The Internet promises to revolutionize the way communications service providers do business. As margins for traditional services like long-distance telephony diminish due to intense competition, changing regulation, new business models, evolving technologies and new market entrants, offering Internet Protocol (IP)-based services, represents a logical step for communications service providers.
As a result, a great deal of attention has been devoted to next-generation services, such as videoconferencing and Voice over Internet Protocol (VoIP). However, less consideration is given to the challenges implicit in collecting revenue generated by these new offerings. PricewaterhouseCoopers has found that many telecom companies leak between 2%-5% of their revenue, a large portion of which is recoverable. However, this percentage could rise dramatically as companies begin offering new IP-based services that they are not equipped to support with their current revenue integrity systems and processes.
In the standard circuit-switched environment, maintenance of revenue assurance during the course of a call capture and billing cycle depends on carriers being diligent about ensuring end-to-end reconciliation of their switching and billing process.
For IP-based services which employ a packet-switched model, however, the mediation and billing process can be significantly more complex. IP-based telephony requires that billing systems process a greater amount of data than circuit-switched systems. IP billing accounts not only for connection time and the amount of data transferred, but also for elements such as packet originator/destination, application (Web, FTP, video), quality of service requested/provisioned etc.
Furthermore, in order to be able to account for all services rendered, IP billing system must be able to mediate data of different formats that are collected from a wide variety of network elements such as routers and traffic assessment devices, many of which are built by different manufacturers using proprietary standards.
All of these imply that traditional revenue integrity systems and processes employed under the circuit-switched environment might not be capable of handling the added complexities presented by IP-based service offerings.
PricewaterhouseCoopers believes one of the solutions to this challenge is the employment of effective IP-based business support systems. These systems should comprise a set of revenue integrity-focused processes and automated tools to enable an IP-based service provider to effectively monitor revenue integrity metrics in key areas such as product development, customer care, billing, fraud detection, churn management etc.
Monitoring tools that attack the greatest areas of revenue leakage in standard circuit-switched telephone networks, ie. billing validation, end-to-end usage reconciliation, network test call, interconnect verification, and provision verification, will still exist as part of these systems, but probably in different forms.
Once in place, an effective IP-based business support system should provide a broad range of data (such as provisioning status, invoicing and churn ratios) to allow management to understand how the performance of key indicators influences the rate of revenue capture. Ultimately, these systems could allow real time/web-based account information to be made directly available to consumers and carriers, virtually eliminating human intervention, and making possible fully-automated reconciliation and usage monitoring.
Internet technologies offer communications service providers tremendous capacity to deepen customer relationships, create new services and monitor internal operations. There is also little doubt that IP-based services have the potential to become a crucial component of many communications service providers’ revenue. However, the successful transition of traditional revenue integrity systems and processes to cope with the challenges presented by evolving IP services will be a key factor in fully realizing the opportunities available.
Teresa Chow, senior manager, Global Risk Management Solutions, PricewaterhouseCoopers. Email: [email protected].
