Billing World Research Report International Telecom Billing Market to Hit $8.4 Billion by the Year 2000

The international market for billing will rise from $5.8 billion this year to $8.4 billion by the turn of the century, according to analysts at G2 Research. Simultaneously, the international market for customer assistance will rise from $3.8 billion to $5.5 billion. These numbers spell opportunity for any company providing telecommunications billing services to carriers providing wireline, wireless and media distribution services across the globe, according to G2 Research's Global Communications Practice, a strategic research firm based in Mountain View, California that provides business planning, tactical data and consulting for some Fortune 500 IT vendors.

Worldwide Forecasts for Spending on Customer Care (in millions)
Source: G2 Research
Note: This forecast assumes that customer assistance encompasses all processes and systems, which support customer interaction outside of marketing, sales or collections. Directory assistance, billing inquiry, service questions, adds & changes, 911 calls and repair requests all fall into this category.

Just look at what's happening in the Brazilian marketplace. As of April 1996, 498,000 pagers were in service in Brazil, says a cellular industry expert based in Brazil. In January 1997, the figure jumped to 800,000, he says. "In general, the pager learning curve has grown tremendously in a very short time."

The market for wireless billing solutions in Latin America alone is projected to grow at an aggregated rate of 24 percent-to become a $74 million-dollar market by the year 2000. As a result, many U.S. billing vendors are opening offices in Brazil, Argentina, Chile, Mexico and other parts of the continent.

But U.S. vendors be prepared: The billing needs of Latin American carriers differ from those of American carriers, however, says Matt Weathers, communications project leader, G2 Research. "The start-up companies lack legacy systems, so do not require the interim solutions needed by many U.S. carriers," he says. "Also, real time billing and multiple rating plans are not as high a priority as they are in the United States."

Latin America: Forecasts for Spending on Billing & Records (in millions)
Source: G2 Research
Even in China, Vietnam, Korea and Eastern Europe, where competition is still far from full-fledged (as compared with Western Europe and the United States), several industry analysts believe that huge markets are appearing, just waiting for deregulation and venture capital to spur them into bull market activity. In Hungary, for example, there are 18.5 main lines per 100 people and a two-year wait for a phone. In India, there are only 1.29 main phone lines of service per 100 inhabitants and more than a year's wait for a phone line. Last year at a press conference in Washington, D.C., a Minister of Finance from India urged U.S. financiers and government agencies to invest in India's telecommunications infrastructure. (Some U.S. analysts caution investors, however, about past seizures of U.S. property by foreign governments-which sometimes occurs during a change in power.)

U.S. billing vendors should be ready for Asian carriers' differing needs, such as language translation software, scaleability and centralized computing, say analysts. "A disparate computing environment is driving carriers in the Asia Pacific region [not including Australia and New Zealand] to consolidate billing and customer data on centralized platforms like mainframes or minicomputers," says Kristen Tobias, telecom analyst, G2 Research. "In Korea, Hong Kong, Singapore and Taiwan-otherwise known as the Asian tigers-the business community is pushing for enhanced billing features and functionality. Whereas, in the Asian growth spots [see map on page 20], carriers are seeking billing fundamentals, but expect the flexibility to add enhancements as their markets grow in the future," she says.

Who's Teaming Up with Foreign Providers

As a result of these burgeoning international markets, many U.S. billing vendors are establishing a presence in these foreign countries like never before.

The number of recent international contracts signed (or extended) between U.S.-based billing vendors and foreign-based telecom providers seem to be growing, and include, among many others, the following: • ITDS, based in Stamford, Conn., signed a recent contract with Brazil-based MCOMCAST for all message processing and billing functions.

• ALLTEL, based in Little Rock, Arkansas, recently extended a contract with U.K.-based One 2 One for billing and customer care software, technical support and account management. ALLTEL also signed a second contract for its billing services with the cellular provider Philipino Telephone Corporation, PilTel, based in the Philippines PilTel, already uses ALLTEL's Virtuoso CCB system, and recently has acquired its real-time rating module.

• CSG, based in Englewood, Colo., signed a contract with Dutch cable operator A2000 Holding, N.V. for CSG Phoenix Telephony billing system, a three-tier client-server, object oriented architecture. And, CSG has a contract with Australia's largest cable operator, Foxtel management Pty. Ltd. for CSG's Vantage Point data warehouse product.

• Metrica, based in Mass., recently signed a contract with Spain's Telefonica Moviles' GSM network, Movistar, for the network management solution, Metrica/NPR, which collects performance statistics from switches and provides reports on many operations.

• LHS will be handling German wireless provider E-Plus's billing as of October, says Christopher Thomas, president, Chorleywood Consulting, United Kingdom.

• CableData has signed a contract to provide its new cable-ISP billing systems to Canada-based Internet service provider CyberSCR, according to Thomas. CableData also completed implementation of its Intelecable CCB solution for Netherlands cable provider, Telekable.

• CBIS signed a five year license agreement with E-Plus Mobilfunk, a wireless carrier based in Germany, for CBIS's modules of Advantage GSM application suite, says Thomas. E-Plus's current billing provider, CASS, may remain in use as a wholesale billing system for E-Plus's independent service providers and clearing houses, he says. CBIS also signed a contract with Telewest Communications, the U.K.'s second largest cable company.

• Kenan Systems, based in Cambridge, Mass., signed a contract with NV Casema kabeltelevisie, a cable TV provider based in the Netherlands and owned by Dutch PTT, for Kenan's billing services.

• Deloitte & Touche Consulting Group is assisting U.K. cable provider, Videotron, with the overhaul of its current billing system, says Thomas.

These billing vendors may be following the lead of some of the largest U.S. carriers, who are currently expanding their reach more and more into foreign territories. For example, GTE's international network connects more than 250 locations on five continents, linking its own international providers in the Dominican Republic, Hawaii, Micronesia and Venezuela with many other international carriers customers and businesses and plans to expand futher.

Also, Southwestern Bell Co. International completed negotiations in March with South Africa's Ministry for Posts, Telecommunications and Broadcasting and Telekom Malaysia Berhad for a 30 percent stake in Telekom South Africa. "The expanding South African economy and significant unmet demand for high-quality telecommunications services represents an attractive growth opportunity," said Edward E. Whitacre Jr., chairman and CEO of SBC Communications at a recent press conference.

Ameritech International also has developed new businesses overseas in Brussels, Beijing, Norway and New Zealand, among other areas. The Chicago-based RBOC now serves customers in more than 40 countries worldwide. And executives at the other six RBOCs are expanding their foreign operations, as well.

Why Is the International Market Burgeoning Now?

The international market is growing partly because of a worldwide trend toward deregulation of the telecommunications industries. This year 60 countries agreed to open their markets to compete for domestic and foreign telecommunications network operators and service providers. The World Trade Organization's Telecommunications Pact breaks the old international trade barriers that stopped U.S. carriers from owning and operating networks overseas.

Political change around the globe and a generalized trend toward free market competition is providing opportunities as well. For instance, Fernando Culler, president of Brazil in 1990 changed everything for technology, says telecom billing analyst Shane Dale, PCS Itatel, San Paulo, Brazil. Although Culler left power shortly after being elected, one of his legacies was a move toward opening up the telecommunications market in Brazil. In 1994, there were three or four major companies trying to provide paging in Brazil. Today, there may be as many as 10 new companies besides the original four providing cellular and paging in the area, says Dale.

New technological advances, such as more sophisticated messaging on pagers, is requiring carriers to change their billing systems to bill for these new services, says Mark Nielsen, CEO and chairman of the board of Subscriber Computing, Irvine, Calif.

In the Asia-Pacific region, for example, there are more types of transaction-based services surfacing, he says. "Now that competitive environments are emerging within many countries for the first time, cross discounting and customer service suddenly become very important. As a result, carriers are looking for better billing and customer care systems."

Much consolidation is occurring in the United States, and as a result a shrinking number of players are providing services, Nielsen says. "Conversely, internationally you have an explosion of new carriers as a result of these counties opening up what were monopoly markets for competition. Suddenly you've got three, four or five different providers entering the market. So, internationally there is much greater opportunity in terms of the actual number of potential customers." Half of Subscriber Computing's customers are outside the United States.

Telecom carriers based in the more mature market segments in the world, such as the United States, Canada, Japan and Western Europe, still offer huge opportunities for billing vendors, however. Consider the following spending forecasts shown on the following graphs over the next three years, according to G2 Research.

European countries, in general, have more sophisticated billing needs than do developing countries, observe industry experts. Convergence billing, for instance, is very much a theme at the moment in Europe-although can be seen in different forms from country to country, says Christopher Thomas, president and CEO of Chorleywood Consulting, U.K. In the United Kingdom, for instance, companies are converging billing for cable and telephony with an eye on eventually adding in electric utilities. Conversely, Swedish carriers want to converge wireless and wireline, he says.

To compete throughout Europe, major carriers require the ability to support different languages, tax structures and tariff structures. Culturally, customer care and marketing will be distinctly different in each country as well, says G2's Weathers. "Frontier Cellular, for example, introduced Frontel in the United Kingdom with an American billing system and had to virtually rewrite the software and redesign the process to fit the UK market," he says.

Challenges that Hinder Opportunity for Billing Vendors in Foreign Markets

Challenges arise that billing system vendors never encounter in the West, says Nielsen. The slow pace of privatization is one problem. In some countries where competition is theoretically in place, agencies to regulate telecommunications have not yet been created. And in other countries where requirements do exist, they often differ radically from U.S. requirements. For instance, in one Latin American country, each invoice must be no longer than one page. Therefore, any billing vendor doing business with a local carrier there must be able to build into the new system this capability to print out one-page invoices. If a customer's charges do not all fit on one page, then separate pages, each with its own invoice number and total, must be sent to the customer, explains Nielsen.

Asian, Latin American and European markets challenge U.S. billing vendors to work not only with differing technological intricacies, but also with differing languages, time zones, business cultures and customs, says Mark Perry, director of Saville System's Singapore office which recently opened. In Europe, billing systems must be multi-currency and multi-lingual if a billing system vendor expects to land a contract. Most billing system vendors entering the international market place either have or are working on a system that will link a customer's name and phone number with text in their first language, so that when a CSR answers the phone and inputs the customer's account number, the screen that pops up will be in that customer's language, says Nielsen.

The expansive geography and inadequacy of the transportation system in some parts of the Asia/Pacific region catches some billing executives new to international markets by surprise. Don't expect to make a meeting with one vendor in Singapore the day after one in Beijing, for example. The number and frequency of flights departing from many of the airports in Asia and Latin America are not as great as those departing from major U.S. airports, says one vendor new to the international scene. "Its not like in the United States, where you can have a meeting with a client in New York City at 3pm one day and be in Chicago to meet with a different client at 10am the next morning," says Perry.

To complicate matters further the postal systems in developing countries are often unreliable, which is one reason why many foreign carriers contract with a bank to directly debit their customers' accounts. Banks have traditionally handled the sending out of the invoice and collection of money in many European and Latin American countries, says Perry. This is one way to avoid subscription fraud and limit the liability of the telecom carrier. Prepayment plans have also become popular with new wireless entrants into foreign telecom markets. For example, a carrier in Tanzania started out with prepaid service for 100% of customers. It works, says Nielsen. They have no bad debt.

Future Market Opportunities

Telecommunications as a whole is the fastest growing industry in the world, according to an Ameritech publication. "By the year 2000 the global telecommunications market in general is expected to expand 57 percent, from U.S. $677 billion to more than U.S. $1 trillion. Consequently, the worldwide communications market offers tremendous growth opportunities to companies prepared for success in a highly competitive international environment," wrote an Ameritech market analyst.

For developing countries, it is the consensus among industry experts that building a wireless infrastructure is the present and future priority, due to the comparatively prohibitive cost of the alternative: building a land-line infrastructure from the ground up.

Aside from billing and customer assistance, carriers in each of the regions discussed above are planning to spend big bucks on network management and OSS hardware, software and consultation. The international markets for these products, along with the markets for billing and customer assistance, will continue to grow exponentially over the next five years, creating even greater opportunities for information technology vendors across the globe.