 | Issue: | Asia-Pacific 2004 |
| Article no.: | 12 | |
| Topic: | Fraud-Free Prepaid Messaging | |
| Author: | Boudewijn Pesch | |
| Title: | Vice-President, SE Asia & Greater China | |
| Organisation: | LogicaCMG | |
| PDF size: | 92KB |
About author
Boudewijn Pesch is the Vice-President of LogicaCMG SE Asia and Greater China operations. Boudewijn joined CMG as the Chief Representative tasked with extending CMG’s global presence to China and was later promoted to Managing Director of CMG Asia-Pacific, when he moved to the Singapore regional offices. Prior to joining CMG, Boudewijn served as the General Manager of Detron Group Asia-Pacific. His previous experience includes consulting with the VB Group in The Netherlands. Boudewijn was born in The Netherlands. He has a Master’s degree in management studies and a Bachelor’s degree in engineering.
Article abstract
Prepaid messaging services are proliferating throughout the Asia-Pacific region. With prepaid representing such a high proportion of the customer base, it is essential that regional operators can market new non-voice services to customers without exposing themselves to fraud. Traditional delivery charging creates a fraud window between the expiry of an account and its blocking. The new high-volume services mean this fraud can become expensive for the carrier. Pre-delivery SMS charging eliminates this window by vetting the account before the message is sent.
Full Article
The emergence of prepaid services in Asia-Pacific has contributed significantly to the success of mobile phones both regionally and globally. Analysts claim that by the end of 2010 eighty per cent of new customers are expected to opt for prepaid services.1 It is also predicted that by 2009, prepaid mobile users will reach over 1.35 billion, with a 59 per cent share of the total global mobile market.2 The Asia-Pacific region leads the adoption of mobile technologies; there, the fastest growing mobile application is text messaging. With the world market for text messaging expanding, this trend is set to continue. Market analysts predict that non-voice services, such as Enhanced and Multimedia Messaging Services, will be the engine of growth in the 2.5G (2.5 generation) and 3G (third generation) mobile technology worlds. With prepaid representing such a high proportion of the customer base, it is essential that regional operators be able to market new non-voice services to prepaid customers without exposing themselves to fraud. The incidence of fraud due to prepaid customers sending text messages when their credit balance has expired has grown alongside the growth in prepaid and text message usage. The first generation of prepaid solutions to be adopted by operators used a post-delivery charging mechanism – the text message is delivered immediately and afterwards a charge is applied to the subscriber’s account. Operators using these post-delivery or “hot-billing” solutions are reporting revenue losses of up to 20 per cent from their messaging services. Traditional Post Delivery Charging In this scenario, when a subscriber or hosted service sends a Short Message (SM), the Short Message Service Centre (SMSC) delivers the message and then passes a Call Detail Record (CDR) to the prepaid platform, which applies the charge to the prepaid subscriber account. A copy of the record is then generated as an Event Detail Record (EDR) and passed to the Customer Care System to be used by the operator’s Customer Care Representatives or by subscribers using a Customer Self Care Service. When a subscriber runs out of credit the Customer Care System can inhibit further use of the Short Message Service (SMS) by requesting the Home Location Register (HLR) to bar the subscriber from further service until the account has been recharged. The CDRs for Short Message deliveries may be submitted for processing individually or in batches. This type of charging takes place after delivery of the Short Message and is known as post-delivery charging or hot billing. Figure 1 highlights the sequence of steps involved in post-delivery charging. Whilst effective, the problem with this solution is that it introduces the potential for fraud, as the subscriber may send or receive chargeable Short Messages before the HLR is notified that service should be barred. This fraud window can be minimised by providing faster access to the HLR for barring, or by reducing the time between sending a Short Message and processing the CDR. However, both of these approaches unnecessarily increase loading on the operator’s network and on the prepaid platform. Eliminating the Fraud Window To overcome the problems associated with post-delivery charging mechanisms, operators need a solution that ensures subscribers are not allowed to overrun their credit. The ideal method for many operators in the Asia-Pacific region is to move existing post-delivery charging solutions into the pre-delivery phase. This means that all prepaid, non-circuit switched services such as messaging, data and mobile commerce will be provided only after payment has been secured. LogicaCMG’s method for doing this involves introducing a Pre-delivery Service Agent (PSA) into the equation. When a subscriber sends a Short Message, its first stop is the SMSC. Before delivering the Short Message the SMSC queries the PSA to see if there are sufficient funds available to deliver the Short Message. If the subscriber has sufficient funds, the SMSC is authorised to send the Short Message and the subscriber’s account is debited. If the subscriber does not have sufficient funds then the SMSC is directed to deny service and the Short Message is rejected. To minimise the interaction between the PSA and the prepaid platform, the PSA can be configured to authorise a transaction without referring to the prepaid platform for each SM delivery attempt, providing the subscriber has more than a predetermined balance. If the subscriber falls below this balance threshold, then a “Credit Low” signal is received by PSA and all future requests must be checked with the prepaid platform. Benefits of Pre-delivery Charging Operators in more mature markets are now beginning to experience a slowdown in subscriber acquisition rates. As a response, innovative operators are adapting their strategies to shift the focus from subscriber growth to maximising the revenues generated from their existing customer base. The transition to strategies that maximise revenues is supported in several ways, as explained below. New Revenue From Services Building on the success of text messaging, new services will include multi-media messaging, data access and mobile commerce services. These will have both higher value and increased fraud risk compared to the simple text messaging services deployed today. Reduction in Operating Costs Tighter control of operating costs through elimination of the prepaid fraud window will have an immediate and positive impact on an operator’s revenue stream, which will continue, in the short term, to be dominated by messaging. Protection of Investment The unexpected explosive growth in messaging has caused problems for some operators whose charging platforms have been stretched by the increased load from messaging. The introduction of new services will generate more charges. This means that operators must manage this ever-increasing loading of existing prepaid systems in order to protect existing investments. Minimising Subscriber Disruption Smooth and seamless introduction of new services and applications is essential if operators are to maximise revenue opportunities and minimise the disruption to existing subscribers and services. Critical Issues to Address Once operators have identified the key drivers for migrating to a pre-delivery charging mechanism, there are a number of very important issues they must ensure are addressed by any potential solution. Performance and Resilience The ability of a pre-delivery charging solution to provide both scaleable performance and robustness are important criteria. If there is delay or significant latency in querying and obtaining a response regarding a prepaid subscriber account before delivery, then handling a large number of queries could result in network overloading. The ability to manage this potential bottleneck while maintaining quality of service on a par with post-paid services is essential. Mixed Vendor Solutions A single supplier might not have provided an operator’s existing prepaid solutions. Where such co-mingling of solutions exists, operators must be capable of implementing pre-delivery charging, regardless of the vendor’s equipment. Number Portability With the introduction of Mobile Number Portability (MNP) into networks, the operator faces new challenges. In a MNP environment the available subscriber identifying data (MSISDN) is potentially no longer valid for identifying whether a message originated from a post-paid or prepaid subscriber, or even whether the subscriber belongs to another network operator. The prepaid solution must now be capable of identifying the IMSI – a unique subscriber and network identity number – for each message, and performing a credit check/deduction where necessary. The Next Step in Prepaid Messaging Mapping a simple transition path from an existing post-paid system to the new charging model is the first step towards successfully shifting to pre-delivery charging. This then paves the way for a smooth change from today’s simple text messaging services to more complex multimedia messaging and other 2.5G and 3G services. By helping to streamline back-end operations, the pre-delivery charging model enables operators to concurrently offer all their services to prepaid subscribers using a single account. By effectively removing multiple user profiles, this provides the operator with a much more accurate picture of prepaid usage patterns, as well as of which services provide most revenue. Operators who wish to eliminate fraud, protect their existing investment in prepaid platforms and minimise disruption to subscribers while introducing new services should select a pre-delivery solution that can support this migration and offer the capability of concurrent pre-delivery charging for all non-voice services.
