|Issue:||Latin America 2004|
|Topic:||Online mediation – Full service for pre-paid users|
|Author:||Tero Laaksonen and Marianne Tikkanen|
|Title:||President and CEO and Market Analyst|
Tero Laaksonen is the President and CEO of Comptel. During Mr Laaksonen’s long career in IT and Telecommunications, he served as the Managing Director of Telia Finland Oy; Senior Vice-President Nokia Telecommunications Oy / Information Networks; Director of the Financial Services Business Division at ICL plc; Managing Director at ICL Data Oy and Managing Director at Nokia Data Oy. Mr Laaksonen previously held various positions at Nokia Data Oy / Nokia Electronics and at Outokumpu Oyj. Mr Laaksonen Laaksonen has a MSc. degree in mathematics. Marianne Tikkanen is a Market Analyst at Comptel. Marianne served previously as Comptel’s Business Programme Manager. Before joining Comptel, Ms Tikkanen worked for Ericsson in a series of managerial, sales and R&D positions. Ms Tikkanen has a Master of Science degree in telecommunications.
Since the emergence of pre-paid services, pre-paid and post-paid billing systems have developed separately and are now quite different. As a result, many non-voice and international services cannot be billed, or offered, to pre-paid subscribers. This is unacceptable from a business standpoint since the majority of mobile users today are pre-paid. Online mediation and international roaming makes it possible to offer these services to pre-paid users giving pre-paid users access to the same services as their post-paid peers.
A revolution in connectivity is underway. It is hard to spot; the user is rarely aware of what is going on behind the scenes, but online charging is definitely reshaping the mobile communications sector. Pre-paid service has already made it possible for operators to recruit millions of new mobile phone users. Now, online mediation makes it possible to offer non-voice services and international roaming to the vast multitude of pre-paid users. Without online mediation, pre-paid users are cut off from these services and their needs will only be partially met. Today, by using on-line mediation, operators can expand their service offerings; in addition to traditional voice services, they can now offer short messages and other non-voice services. Online mediation makes it possible to offer any service to any customer regardless of the payment method they use. Full service pre-paid Online mediation was developed to meet the growing need to extend non-voice services to pre-paid customers. Since the emergence of pre-paid services, pre-paid and post-paid systems have been technically separate. This has led to unnecessary differentiation of the services available according to the type of payment chosen by the customer. The pre-paid community has been limited, for the most part, to voice-only services, and these typically without roaming capabilities. The premium services that the post-paid users can access have been out of reach for pre-paid users. These premium services or ‘luxury items’, include such services as picture messaging, life style portals, mobile internet, or just sending a text message when roaming. Such limitations seriously hamper business in countries where the pre-paid segment is dominant. The penetration of pre-paid varies by region, but now reaches over 90 per cent in many countries. According to the researchers at EMC, the global pre-paid subscriber base outnumbered post-paid at the end of 2003 (705 million versus 682 million). EMC forecast that by 2006 almost a billion people would have chosen to use a pre-paid SIM-card. The limit on services available to pre-paid subscribers is no longer acceptable from a business standpoint. Furthermore, the technical limitations that once made it impossible to offer certain services to pre-paid users no longer exist; technical innovations that overcome fraud, permit roaming,and control a wide range of other problems, are at hand. Online mediation – or as it is also called, pre-paid mediation, transaction management, or interactive charging – gives pre-paid users access to the same services as their post-paid peers. Without online mediation, an operator’s revenue, customer satisfaction and competitive offerings are at stake. The pre-paid customer may well want, or need, additional services and be willing to spend more for them, if only given the chance. Unlike post-paid customers who have desktops, laptops and palm-tops in addition to a range of communications devices, the pre-paid subscribers’ mobile phones are often the only digitally enabled device they have. When pre-paid non-voice services are enabled, the pre-paid subscriber can access a range of data services, engage in e-business transactions and even open new sources of income and information for their entire village. Interactive control is the technical novelty What is so revolutionary about online mediation, the technical novelty that enables pre-paid users to obtain non-voice services? Imagine that you are in a room, next to one where a family is quarrelling. You can hear every word they are saying, every bit of the fight, but you cannot control the quarrel. You need to sit in the same room with the fighting couple to be able to stop the quarrel. If it were not a quarrel, but a mobile phone company trying to control a number of different interactive services, online mediation would be a system sitting in the same room, so to speak, with the ‘quarrelling’ demands of the system. The power to interactively control, coordinate and account for communications (and a wide variety of associated services) in real time is the difference between online and offline mediation. Two years ago, mediation systems for pre-paid services did not even have terminology, let alone the technology, to control such functions as: – ‘pre-delivery control’ or, – ‘charging transaction’ or, – ‘zero fraud window’ or, – ‘time-limited try-and-buy.’ Online mediation provides a new type of controlling link for the network elements. While the offline mediation monitors, the online mediation acts to enable real-time charging. The online approach is dramatically more efficient than the older (offline) IP mediation philosophy, still in wide use, of collecting partial data from numerous nodes and consolidating them into chargeable items. Online mediation functions by placing intelligent nodes in strategic spots of the network. These dedicated nodes monitor and control the non-voice service traffic. The nodes interactively control the services in real time. The two-way link from network-to-mediation-to-billing has evolved into a four-way interactive series of communications, to and from the network, as well as to and from the pre-paid billing system. Online mediation makes it possible to start a service, continue a service, to redirect a service, to cut a service, or even to deny the service. Control decisions take place during the delivery of service, and not after it, as with post-paid – whether in real-time, hot or batch. Control, also, is much more than just debiting, or not debiting, the account. Then too, in many cases, the control decisions are not at all related to charging for example: – Java game download is denied after checking the balance in the pre-paid account; – Adult entertainment pages are allowed after authorisation, age, check; – The daily news is delivered after verifying that the monthly subscription has not expired; – Money from the account is reserved at the beginning of a streaming service; – The amount reserved is returned to the account after an unsuccessful MMS delivery. From post-event to pre-delivery Mediation used to be about collecting and formatting usage records (minutes, destination) after the event. Now mediation is an online transaction flow management process that takes place before and during the event. A charging request initiates the transaction and the subsequent flow of logical processing steps. The transaction flow management system establishes how an incoming transaction request is to be handled. Transaction requests needing pre-delivery authorisation or accounting come in from control nodes (proxies), messaging centres, content portals, delivery platforms or other intelligent network elements. Transaction logic includes conditional, if-then, statements that branch differently, that is perform different actions, depending upon the values contained in the original transaction record. The branching values can include service type, download address, time of day, message size, download volume, own/roaming subscriber, destination number and many others. The branched logic can execute various tasks: database look-up, differentiated rating, differentiated control (go, no go, re-direct), reserve funds, release microbalance, etcetera. The transaction logic results in a reply; for example, subscriber not found; user not authorised to access service; subscription timed out; no funds; or, normally, just approve the transaction and let service proceed. Online mediation gives a nicely balanced solution by centralising transaction flow management at the mediation layer. This architecture avoids burdening top-level business support systems and avoids the challenges of placing all the control functions at the network level. With this sort of system architecture, updates and upgrades can be managed centrally. Service rates and logic changes are centred in one system only. A given set of ‘cross-service’ business rules, or logic, can be applied to a number of services at the same time. This is possible because centralised online mediation ‘sees’ all of the services in use, unlike individual network elements. A centralised system can be adapted quickly and is trouble-free to maintain. Options for a long-overdue reunion Operators are racing to deploy next generation services. Due to price erosion, the revenue from voice calls is declining slightly even though customers are using more call minutes. Globally, non-voice services now generate 13 per cent of operators’ revenue (EMC 2003). Non-voice services are on the rise; in the near future, non-voice call revenue should grow to one third of the total. The nature of non-voice services can expose operators to risk. New services, then, must not only be fraud free, they should be available to any subscriber regardless of the payment method – pre- or post-paid – they choose to use. There is a growing call for convergent billing systems and the first systems are gradually being deployed to meet the need. Convergent online mediation plays a key role in convergent billing solutions; it gives operators a relatively pain-free way to provide their pre-paid customers with a full range of services. Since the emergence of pre-paid services, the two billing systems – pre-paid and post-paid – have developed separately and are now quite different. For convergent, payment-method-agnostic charging, both billing systems need to be changed. However, when and what steps to take depends upon each operator’s existing systems, time frame and budget. Centralised online mediation enables operators to migrate in smaller steps; it unties the launch of new non-voice services from the renovation of existing billing systems. Online mediation makes it possible to use the existing pre-paid billing system, designed originally to handle only voice, to charge for non-voice services as well. Post-paid billing, with an online mediation and rating system in parallel, enables pre-delivery, per service charging. Investing in online mediation protects and prolongs the investment made in existing billing systems. The ability to define the payment method per service appeals to both customers and operators.