BellSouth Will Let Competitor Market its Wireless Billing

In a rare agreement between competing telcos, Alltel Information Services (AIS) has won a contract to manage and support billing for BellSouth’s wireless customers, as well as a license to resell BellSouth’s wireless billing system in the United States and abroad. Under the terms of the contract with the RBOC’s Wireless and Intellectual Property operations, AIS will license the rights to the Customer Assistance Resource Environment (CARE) billing system, and will manage and support billing for BellSouth’s domestic wireless customers. Several BellSouth IT staff members will be moved onto the AIS payroll, and they’ll perform maintenance and enhancements alongside AIS staff at BellSouth’s Atlanta data center.

Flouting logic?

At first glance, the deal defies conventional wisdom in this era of intense competition for subscribers. AIS already develops and markets Virtuoso II, its own billing system that handles wireless. Alltel Communications Inc., the communications arm of the company, competes for wireless customers in BellSouth territory. Why would BellSouth allow its competitor to handle its customer information and billing system? And on the other hand, why would Alltel ever want to tell a customer, “OK, you don’t want Virtuoso—how about buying BellSouth’s CARE system? It might better fit your needs.”

The pact represents an entirely new animal in the telecom zoo, admits Russ Akins, vice president of Technology Services at BellSouth. His team developed the CARE system, and Akins was instrumental in facilitating the agreement with Alltel. “I’ve never heard of a carrier doing this,” he says. “I’ve heard of partnering, or co-developing a billing system, but I've never heard of a carrier developing a complete billing product and licensing it for resale.”

But the contract, the financial terms of which were not disclosed, may benefit both companies without hurting the other’s competitive edge, say those close to the deal. BellSouth Corp. is in the midst of building a single, convergent system for wireline, wireless, Internet, data and cable. Although CARE was built primarily for wireless services, developers might use some of the system's modules to build the convergent system. “I never built the system to do all these things,” Akins says. “I was building a wireless billing product, but we want to leverage as many of the CARE modules as possible." And, he says, that includes offering the complete CARE system for resale.

CARE handles millions of subscribers

Not to say that the CARE system is obsolete, or on the way out. It supports the activation, rating and billing for 4.7 million wireless customers. An additional 800,000 PCS customers in the Carolinas and eastern Tennessee will be converted to the system by April. “We have a product that’s good,” Akins says. “Alltel wants to license it, market it and give us money up front and a lucrative royalty deal. We recover some of the investment on what we paid to build it, we lower operating costs because they’ll run it, and we secure a long-term revenue stream because every time they license it, we get royalties.”

AIS will also add functionality to the system, depending on what customers want, “instead of me having to pay for all of the enhancements,” Akins says. As for proprietary information, Akins is not concerned. “They’ll be running our internal operations. They aren’t going to have access to customer information other than processing bills. Their job is to run the machines and the code on the machines,” he says. “They don’t have the customer responsibility—not customer care, not collections, none of those services. They won’t own the database and we have strong non-disclosure agreements.”

Alltel seeks foothold in GSM

What’s in it for Alltel? Every time it resells the system, it gets a commission, plus AIS gets to charge new customers for any conversion or customization it performs. But more importantly, Alltel has the opportunity to gain a foothold in international markets already served by BellSouth. Alltel has at least two overseas contracts: Virtuoso II is being used by Hughes Ispat Limited (HIL) in India and by Piltel in the Philippines. “The plan is to market the CARE system internationally more than anything,” says Mona E. Kelley, senior vice president of sales and marketing for AIS Telecommunications Services. “GSM is the key word here.” The differences in the system will ensure that Virtuoso will still have a market, she says: Virtuoso II handles CDMA and TDMA, and having CARE in its stable gives Alltel a GSM billing system to market. “If a customer in the United States wants a billing system that handles GSM,” Kelley says, “we can give them CARE. Otherwise, we can give them Virtuoso II.”

Alltel has eyes on foreign markets

BellSouth has several properties in South America and other countries that Alltel sees as target markets. International marketing will be headed by Alltel’s Frank Lloyd, who is based in England. The idea is that Alltel can introduce itself where BellSouth already has customers in foreign markets, resell CARE, then reap the rewards on the heavy customization—reformatting the system to handle overseas address formats, multiple languages and currencies, as well as integration with other systems. “There will be no secret that it will be the BellSouth system,” Kelley says. “But it will give AIS a great revenue stream through the customization of telephone numbers, ZIP codes, country codes. In some currencies, there are dots instead of commas, or the year comes first in the date fields. There are a lot of differences there.”

And then there’s the comfort level: BellSouth, for instance, has used AIS for projects in the past. In fact, when he first began to build the CARE system, Akins bought some Alltel source code—which lets developers add and delete customer care information from databases. “We started with a piece of the Alltel system, Virtuoso I,” Akins says. “However, over the years, it's become more proprietary, customized and versatile." BellSouth also has recommended AIS to other companies. “We had a project where BellSouth sold off a property to a company in Madison, Wis., and we were to help them make that transition,” Kelley says. “It was Russ Akins who recommended us to that company.”

In fact, the idea to resell CARE occurred about a year ago as the two companies were working together on another project. “We had been doing project work for Russ, and Russ wanted to offload the processing of the wireless bills, wanted to focus on other things,” Kelley says. “We started talking about joint opportunities.”

But Akins and AIS Account Director Jeff Betts had to sell the idea to their respective companies. For Akins, the hardest part was convincing the BellSouth business unit that his team wouldn’t be distracted by doing the deal, which took negotiating and had to be completed in stages. “We had seven steps in the entire process,” Kelley says. “As we completed each step, the deal came closer to completion.” Some of the work entailed file conversions and customization of middleware, Kelley says.

What if the deal hadn’t worked out? After all, it’s a business contract. “We had an exit strategy,” Akins says. “If it didn’t work out, we’d just go back to business as usual; it wouldn’t have hurt BellSouth. However, I'm glad it did work out because both companies benefit.”

The contract is set to begin in May.