|Revenue assurance for new generation services
|President, CEO & Co-Founder
Alon Aginsky is the President, CEO & Co-Founder of cVidya Networks. Prior to cVidya, Mr Aginsky served as Vice President of Business Development and Business Alliances at C. Mer Industries and as Vice President of Sales and Marketing at Mer Telemanagement Solutions responsible for global marketing and sales efforts. Mr Aginsky holds a BA in Business Administration from New York Technology University.
Operators expect the new 3G services, such as data, multimedia, IPTV and the like will drive new revenue streams and raise their ARPU, average revenue per user. The operators’ billing systems, however, are often not up to the job and revenues for services rendered are lost – not to fraud, but because they were never billed. Revenue assurance uses sophisticated systems that control the services rendered and guarantee they are properly registered by the operators’ internal systems and billed appropriately.
The telecom revenue assurance industry began its evolution in the mid 1990s. Since then, communication services, both fixed and mobile, have become a commodity. Operators have been investing in new and expensive technologies to create more sources of revenue, improve their ARPUs, average revenue per user, and overcome the competition in the heavily saturated marketplace. Infrastructure, customer acquisition and retention costs each got higher and higher, however, and income never did reach their optimistic expectations. The operators, looking for ways to improve their cash flows, began to examine their processes and data to find where revenue leaks were occurring. The introduction of DSL based Internet access provides a good example of revenue leakage and the attempts to control it. The technology delivered value to the customer, so demand for the new service grew very quickly. It looked like a promising additional source of revenues and, although the technology was not the best basis for creative new pricing schemes, it looked like it could become a major revenue source for operators; despite the considerable initial investment, DSL had a relatively low total cost of ownership. The reality, as it became evident within the first few years of providing the DSL service, was that a lot of the expected revenue did not find its way into the books, or the banks, of the companies. This was due to many reasons. Some of the customers were billed incorrectly and some of them were not billed at all for the services they used. Another example of leakage was the emergence of value-added cellular services. The mobile operators created a great number of pricing plans to attract customers. These plans, however, had inherited a series of complex terms and interdependencies that made administering them more complicated and, at times, confusing. Thorough studies showed that these and other phenomena did not result primarily from the malicious intent of customers or internal stakeholders, but rather owed their occurrence to the lack of data, system and process integrity. Given the effort and resources invested to win market share and provide services at a competitive quality level, operators had few resources left, initially, to use for developing their revenue control systems. Hence, the new services were provided before the required support systems implementation and the necessary adjustments could take place. There were many instances when customers were ‘forgotten’ on a free-trial period and kept getting the service for free, or customers who used higher bandwidth than they paid for, and caused the operator to lose revenues. In many cases, the revenue losses were as high as 12 per cent of the overall DSL related revenues. The losses found in the case of the complex pricing schemes were mostly the result of mistakenly associating customers with the wrong price plan. New generation services Nowadays, we are witnessing the growth of new service types, relying on the even broader bandwidth capacity of fixed (VDSL, very high-speed digital subscriber line) and mobile (UMTS, Universal Mobile Telecommunications System) communication infrastructure. These services create new ways of content and service consumption, but the resulting revenue chains are longer and more complex then before and present new operational challenges. Two technologies stand out among these new types of services. One is IPTV and the other is IMS, the IP Multimedia Subsystem. Both of them rely on a high bandwidth IP infrastructure and call for common platforms that consolidate a wide range of services. Examples of this new generation of services include video broadcast, video-on-demand, video conferencing, synchronization and geography shift (access to data and services from virtually any location) among others. However, the greater the variety of services, and the longer and more complex the value chains, the greater the risk that revenue leakage will occur. Types of revenue assurance The traditional network-to-bill revenue assurance systems used to be limited to tracking the service usage records to make sure that customers are billed for the entire billable time consumption reported by the network. These revenue assurance practices work quite well for traditional voice, and some value-added, services. However, in the case of data services, where a considerable portion of the revenues are based upon subscription and consumption by units (eg files/messages/etc) rather than by time, the network-to-bill, usage-based revenue assurance is not enough. The approach of the operators to billing for data services requires looking for revenue leakage cases in places other than the network-to-bill trail of records. These places, where revenue leakage can be found, are mainly in the data and process consistency – or lack of such – across the operator’s support systems domain. Detection of revenue leakage here requires evidence that a service was provisioned and is being used by the customer; such information is available through provisioning and the network management systems. Confirmation that a service provided to a subscriber was not registered in the customer’s profile in the CRM, or the billing systems, is the best indication that a customer is not being billed for the services he or she consumes. This approach to revenue assurance is called ‘configuration reconciliation’. Revenue assurance and next generation services Next generation services are still in a very early stage of their life cycle. Operators are not yet confident about the business cases for these services, and most of them do not yet fully comprehend the investments needed, and the technology changes required, to enable these new services. Having said that, revenue assurance techniques can help reduce the risks inherent in deploying and using new technologies and, thereby, facilitate the marketing of these new services. As an example of how it works, let us consider the case in which the operator wishes to deploy a new service such as video conferencing between PCs and cellular phones. Revenue assurance techniques, used as early as the service planning and pricing stages, provide additional safety. At that time, the revenue assurance team can model the price plan in the rating and billing module of the revenue assurance system, and run test scenarios to verify the integrity of the pricing scheme, so that no case remains unhandled. Then, whenever a customer subscribes to the service, the revenue assurance systems perform a check on the integrity and alignment of the customer details registered in the various systems involved. This method detects and corrects discrepancies even before the customer has begun to use the services. New generation fixed and mobile communication services promise to increase the ARPU, but the telecom industry has learnt the hard way that failure to guarantee data integrity costs a lot of money through revenue leakage. This revenue leakage can offset the increase in ARPU and may be a source of frustration to the operators. With these new services, revenue assurance is not just a ‘nice to have’ option. Revenue assurance is a ‘must have’ system that permits operators to derive profits from the generation of new services.