Billing Q&A with Jim O'Neill

Q –What is the trend in the industry regarding billing cycles? How many billing cycles does a telecommunications company usually have? How many subscribers per cycle? Can companies run concurrent cycles?

A –There are any number of different answers, which depend on:
the size of the customer base
the organization of the company
which telecommunications services are being billed
how the company elects to group customers for billing
how fast the company wants to deliver the bills
capabilities of the billing system

Major carriers, such as the Regional Bell Operating Companies and the ever-expanding Inter-exchange and wireless companies, have multiple billing cycles. Smaller companies, especially the newer entrants, tend to stay with a single bill cycle until one or more of the factors noted above force a change to multiple cycle billing. The number of billing cycles is determined in various ways. The very largest companies may run billing every business day; some schedule runs on weekends, either to absorb volume or to speed up the delivery process. Some companies will create separate cycles for consumers, small business, large business, electronic payers, et cetera. This allows them to offer different formats to each segment and speed up the delivery of large bills to expedite payment. Given the increasing costs of labor and the demands put on Customer Service Representatives, multiple cycles will help even out the rate of customer bill-related calls. This is especially important in a period of rapid customer growth, as new customers tend to make a greater percentage of calls than those who have been on the service and are familiar with their bills. Finally, financial considerations are a factor. Nothing brings a smile to the face of the CFO faster than even cash flow, so the more cycles a company has, the more payments will be balanced throughout the month.

There are many considerations that determine cycle sizes. Many companies measure themselves in part based on the time it takes to get invoices to subscribers. To aid in these measurements, companies might ask:

? How fast can the billing system process bills?
? How complex are the bills? (Bills for pagers or cable service generally require less processing time per bill than complex multi-line mobile bills).

? Can the staff perform reasonable quality assurance tests in the available time?
? How many bills can the print fulfillment process concurrently?

Companies can run concurrent cycles, but that implies considerable computer processing power. Also, additional staff may be required to perform timely quality assurance steps to maintain printing and mailing release schedules. Companies also have to consider how they have organized their billing cycles. The traditional method for LECs, which typically own entire Central Office (NNX) designations, is to bill complete NNXs as a unit. This method also helps simplify postal delivery management, because each NNX prefix typically serves a specific geographic area. In many cases Central Office designations and ZIP codes are a perfect match.

While some wireless carriers also process by NPA-NNX designations, many allow customers to pick their prefixes from the available number pool. So you might find a business in a large multi-NNX market with users that have two or three different prefixes on the same account.

Where the assignment is not based on NPA/NNX prefix, there may be a desire to keep cycles in balance once they reach maximum capacity. One method is to have the system function that assigns new customer accounts rotate cycle number assignment for each new account added to the customer base.

Companies who run billing daily may assign cycle dates keyed to the service start date. This technique can avoid pro-rating and partial month bills, except when service is terminated on a date other than the cycle start date.

Q – I have two questions related to resale. What is the difference between a “switchless long distance reseller” and a “facilities-based long distance reseller”? How do resellers bill their customers?

A – When resale of telecommunications services started about 20 years ago, all resellers were “switchless” - they had no network equipment or cable facilities of their own. They pay state resale tariffs and purchase wholesale access from the carriers such as AT&T who own and operate the actual networks. The next step is to convince subscribers to use “their” service and many of them are quite successful at it by targeting business customers and giving them better rates, improved billing services and the opportunity to buy related services such as pagers, and other equipment.

Over time, the more successful resellers began to install their own switches and fiber in areas where the investment made it worthwhile. They can then obtain their own carrier codes and have the LECs route calls through their switch. With switches, they have the ability to route calls to the carrier that gives them the best rate based on time of day and destination - this is called “Least Cost Routing.” By recording their own call detail records, facility-based resellers can improve fraud control and rate calls for billing each month without having to wait for the underlying carrier detail records.

As for billing, some develop complete billing systems of their own, or license software developed by third party vendors and do their own invoicing. Others use rating services and arrange to have the charges billed on Local Exchange Carrier bills. There are clearinghouses that have contracts for this and act as agents for the resellers for billing and settlement. Some of the large inter-exchange carriers establish direct feeds to certain LECs to expedite the process and reduce their overhead costs.