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Revenue Lifecycle: Arresting Leakages

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VoicenData Bureau
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This survey is designed primarily to collate general industry

revenue-assurance practices in Asia-Pacific, and allows telecom operators to benchmark themselves against their peers in this area. Several interesting conclusions and lessons can be drawn from these practices, some of which we elaborate below.

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Product Development and Telecom Billing Systems



Operating in recently liberalized markets with many in their management teams having worked in large incumbent monopolies, we expected Asia-Pacific mobile telecom operators to be engineering focused companies. Hence, we were not surprised by the fact that the respondents were almost equally divided between network quality and marketing initiatives (like loyalty scheme, branding, promotions) as their number one choice for retaining customers. With rising prosperity in the region, network quality and engineering competence are increasingly taken for granted as telecom operators purchase state-of-the-art machines from common international vendors. The trend going forward is clearly for Asia-Pacific telecom operators to be more market rather than engineering focused as it is marketing and product packaging that will differentiate the players. This is particularly so as younger managers from other industries join the management teams of telecom operators in liberalised markets.

On the other hand, Asia-Pacific mobile telecom operators can do more to upgrade their network and billing systems and streamline their internal processes to cut down the six to twelve months lead time that nearly half the telecom operators surveyed require to launch a new product idea. This will allow them to better exploit the first mover advantage. In our experience, the inability of the billing system to cope with capacity growth and marketing demands is the most common reason for the delay. Unlike many other industries where billing is essentially a back-office function that takes place after concluding a sale, a telecom operator’s billing system is the engine that facilitates sales and drives marketing plans. Poorly designed billing systems not only limit the telecom operator’s marketing options but can also lead to customer ill-will or cashflow difficulties as a result of billing errors or delays.

Activations



From the survey responses, we did not find significant corelation between lack of upfront credit checks as reported by over a third of the telecom operators, and bad debts. However, many of those who conduct upfront credit checks but do not collect deposits from subscribers reported higher incidence of bad debts. Upfront credit checks alone have not been effective in many Asia-Pacific economies due to a general reluctance by operators to share information, and the limited role played by credit bureaus in these countries. On the other hand, the upfront credit evaluation is one of the reasons for the long activation lead time, as almost a third of the telecom operators require more than 24 hours to activate the service. Telecom operators should review the effectiveness of their upfront credit evaluation in bad debt prevention, and consider if it may be more cost effective for them to rely on rigorous upfront identity verification (because subscription fraud is a major source of revenue leakage for mobile telecom operators), and concentrate their efforts on improving detective credit controls like high toll alert and bill follow-up. In addition, telecom operators are also using pre-paid mobile to cover the lower end market, where upfront credit checks are less effective. Revenue-Assurance and Revenue-Maximization




Revenue-assurance is a function designed to monitor, audit and ensure that the telecom operator’s revenues are correctly and completely captured, billed and collected. It is in this regard that Asia-Pacific telecom operators fall the furthest behind their American and European counterparts. For example, 

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  • almost all of the telecom operators we surveyed do not carry out periodic rate table verification
  • a quarter of those surveyed do not monitor their high-toll customers, which we consider an essential tool for credit control and subscription fraud detection
  • over half of these telecom operators do not conduct run-to-run billing checks, which we feel is the most basic test to ensure billing completeness and
  • almost half do not rerate their customer bills, and for those who do, the majority do it manually which is limited in effectiveness given the number of bills and call records involved.

In terms of organization structure, American and European telecom operators not only have had dedicated revenue-assurance functions for the past decade, but are already moving the concept from mere Revenue-assurance to one of Revenue-maximization. In doing so, these telecom operators expand the traditional revenue-assurance function (which typically comprises investigating and auditing revenue capture processes and systems) to one which focuses on proactive end-to-end review for not just revenue leakages, but also revenue opportunity loss. On the other hand, many of the Asia-Pacific telecom operators see revenue-assurance very narrowly as part of the billing function.

With increasing competition and falling tariffs and margins, Revenue-maximization provides an important competitive advantage to telecom operators. In our view,

  • it should be a dedicated department
  • it should be staffed with cross functional skills as it has to cover the entire revenue cycle and therefore, requires a range of skill sets
  • it should be organized as a profit centre and measured on lost revenue identified, rather than invoices checked or procedures performed and
  • it should report directly to the chief executive officer or the chief operating officer.

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