Billing for Data Services Challenges for Mobile Operators

Billing for data services is a challenging task, as service
providers are not justified in charging customers in the traditional way based
on time and duration. While operators are keen to establish a new paradigm based
on ‘Value of Service’, it needs to be quantified and get ‘customer buy-in’.
In addition to this, technology needs to provide operators the ability to
capture details of applications and services being used over their network, and
generate billing events.

It is clear that the rapidly eroding margins in the network
itself will not be able to sustain tomorrow’s growth. Today’s operators must
migrate to provide next generation applications and have the ability to generate
revenue from them. The first to market players would acquire the maximum
customers. NTT DoCoMo has made an pioneering effort with i-mode. NTT DoCoMo has
more than 26 million subscribers for its i-mode service, as of 12 August 2001.

The success of i-mode lies not just in the pace of growth,
but its ability to define and attract a significant number of partners providing
captive applications, and also the ability to sell and bill for these data
services.

i-mode has been able to attract content vendors, provide
customers attractive offering and at the same time charge affordable rates. It
is interesting to learn how they bill.

They have a monthly charge, a packet-based charge and an i-mode
information charge for it. For e-mails they bill both for outgoing and incoming
traffic, based on slabs of size (20, 50, 100, 150, 250 characters). i-mode
charges you based on packets used (one packet equals up to 128 characters). In
addition, it charges you a flat monthly fee based on the info services
subscribed.

i-mode presents an interesting example of billing challenges
for tomorrow. For operators to duplicate this elsewhere in the world, they will
need to create similar captive applications for their customers and drive growth
based on these applications.

In the last five years of Internet and mobile communications,
the growth in the number of Internet subscribers and mobile phones is
unbelievable. There would be one billion mobile phones in the next three years.

With widespread access, cost of airtime and usage have
dropped, thus lowering margins to the operators. Access alone is no more the
money-making proposition. But they now have a captive customer base, which they
must use to increase their net worth.

While from a business model perspective, the key challenge
lies in defining and creating applications that mobile customers would be
willing to pay for. Billing complexities revolve mainly around three issues:

• Captive applications, which will drive growth

• Technology to support data formats and metering of VAS

• Defining how to bill, based on perceived value

Captive applications, which will drive growth

• E-mail: This is probably the most sought-after and
  successful application. The days of free e-mail are over, and operators are
  trying to find ways to charge for them. USA.NET, one of the largest free
  e-mail providers, has already made the move.

• SMS: This is fast gaining volume and is being used for
  information exchange for news, sports, stocks, etc. Today, operators can
  also charge for incoming SMS, something that they have not done so far.

Information feeds and online games are appearing to be the
other attractions where application providers can partner with operators and
content providers to maximize revenue.

In India, applications such as Kaun Banega Crorepati (KBC)
could become captive applications. KBC dial-up lines are always hard to get and
the demand is far greater. They are creating a large revenue for DoT. Instead if
they were made paid lines, they could make revenue for themselves, share a small
part with DoT, and the user would have a better chance of getting through them
at an incremental cost.

All these new services make very good business by providing
customers a choice. But then, this would also mean more billing complexities
because for billing systems, each customer is unique.

Traditionally, billing solutions also handle ordering and
provisioning job. Varied services also mean handling multiple network elements
and access authentication devices. The ability to handle these disparate
routers, gateways, RAS, LDAP for provision, and services accurately and on a
timely basis, would be essential.

Technology to support data formats, and metering of VAS

The most significant challenge for the operators is to know
what is being transferred on their network. They need the ability to capture it
and bill for it.

At present when a SMS message is sent over the network, it
needs to be recorded by originating network, terminating network and the network
transporting it. This could belong to one-entity or several entities. In such a
scenario, it is important to generate accurate billing events of the transaction
passing through the network and bill for it. In addition to charging for it, the
network collecting revenue (most likely the originating network), should share
the revenue with others transporting and terminating it.

However, today’s networks do not have the ability to
capture events as the message passes through them.

Though the new generation equipment (mainly 2.5G and 3G) is
being built with abilities to capture data flow, another challenge arises out of
the non-standardization of technology. These raise significant mediation and
interfacing issues.

Equipment manufacturers of network devices and routers, need
to standardize data formats to be able to capture billing events from various
network elements and share data across the network. And wireless adds its unique
complexity of location-based billing.

Extensive work is being done by the WAP forum, IPDR
organization and ETSI, to create standards around the collection of event data
records, their formats and the manner in which information is to flow across
service and content providers. The efforts are still far from deployable
standards that can help stop revenue leakage.

Defining how to bill, based on perceived value

While network and technology challenges revolve around
mediation, collection and interfacing issues, charging itself poses new business
complexities. Like any emerging business, nobody can predict correctly–what
and how would the customer be willing to pay.

For an end-user, the value of a banking transaction is far
different from the ability to surf the web. The ability to determine a value
paradigm and also distinctly capture the type of service rendered in bill-able
events, remains a significant challenge. While providers, such as i-mode, have
started billing on a flat fee + packet transferred, whether that is the most
appropriate method, remains to be seen.

For banking and online reservations, a value-based charge can
be justified. In the present methodology, the customer gets more value at a
lower price. However, the customer is unable to get a highly secure channel,
which a banking application may require and hence, the value may have to be
discounted.

In an entirely reverse scenario, content providers may be
willing to pay service providers for carrying advertisements and promotional
content. Then the value of the content may deteriorate over time, during the
trading hours and after the closing of trades.

Customers and service providers are used to differentiate
between air-time for peak and non-peak hours. In a converged network scenario,
they are accustomed to differentiate between voice services and fax services.
But they are not used to charges that fall with time and may eventually go to
zero. They are not accustomed to a scenario where each service event can be
charged differently based on the content being transferred, when is it being
transferred and at what rate of throughput.

SMS messages are being billed by operators at a flat fee for
sending and free for receiving. One could consider a charge for receiving, too.
And that would mean a customer to have choice whether he or she wants to receive
SMS or not.

The New Charging Principles

The technology also brings in new parameters for charging
customers based on:

• Volume of data transfer, again differentiated for
  upstream and downstream

• Committed and achieved Quality of Service (QoS) during
  static, running and travelling modes of CPE

• QoS in roaming networks

All these parameters would be applicable after a charge for
the perceived value of the content has been determined.

And then Back to Basics: Who Pays Whom for What?

Customer would not pay for promotional content, the content
provider would. M-commerce would lead to transaction commissions being paid by
financial clearing houses to service providers, for facilitating the
transactions.

Service providers may become online financial clearing houses
themselves. Not to forget transit carriers who would be carrying the transaction
from originating networks to terminating networks or the content providers or
aggregators.

Many providers will share call revenue for each call, there
would be micro transactions and micro payments (value of transaction is small)
with huge volume. How would small payments be received? Will they be added to
the telephone bills or the ISP bill? Billing and collection agents could become
specialized services or applications, which service providers could use.
Interconnect and content settlements would need clearing houses that would have
tackled all these complexities.

Service providers would need more extensive and powerful
business-intelligence applications. New and varied services, and usage
principles would redefine customer behavior. Service providers would need
in-depth knowledge of the trends in customer behavior to be able to lead service
offerings initiative. Data on wireless would create new avenues for fraud.
Applications that help in curbing fraud would be much in demand. Securing
packets in air and that too in m-commerce environments would become important
even before services can be launched.

Going forward, it will be important for operators to invest
in intelligent and interactive billing systems, to maximize revenue from
existing service and to promote killer applications. Billing vendors would need
to come up with not just new billing paradigms, but also have increased
flexibility to meet the needs of tomorrow’s network. The success will lie in
rapid adoption rate of key applications whose billing is also attractive to
customers.

Ankur Lal, CEO, Infozech Ankur Dhingra, telecom
analyst, Infozech