prepaid users are not provided with
the same menu of higher-margin, value-added services delivered to
post-paid subscribers because it’s hard to charge for them.
In addition, this means a missed opportunity to increase the profitability
of prepaid us-ers. Prepaid users are a rapidly growing segment of
the wireless mar-ket. In developing – and lucrative –
markets in Asia, for example, pre-paid users account for up to 90%
of the customer base. Not offering these users content and data services
is a risky business, indeed.
• They restrict operators from using promotional campaigns such
as bonus programs, limited trials and special offers for push new
services. Variable tariff models and loyalty and bonus schemes are
the tie that binds customers to an operator. Moreover, special offers
are an attractive marketing instrument for operators – and one
they will need to harness as they introduce new content and data services.
• They complicate new service experimentation. Quick-turn services
such as content, data and messaging require the ability to prototype,
or rapidly adjust pricing and service definition. The most profitable
op-erators will be the ones that can monitor and quickly respond to
fac-tors that optimize the margin mix of all their services.
• They complicate 3rd-party content charging models. Revenue-sharing
agreements don’t come in a one-size-fits-all. The mechanisms
for distributing the profits among the players in the value chain
are lim-ited – and the charging schemes are vast (P2P MMS Model,
A2P MMS Model, Wholesale Delivery-Only-Model, Wholesale Full-Service
Model.) Essentially, mobile operators have become hypermarket re-tailers
that must deal with suppliers. Like retailers, operators must see
that items on the shelf -- in this case, content and applications
-- are fresh and just what the customer ordered. And, just as retailers,
opera-tors must manage a vast supply chain in real-time.
Without a charging
system that enables quick response to wide variety of market conditions
and customer demands, operators will lose out on high-margin opportunities.
What’s worse, their shareholders will lose their pa-tience.
The infrastructure
provider have already reacted to this challenge and come out with
flexible charging systems – an example for this is charge@once
With charge@once,
Siemens has developed a modular, highly scaleable and flexible convergent
charging solution. This enables operators to charge online for transport/access
(volume-based charging). They can also charge for services and sessions,
such as video calls with a guaranteed QoS (Qual-ity of Service), and
for content and events such as web pages, video/audio on demand or
hard goods. The system operates equally well over packet based networks
such as GPRS and UMTS, over circuit based networks such as GSM and
over WLAN or IP.
In addition to
online charging with credit checking and synchronized checking in
real time, charge@once also supports hot billing with defined response
times for network elements that do not yet offer real time capability.
The Sie-mens system is compliant with the 3GPP standard for charging
and billing. Its interfaces enable it to be smoothly and seamlessly
integrated into an opera-tor’s existing infrastructure.
Challenges
for Network Operators
A convergent
online charging offer answers operator concerns
Modular approaches allow operators to get new services up and running
quickly and assures that they can charge for them. The result is a
rapid re-turn on innovation as they move quickly to implement the
wide variety of data, content and messaging services that can drive
business growth.
• Charging methods and flexibility: Operators can present their
sub-scribers with an easy-to-understand bill for content and data
services. For all kinds of services and all kinds of subscribers –
making no dis-tinction between prepaid and post-paid users –
real-time charging ca-pabilities can be combined with a wide range
of pricing and tariffing options, as well as bonus and loyalty programs.
• Enhanced Customer Care: Operators can better harness marketing
instruments such as discounts, special offers and campaigns to create
binding ties to the subscriber. This can reduce churn and encourage
users to experiment with data and content services. This is because
the marketing campaign has clearly demonstrated the advantage of new
data and content services. What’s more, cost control (setting
spending limits, for example) and an accurate Advice of Charge are
guaranteed.
• New Partners – extended value chain: Operators, like
retailers, must deal with suppliers – in this case content providers
– and see that the content is packaged and priced in accordance
with customer preferences. Flexible charging systems enable this value
chain and the variety of revenue-sharing arrangements necessary for
the suc-cess of data and content services. They also make it possible
for players – such as advertising agencies – to accept
some of the con-nection and usage costs in the process.
• New Business Models: Operators can decide themselves which
busi-ness model they want to pursue. They can choose to be a one-stop
shop, and own the customer, the billing relationship and split revenues
with other players in the value chain. They can also adopt a “Third-party
enabler model” and sell their services to other players in ex-change
for a share of the revenues.
Siemens
has designed and developed its solution for convergent online charging
to meet these challenges – first products are already field-tested.
